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Kroger vows lower food prices in its $20-billion Albertsons bid. Consumer advocates are doubtful

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Kroger vows lower food prices in its -billion Albertsons bid. Consumer advocates are doubtful

Kroger’s $20-billion bid to purchase smaller rival Albertsons would convey collectively a number of well-known Southern California grocery chains, together with Ralphs and Vons, to create a grocery store large in an period of upper meals costs and elevated competitors for customers’ cash.

As the most popular inflation in 40 years eats into shopping for energy, Kroger Chairman and Chief Government Rodney McMullen vowed to make use of $1 billion in annual financial savings created by the proposed merger to decrease shelf costs, rework shops and enhance employee wages and advantages.

“We are going to take the learnings from every firm to convey larger worth and a greater expertise to extra prospects, extra associates and extra communities,” McMullen mentioned Friday in a convention name with buyers.

Client advocates and union representatives rapidly decried the proposed deal and urged the federal government to take a tough have a look at the potential results and block the mixture.

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Jamie Court docket, president of Client Watchdog, a Santa Monica-based client advocacy group, referred to as the proposed merger “a horrible thought.”

“It’s going to drive down competitors,” he mentioned. “This is able to give an excessive amount of market energy to 1 massive large, particularly in California. … We’d urge the administration to reject this merger.”

The United Meals and Business Staff Union, which in April signed a brand new three-year contract protecting 47,000 staff at 540 Ralphs, Albertsons, Vons and Pavilions shops from San Diego to San Luis Obispo, mentioned the proposed merger “would considerably hurt Southern California’s grocery trade — hundreds of important grocery retailer staff may probably lose their jobs, and it’ll have an effect on prospects’ entry to contemporary, wholesome groceries at a time after they’re already battling rising inflation.”

Consumers additionally have been nervous by the information, notably by the prospect of retailer closures.

“Any time you hear about one thing like this you realize it’s not going to be good,” mentioned Katrina Medina, who has shopped on the Albertsons retailer within the Baldwin Hill Crenshaw Plaza buying heart for years. “The standard and repair right here is healthier than another retailer within the neighborhood. It will be terrible in the event that they closed one other Albertsons.”

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Mel Henderson had pushed from the San Fernando Valley to the shop on Crenshaw Boulevard simply to get cupcakes for his daughter. Albertsons is his favourite chain and few of the shops are left in Southern California.

“There have been two of them not too removed from right here, and so they closed each of them,” Henderson mentioned. “I simply hate that they at all times appear to be taking stuff away from us, Black individuals, after they speak about mergers.

Kroger, primarily based in Cincinnati, operates 2,800 shops in 35 states, with chains that embrace Ralphs, Meals 4 Much less, Smith’s and Harris Teeter. Albertsons, primarily based in Boise, Idaho, operates 2,273 shops in 34 states, underneath names that embrace Vons, Pavilions, Safeway, Jewel Osco and Shaw’s. Collectively the businesses make use of round 710,000 individuals and would function shops in 48 states and the District of Columbia.

Kroger is providing to pay almost $20 billion for Albertsons Cos., or $34.10 per share. Kroger may even assume $4.7 billion of Albertsons’ debt. Shares in each corporations fell Friday.

The deal will seemingly be closely scrutinized by U.S. antitrust regulators, particularly at a time of excessive meals value inflation.

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The Justice Division and the Federal Commerce Fee have been already within the strategy of updating merger pointers to raised detect and forestall anticompetitive offers. In July, President Biden signed an government order selling competitors in enterprise and calling for more durable scrutiny of mergers.

Utah Sen. Mike Lee, the senior Republican member of the Senate Judiciary Committee’s antitrust subcommittee, mentioned in an announcement: “I’ll do all the pieces in my energy to make sure our antitrust legal guidelines are robustly enforced to guard shoppers from anticompetitive mergers that might additional exacerbate the monetary pressure we already really feel within the grocery retailer checkout aisle.”

If accredited by regulators, the deal is predicted to shut in early 2024.

To ease the regulatory course of, Kroger and Albertsons mentioned they might divest shops in markets the place they overlap. The businesses mentioned they might spin off as much as 375 Albertsons shops in a standalone public firm.

“We’re assured, from the in depth work that we’ve finished, that we now have a transparent path to attain regulatory approval with divestitures,” Kroger Chief Monetary Officer Gary Millerchip mentioned.

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McMullen mentioned the corporate would determine market by market whether or not shops would change their names.

“We’ll need to consider every market individually, who has the stronger market share,” he mentioned.

Collectively, the shops would management round 13% of the U.S. grocery market, assuming the sale or closure of round 400 shops for antitrust causes, based on JPMorgan Chase analyst Ken Goldman.

Nonetheless, that may be a distant second to Walmart’s 22% share. Amazon, which purchased Entire Meals in 2017, can be a rising participant within the house, with 3% share. Warehouse retailer Costco controls 6%.

