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U.S. sues to block grocery megamerger of Kroger and Albertsons

ARI SHAPIRO, HOST:

The country's two largest supermarket chains were hoping to unite. That's now up in the air after a lawsuit from federal regulators and nine state attorneys general. NPR's Alina Selyukh reports.

ALINA SELYUKH, BYLINE: The Federal Trade Commission is suing to block Kroger's purchase of Albertsons. Kroger runs stores including Harris Teeter, Ralphs and Fred Meyer. Albertsons owns Safeway and Vons. Together, they have 720,000 workers and about 5,000 locations. They overlap particularly in Western states. California Attorney General Rob Bonta joined the federal suit.

(SOUNDBITE OF ARCHIVED RECORDING)

ROB BONTA: In many areas of Southern California, Kroger or Albertsons would be the only one-stop shop for groceries.

SELYUKH: Regulators see the merger reducing competition not only for shoppers, but also for workers, leading to higher prices and worse benefits. But Kroger and Albertsons argue they are not the colossus. It's really Walmart and Amazon, and the merger is critical to their ability to compete. The FTC's Rahul Rao disagrees.

RAHUL RAO: People are not shopping at Amazon as a substitute for going to their local grocery stores.

SELYUKH: Kroger and Albertsons had hoped to avoid the lawsuit by proposing to sell off hundreds of stores to essentially create a competitor to themselves. But the regulators say the plan falls short.

RAO: We've seen grocery store divestitures in the past, and we've seen them fail spectacularly.

SELYUKH: Albertsons, in 2015, sold off stores to get approval to buy Safeway, only to regain a bunch on the cheap when its buyer went bankrupt.

Alina Selyukh, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Alina Selyukh is a business correspondent at NPR, where she follows the path of the retail and tech industries, tracking how America's biggest companies are influencing the way we spend our time, money, and energy.