Business
Column: Good riddance to the merger of grocers Albertsons and Kroger, which would have cost you money
The inside stories of messy marriage breakups have been an entertainment staple since even before Tolstoy observed that “every unhappy family is unhappy in its own way.” So let’s thank the supermarket giants Kroger and Albertsons, whose $24.6-billion merger has collapsed amid mutual recriminations, for their outstanding contribution to the genre.
The proximate cause of the breakup was the granting of a preliminary injunction against the deal by U.S. Judge Adrienne Nelson of Oregon. Nelson’s ruling, issued Tuesday, was a response to a motion by the Federal Trade Commission, the District of Columbia and eight states including California. (A state judge in Washington also ruled against the merger the same day.)
Although the two companies had fought the challenges to the merger seemingly hand in hand, their accord dissolved within 24 hours of Nelson’s ruling. Boise, Idaho-based Albertsons sued Kroger on Wednesday, citing the latter’s alleged “failure to exercise ‘best efforts’ and to take ‘any and all actions’ to secure regulatory approval” of the deal.
The overarching goals of antitrust law are not met by permitting an otherwise unlawful merger in order to permit firms to compete with an industry giant.
— Federal Judge Adrienne Nelson, blocking the Kroger/Albertsons merger
Kroger called Albertsons’ claims “baseless” and cited its would-be spouse’s “repeated intentional material breaches and interference throughout the merger process, which we will prove in court.”
Those of us who have followed the deal from its inception in 2022 can add this: “Good riddance.”
The collapse of the supermarket merger may stand as the final antitrust success of the Biden-era FTC, which has taken a hard line toward industry consolidations under Chair Lina Khan. Donald Trump is planning to nominate Andrew Ferguson, an FTC commissioner and conservative lawyer, as the agency’s chairman. Khan will be stepping down.
The two grocery chains maintained that they needed to merge in order to successfully compete with megastore chains such as Walmart and Costco, which have grown their grocery operations to the point that their sales approach those of Albertsons and Kroger or even exceed them.
The truth is, however, that the squalid nature of this transaction was always self-evident. As I wrote after the original announcement, the merger partners pitched it to the public as a boon to consumers. Merger partners always say this, but the consumer savings and service improvements generally prove elusive.
“We will take the learnings from each company to bring greater value and a better experience to more customers, more associates and more communities,” Kroger Chief Executive Rodney McMullen said then.
McMullen didn’t explicitly say that the deal would mean lower prices, but it would be a rare shopper who didn’t think that “greater value and a better experience” meant anything other than paying less at the checkout counter. Economists and antitrust experts predicted that the creation of a monopolistic supermarket giant would almost surely add inflationary pressure to food prices.
At the heart of the merger, as I further reported, was a $4-billion dividend to be paid to Albertsons stockholders. Six of the largest stockholders were corporate insiders, defined as holders of more than 5% of Albertsons shares each.
The biggest shareholder was the private equity firm Cerberus Capital Management, which owns more than 26% of the shares and has four nominees on the company’s board of directors. The other five are investment and real estate funds that hold a total of an additional three board seats.
The six investors control about 75% of Albertsons shares. In other words, they voted themselves a multibillion-dollar handout.
Albertsons had claimed that the dividend wasn’t connected to the merger but was “part of Albertsons’ long-term strategy for growth,” which was “determined well before Albertsons’ discussions with Kroger began.”
Yet the companies’ own merger announcement had stated explicitly that the $4-billion dividend was “part of the transaction.” They counted the dividend as part of the merger price, accounting for $6.85 per share of the $34.10 per share payable to Albertsons shareholders. The dividend was approved by the Albertsons board at the very same meeting at which it approved the merger deal itself.
It should go without saying that funneling $4 billion to insiders off the top wasn’t going to make it any easier to bring consumers lower prices at the checkout counter.
Then there was the issue of Albertsons’ corporate conduct. In October, Albertsons reached a $3.9-million settlement with the attorneys general of Los Angeles County and six other California counties as well as the FTC over accusations that the chain ripped off customers at hundreds of its Vons, Safeway and Albertsons stores in California. The company didn’t admit to liability in settling the case, but the terms of the final judgment suggest that the counties and the FTC had the goods — or at least had enough evidence that Albertsons thought it wise to make the case go away.
Albertsons says it has now implemented policies and employee training to ensure that its prices are accurate.
The principal issues raised by the FTC and the states concerned the prospects that the merger of America’s two biggest supermarket chains would allow them to dominate their markets as a monopoly or near-monopoly. That pointed to higher prices for customers and lower wages for workers, which are legitimate concerns for antitrust regulators.