Worth chains like Aldi and Greenback Basic — which have a mixed 4% market share — have additionally been squeezing conventional grocers like Kroger and Albertsons.

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Goldman mentioned a stronger mixed firm may presumably assist tame meals value inflation, since it could have extra energy to reject meals producers’ value will increase. The 2 chains mixed have 34,000 non-public label merchandise at numerous value factors that compete instantly with meals producers.

Kroger mentioned it could reinvest roughly $500 million into value reductions. It mentioned it could additionally spend $1.3 billion updating Albertsons shops and $1 billion on larger worker wages and improved advantages.

Kroger additionally mentioned the mixed shops would offer larger and quicker entry to contemporary meals, with a mixed 66 distribution facilities and 52 manufacturing crops.

However critics questioned a merger at a time of excessive meals value inflation. Meals costs rose 13% in September in contrast with final yr, based on U.S. information launched Thursday.

“A Kroger-Albertsons deal would squeeze shoppers already struggling to afford meals, crush staff combating for truthful wages and destroy unbiased, neighborhood shops,” mentioned Sarah Miller, government director of the American Financial Liberties Mission, a nonprofit that helps stronger company accountability and antitrust measures.

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Each Albertsons and Kroger themselves have grown into large operations partially by way of acquisitions.

Albertsons was purchased by a consortium of buyers together with Cerberus Capital Administration, a personal fairness agency, in 2006. Cerberus helped finance Albertsons’ 2015 buy of the Safeway grocery chain and tried a failed merger with Ceremony Support in 2018. Albertsons grew to become a publicly traded firm in 2020.

Cerberus at present holds almost 30% of Albertsons shares. The merger deal features a $4-billion dividend to Albertsons shareholders.

In 2015 alone, Kroger bought 4 chains: Roundy’s, Choose ’N Save, Metro Markets and Mariano’s. It purchased the meal equipment firm Residence Chef in 2018.

Kroger has lengthy outperformed Albertsons in key areas, together with the event of retailer manufacturers and superior know-how, mentioned Neil Saunders, managing director of World Retail Information, a market analysis firm. Final yr, for instance, Kroger opened the primary of 20 deliberate warehouses the place robots assist fulfill supply orders.

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However Saunders mentioned Albertsons permits Kroger to increase into markets the place it has much less presence, like Nevada, Oregon and Washington.

The Related Press contributed to this report.

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Albertsons to pay $3.9 million over allegations it overcharged, lied about weight of groceries

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Albertsons to pay .9 million over allegations it overcharged, lied about weight of groceries

Grocery titan Albertsons will pay $3.9 million to resolve a civil law enforcement complaint alleging that it ripped off customers at hundreds of its Vons, Safeway and Albertsons stores in California, authorities said Thursday.

According to the complaint, groceries sold by Albertsons Cos. — including produce, meats, baked goods and other items — had less product in the package than indicated on the label. The company also is accused of charging customers prices higher than its lowest advertised price.

“False advertising preys on consumers, who are already facing rising costs, and unfairly disadvantages companies that play by the rules,” L.A. County Dist. Atty. George Gascón said. “This kind of corporate conduct is especially egregious when it comes to essential groceries, as Californians rely on accurate advertised prices to budget food for their families.”

The case was filed in Marin County Superior Court in partnership with the consumer protection units of the district attorney’s offices of Los Angeles, Marin, Alameda, Sonoma, Riverside, San Diego and Ventura counties.

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The settlement will be divided among the seven counties and used to support future enforcement of consumer protection laws, according to the Marin County district attorney’s office. None of the money will be paid back to consumers.

The fine comes just over a year after the same company was ordered to pay $3.5 million for selling expired over-the-counter drug products. The company is also currently fighting a federal antitrust lawsuit that seeks to block its planned merger with grocery giant Kroger Inc.

Albertsons Cos. operates 589 Albertsons, Safeway and Vons stores in California. The company did not admit wrongdoing. It cooperated with the investigation and has taken steps to correct the violations, according to the L.A. County district atttorney’s office.

In a statement on the settlement, the company said it takes the matter seriously and is committed to ensuring its customers can shop with confidence.

“We have taken steps to ensure our price accuracy guarantee is more visible to customers by posting signage at multiple locations at the front of our stores,” the company stated. “We have conducted additional comprehensive training for associates to reinforce the importance of price accuracy and customer transparency. Additionally, we have enhanced price tracking systems to better ensure real-time accuracy at stores.”

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Prosecutors in the lawsuit alleged that the company failed to implement a price accuracy policy ordered by a court in 2014.

The policy requires that customers who are overcharged for an item either receive the item for free or receive a $5 gift card, depending on which option is worth more. It is designed to encourage customers to immediately report false advertising.

Under the judgment reached Thursday, the grocery giant must implement this policy and ensure staff are properly trained to place accurate weight labels on products.

