Kroger and Albertsons Plan Merger to Combine 2 Largest Supermarket ChainsCurrent Event Close Reading and Critical Thinking Questions for Social Studies Teachers
The following Social Studies event discussion is based on the original news article "Kroger and Albertsons Plan Merger to Combine 2 Largest Supermarket Chains," by Alina Selyukh, published October 14, 2022, in NPR. The article reports on the merger that would combine the two largest grocery-store chains in the United States.
Below you will find the article and some critical thinking questions to pose to your Social Studies students.
Kroger plans to buy Albertsons in a deal valued at $24.6 billion, a merger that would combine the two largest grocery-store chains in the U.S., the companies said on Friday.
The deal is likely to draw intense scrutiny from federal regulators and critics as it would form a new supermarket colossus at a time of soaring food costs. Grocery prices jumped 13% in September compared to a year ago.
Kroger is the largest supermarket operator in the U.S., with 420,000 employees and more than 2,700 stores, including Ralphs, Harris Teeter, Fred Meyer, and King Soopers. Albertsons is the country’s second-largest supermarket company, with 290,000 employees and almost 2,300 stores, including Safeway and Vons.
The two overlap in several markets, largely in the western part of the country. Their tie-up would involve spinning off up to 375 stores into a separate company, the companies said.
In the Friday announcement, Kroger said it would “reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers” and invest $1 billion to raise wages and benefits for workers.
For both companies, Walmart is a key competitor, as a nationwide big-box giant that sells more groceries than Kroger and Albertsons combined. The two also face competitions from Costco as well as Amazon, with its online delivery reach, and lately, dollar stores, the fastest-growing segment of U.S. retail.
Antitrust regulators in the Biden administration have advocated for changes in the government’s approach to mergers, and they have pushed back against megadeals, citing outsize impact on competition and consumer prices.
Kroger and Albertsons are “going to get a much closer look than earlier transactions received in this sector,” said William Kovacic, former lawyer and chair at the Federal Trade Commission. “They’re going to face a great deal more skepticism about the potential benefits of the consolidation[.]”
But the federal competition regulators have also recently lost in litigation over some attempts to block mergers, said Kovacic, who’s now a law professor at George Washington University.
“So there’s likely to be a difficult passage through the review by the FTC,” he said. “It does not mean that the FTC is absolutely destined to prevail if it decides to go to court and challenge the deal.”
For many years, Kroger, Albertsons and Safeway were the leading standalone grocery chains, prominent in different parts of the country. Albertsons merged with Safeway in 2015, then unsuccessfully tried to merge with pharmacy chain Rite Aid in 2018 and eventually went public in 2020.
Critical Thinking Questions
- The first section of an article should answer the questions “Who?” “What?” “When?” and “Where?” Identify the four W’s of this article. NOTE: The rest of the article provides details on the why and/or how.
- Does this article have any bias? Why or why not?
- Why is the planned merger of Kroger and Albertsons drawing scrutiny or criticism?
- How do grocery prices from September 2022 compare to those from September 2021?
- How does Kroger say the merger will benefit its customers and workers?
- Who are some of Kroger and Albertsons’ competitors?
- What impact do antitrust regulators say the merger will have?
- Based on context clues from the article, what do you think “antitrust” means? Define it in your own words.
- Do you think this merger will have a positive or negative impact on customers and workers of these grocery chains? Why do you think that?
- Reflect on current events. Can you think of other recent mergers or “megadeals”? Which companies were involved, and do you think their merging was positive or negative? Explain your reasoning.
Resource of the Week
The following recommended Social Studies classroom item is available at teachersdiscovery.com.
The Essential U.S. History Primary Source Library: Reconstruction and Industrialization Download
Tackle current events through primary sources! Get the 1890 Sherman Anti-Trust Act, along with 24 other primary source documents covering Reconstruction through Industrialization. Also includes a breakdown of primary and secondary sources and 10 graphic organizers.