Kroger, the largest chain, operates about 2,700 stores in 35 states and the District of Columbia, under brand names including Ralphs. Albertsons’ footprint encompasses about 2,300 stores under names such as Vons, Pavilions and Safeway. As Judge Nelson observed, the two chains have assiduously competed with each other for years, tracking each other’s prices in an effort to seize market share.
To meet the FTC’s objections, the merger partners proposed selling 579 stores to C&S Wholesale Grocers, a privately held supermarket supplier headquartered in New Hampshire that is a tiny fraction of the merger partners’ size — among other metrics, it has about 14,000 employees, compared with 430,000 employees at Kroger and 285,000 at Albertsons. The sale price was to be $2.9 billion.
Such divestitures are common features of merger deals that face regulatory challenge. But they don’t always meet their goal of preserving competition. A good example is the outcome of a divestiture scheme the FTC ordered in 2014, to mitigate the anticompetitive effects of Albertsons’ takeover of Safeway.
The FTC ordered the divestiture of 168 stores. More than 140 were acquired by Haggen Holdings, an 18-store chain in the Pacific Northwest. As it happened, Haggen was utterly ill-equipped to grow nearly tenfold overnight. Within months it was laying off workers, and before the year was out it had filed for bankruptcy.
Haggen put 100 of the stores back on the block, and 54 of them were reacquired by Albertsons as part of a deal to purchase Haggen outright. Even with the repurchases, the merger resulted in the elimination all competition in some communities.
That history gave Nelson pause when she assessed the new divestiture plan. C&S, she noted, didn’t have very happy experiences when it “dipped its toes into the grocery retail industry before.” The wholesaler bought 220 retail stores between 2001 and 2003, but had sold 190 of them by 2005. The company operates about 25 retail stores under the Piggly Wiggly and Grand Union brands; unlike Kroger and Albertsons, which incorporate pharmacies and gasoline stations into many of their locations, C&S operates only one pharmacy and no gas stations.
In short, Nelson observed, “there are serious concerns about C&S’ ability to run a large-scale retail grocery business that can successfully compete” with a merged Albertsons/Kroger. Among other issues, she wrote, C&S would have to re-brand about half the stores, a process that is “effectively the same as opening a new, unfamiliar grocery store in the eyes of consumers.” C&S didn’t respond to my request for a comment on Nelson’s take, though a spokeswoman told me by email that the firm is still committed to a “transformation strategy, which includes expansion into retail.”
As for the merger partners’ assertion that their deal was a defensive move against competitors such as Walmart and Costco, Nelson was unmoved. “The overarching goals of antitrust law are not met,” she wrote, “by permitting an otherwise unlawful merger in order to permit firms to compete with an industry giant.”
With the merger dead, the squabbling between the former partners is just beginning. Under their original deal, Albertsons is entitled to a $600-million breakup fee. But it says it will be seeking billions of dollars in costs, due in part to “the extended period of unnecessary limbo Albertsons endured as a result of Kroger’s actions.” Among other things, Albertsons’ asserted that Kroger dithered on divestiture deals that might have met the FTC’s objections.
In response, Kroger said it “went to extraordinary lengths to uphold the merger agreement throughout the entirety of the regulatory process and the facts will make that abundantly clear.”
As the war in Iran strangles the flow of oil around the globe, California’s jet fuel reservoirs are running low.
The state — which refines much of its own fuel in El Segundo and elsewhere but still relies on crude oil imports — has seen its jet fuel stock decline by more than 25% from last year’s peak to a level not seen since 2023, according to data from the California Energy Commission.
The supply is shrinking as a global shortage is already affecting travelers’ summer plans with canceled flights and higher fares. It could even affect plans for people coming to Los Angeles for the 2026 World Cup, which starts in June, said Mike Duignan, a hospitality expert and professor at Paris 1 Panthéon-Sorbonne University.
“People don’t know exactly how this is going to escalate,” he said. “There’s a huge black cloud over the sea for the World Cup and the travel slump that we’re seeing is all linked to this oil shortage.”
As fuel supplies shrink, flight prices are rising. Airlines are adding baggage surcharges to cover fuel costs. Several routes leaving from smaller California hubs, including Sacramento and Burbank, have already been canceled.
Air Canada has suspended flights for this summer, cutting routes from JFK to Toronto and Montreal.
“Jet fuel prices have doubled since the start of the Iran conflict, affecting some lower profitability routes and flights which now are no longer economically feasible,” the airline said in a statement last week.
Europe had just more than a month’s supply of jet fuel left last week, the International Energy Agency said. In an effort to cut costs, the German airline Lufthansa slashed 20,000 flights from its summer schedule this week.
Without a fresh oil supply flowing through the Strait of Hormuz, the situation is unlikely to improve, experts said. The oil reserves countries and companies have in storage are helping fill shortfalls, but the squeezed supply chain could still wreak economic havoc.
“When there’s a shortage somewhere, everything is affected,” said Alan Fyall, an associate dean of the University of Central Florida Rosen College of Hospitality Management. “Airlines are being cautious, and I would say that is a very wise strategy at the moment.”
California’s jet fuel stock reached its lowest levels in two and a half years at 2.6 million barrels last week, down from a peak of more than 3.5 million barrels last year.
The California Energy Commission, which tracks fuel inventory, said the state’s current jet fuel stock is sill sufficient.
“Current production and inventory levels of jet fuel are within historical ranges,” a spokesperson said. “Although supply is tight, no structural deficit has emerged yet. The present tightness reflects short‑term global market stress. As long as refinery operations remain stable, California is positioned to meet regional jet fuel needs.”
Europe has been affected more directly because it relies on the Middle East for the vast majority of its crude oil and many refined products, experts said. California gets crude oil from the Middle East but also from Canada, Argentina and Guyana.
The state has the capacity to refine around 200,000 barrels of jet fuel per day, most of it from refineries in El Segundo and Richmond.
The amount of crude oil originating in the state has been declining since the early 2000s, as state regulations and drilling costs have led to more imports.
California has become particularly vulnerable to supply-chain shocks like the war in Iran, says Chevron, one of the companies that provides jet fuel in the state.
“The conflict in the Mideast Gulf has exposed the danger of California’s decision to offshore energy production,” said Ross Allen, a Chevron spokesperson. “Taxes, red tape and burdensome regulations cost the state nearly 18% of its refinery capacity in just the past year, and we urge policymakers to protect the remaining manufacturing capacity.”
In 2025, 61% of crude oil supply to California’s refineries came from foreign sources, according to the California Energy Commission. Around 23% came from inside the state, down from 35% five years ago.
The state’s refining capacity has also been declining, said Jesus David, senior vice president of Energy at IIR Energy. The West Coast region’s refining capacity has decreased from 2.9 million to 2.3 million barrels a day since 2019, he said.
“California’s had issues prior to the war,” David said. “Nothing new has been built over the past 30 years, and California has closed a lot of capacity.”
The result is higher prices for both gasoline and jet fuel in the state. Jet fuel at LAX costs close to $15 per gallon this week, compared with almost $10 at Denver International Airport and $11 at Newark International Airport.
Gasoline prices have also been hit hard by the global conflict. Average gas prices in California are close to $6 a gallon, around $2 higher than the national average.
The West Coast is a “fuel island” because it’s not connected by pipelines to the rest of the country, United Airlines chief executive Scott Kirby said in an interview last month. That means oil and refined products have to be brought in by ships.
“Fuel price is more susceptible to supply weakness on the West Coast than anywhere else in the country,” Kirby said.
Some airlines might not survive the turmoil if oil prices don’t level out soon, he said. Spirit Airlines, a budget carrier based in Florida, is reportedly facing imminent liquidation if it isn’t bailed out by the Trump administration.
Nike is cutting about 1,400 jobs in its operations division, mostly from its technology department, the company said Thursday.
In a note to employees, Venkatesh Alagirisamy, the chief operating officer of Nike, said that management was nearly done reorganizing the business for its turnaround plan, and that the goal was to operate with “more speed, simplicity and precision.”
“This is not a new direction,” Mr. Alagirisamy told employees. “It is the next phase of the work already underway.”
Nike, the world’s largest sportswear company, is trying to recover after missteps led to a prolonged sales slump, in which the brand leaned into lifestyle products and away from performance shoes and apparel. Elliott Hill, the chief executive, has worked to realign the company around sports and speed up product development to create more breakthrough innovations.
In March, Nike told investors that it expected sales to fall this year, with growth in North America offset by poor performance in Asia, where the brand is struggling to rejuvenate sales in China. Executives said at the time that more volatility brought on by the war in the Middle East and rising oil prices might continue to affect its business.
The reorganization has involved cuts across many parts of the organization, including at its headquarters in Beaverton, Ore. Nike slashed some corporate staff last year and eliminated nearly 800 jobs at distribution centers in January.
“You never want to have to go through any sort of layoffs, but to re-center the company, we’re doing some of that,” Mr. Hill said in an interview earlier this year.
Mr. Alagirisamy told employees that Nike was reshaping its technology team and centering employees at its headquarters and a tech center in Bengaluru, India. The layoffs will affect workers across North America, Europe and Asia.
The cuts will also affect staffing in Nike’s factories for Air, the company’s proprietary cushioning system. Employees who work on the supply chain for raw materials will also experience changes as staff is integrated into footwear and apparel teams.
Nike’s Converse brand, which has struggled for years to revive sales, will move some of its engineering resources closer to the factories they support, the company said.
Mr. Alagirisamy said the moves were necessary to optimize Nike’s supply chain, deploy technology faster and bolster relationships with suppliers.
A bill that would have required insurers to offer coverage to homeowners who take steps to reduce wildfire risk on their property died in the Legislature.
The Senate Insurance Committee on Monday voted down the measure, SB 1076, one of the most ambitious bills spurred by the devastating January 2025 wildfires.
The vote came despite fire victims and others rallying at the state Capitol in support of the measure, authored by state Sen. Sasha Renée Pérez (D-Pasadena), whose district includes the Eaton fire zone.
The Insurance Coverage for Fire-Safe Homes Act originally would have required insurers to offer and renew coverage for any home that meets wildfire-safety standards adopted by the insurance commissioner starting Jan. 1, 2028.
It also threatened insurers with a five-year ban from the sale of home or auto insurance if they did not comply, though it allowed for exceptions.
However, faced with strong opposition from the insurance industry, Pérez had agreed to amend the bill so it would have established community-wide pilot projects across the state to better understand the most effective way to limit property and insurance losses from wildfires.
Insurers would have had to offer four years of coverage to homeowners in successful pilot projects.
Denni Ritter, a vice president of the American Property Casualty Insurance Assn., told the committee that her trade group opposed the bill.
“While we appreciate the intent behind those conversations, those concepts do not remove our opposition, because they retain the same core flaw — substituting underwriting judgment and solvency safeguards with a statutory mandate to accept risk,” she said.
In voting against the bill Sen. Laura Richardson, (D-San Pedro), said: “Last I heard, in the United States, we don’t require any company to do anything. That’s the difference between capitalism and communism, frankly.”
The remarks against the measure prompted committee Chair Sen. Steve Padilla, (D-Chula Vista), to chastise committee members in opposition.
“I’m a little perturbed, and I’m a little disappointed, because you have someone who is trying to work with industry, who is trying to get facts and data,” he said.
Monday’s vote was the fourth time a bill that would have required insurers to offer coverage to so-called “fire hardened” homes failed in the Legislature since 2020, according to an analysis by insurance committee staff.
Fire hardening includes measures such as cutting back brush, installing fire resistant roofs and closing eaves to resist fire embers.
Pérez’s legislation was thought to have a better chance of passage because it followed the most catastrophic wildfires in U.S. history, which damaged or destroyed more than 18,000 structures and killed 31 people.
The bill was co-sponsored by the Los Angeles advocacy group Consumer Watchdog and Every Fire Survivor’s Network, a community group founded in Altadena after the fires formerly called the Eaton Fire Survivors Network.
But it also had broad support from groups such as the California Apartment Association, the California Nurses Association and California Environmental Voters.
Leading up to the fires, many insurers, citing heightened fire risk, had dropped policyholders in fire-prone neighorhoods. That forced them onto the California FAIR Plan, the state’s insurer of last resort, which offers limited but costly policies.
A Times analysis found that that in the Palisades and Eaton fire zones, the FAIR Plan’s rolls from 2020 to 2024 nearly doubled from 14,272 to 28,440. Mandating coverage has been seen as a way of reducing FAIR Plan enrollment.
“I’m disappointed this bill died in committee. Fire survivors deserved better,” Pérez said in a statement .
Also failing Monday in the committee was SB 982, a bill authored by Sen. Scott Wiener, (D-San Francisco). It would have authorized California’s attorney general to sue fossil fuel companies to recover losses from climate-induced disasters. It was opposed by the oil and gas industry.
Passing the committee were two other Pérez bills. SB 877 requires insurers to provide more transparency in the claims process. SB 878 imposes a penalty on insurers who don’t make claims payments on time.
Another bill, SB 1301, authored by insurance commissioner candidate Sen. Ben Allen, (D-Pacific Palisades), also passed. It protects policyholders from unexplained and abrupt policy non-renewals.
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