The serial overcharging was discovered through inspections by Marin County’s Department of Agriculture, Division of Weights and Measures and its counterparts across the state.

“We could not have achieved this result without the outstanding work of our Weights and Measures inspectors as well as vigilant consumers,” said Deputy Dist. Atty. Andres Perez, who prosecuted the case for Marin County.

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For the next three years, Albertsons Cos. is required to hire an independent auditor to ensure it is complying with the terms of the judgment.

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Disney faces class action lawsuit over employee data breach

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Disney faces class action lawsuit over employee data breach

Walt Disney Co. has been hit with a class action lawsuit accusing the Burbank-based entertainment giant of negligence, breach of implied contract and other misconduct in connection with a massive data breach that occurred earlier this year.

Plaintiff Scott Margel submitted the complaint on Thursday in Los Angeles County Superior Court against Disney and Disney California Adventure. The 32-page document also accuses the company of violating privacy laws by not doing enough to prevent or notify victims of the extent of the leak.

The class members, estimated to number in the thousands, are described in the complaint as individuals who gave “highly sensitive personal information” to Disney in connection with their employment at the company — information that was allegedly compromised in the breach.

Representatives of Disney did not immediately respond Friday to The Times’ request for comment.

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The lawsuit cites an article published in September by the Wall Street Journal, which reported that a hacking group known as NullBulge publicly released data spanning more than 18,800 spreadsheets, 13,000 PDFs and 44 million internal messages sent via the workplace communication platform Slack.

According to the Journal, the compromised Slack messages contained sensitive information belonging to Disney cruise employees, including passport numbers, visa details, birthplaces and physical addresses; at least one spreadsheet listed the names, addresses and phone numbers of some Disney Cruise Line passengers. The publication later reported that Disney planned to stop using Slack after the breach.

The plaintiff and class members “remain, even today, in the dark regarding which particular data was stolen, the particular malware used, and what steps are being taken, if any, to secure their [personal information] going forward,” the complaint reads.

The plaintiff and class members “are, thus, left to speculate as to where their [data] ended up, who has used it and for what potentially nefarious purposes.”

In July, NullBulge said that it had leaked roughly 1.2 terabytes of Disney data in rebuke of the company’s treatment of artists, “approach to AI” and “pretty blatant disregard for the consumer.” The self-proclaimed hacktivists told CNN that they were able to penetrate Disney’s system thanks to “a man with Slack access who had cookies.”

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A Disney spokesperson said in a statement at the time that the company was “investigating this matter.”

Margel is demanding that Disney take steps to reinforce its security system and educate class members about the risks associated with the breach. The plaintiff is also seeking unspecified damages and a jury trial.

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Rivian cuts production forecast, citing supply chain issue; its stock dips

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Rivian cuts production forecast, citing supply chain issue; its stock dips

Electric vehicle maker Rivian saw its shares dip Friday after the Irvine-based company cut its production targets amid ongoing supply issues.

Citing a shortage of a component used to build its electric pickups, sport utility vehicles and vans, Rivian said production could drop as much as 18% this year at its lone U.S. assembly plant.

Rivian did not specify the part that is in low supply but noted that the shortage has become more acute in recent weeks.

The company now forecasts its full-year production will be between 47,000 and 49,000 vehicles, down from an earlier estimate of 57,000. During the most recent quarter, Rivian produced 13,157 vehicles and delivered 10,018, falling short of analysts’ expectations.

Shares of Rivian ended the day at $10.44, down 3.2%. The company’s stock has been battered since the start of the year, falling by more than 50% amid underwhelming financial reports. In the second quarter this year, Rivian posted a net loss of $1.46 billion compared with a loss of about $1.12 billion during the same period a year earlier. The company is scheduled to announce its third-quarter earnings next month.

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Rivian received a lifeline in June when Volkswagen agreed to a massive investment in the company that is expected to total $5 billion. Rivan has nonetheless continued to struggle in the face of dropping demand for electric vehicles and other supply chain issues that forced the company to pause its production of commercial vans for Amazon.com in August.

Early this year, the automaker announced a 10% cut in its workforce that sent stocks plummeting 25% in one day. The pool of interested wealthy buyers who don’t already own an electric vehicle is shrinking, analysts said, while the broader market weighs the advantages and feasibility of switching to electric.

The average car buyer is not likely to be able to afford a Rivian vehicle, and concerns remain about charging infrastructure and the distance vehicles can drive on a single charge. Rivian’s R1T electric pickup truck starts at around $70,000; its R1S SUV starts at nearly $75,000.

With sleek design and outdoorsy features, Rivian’s vehicles garnered much attention from analysts and attracted investors such as Amazon and Volkswagen. The company exceeded expectations during its initial public offering of stock in 2021, ending its first day of trading valued at nearly $88 billion.

The production issues announced this week could get in the way of Rivian’s goal of achieving positive gross profits by the fourth quarter of this year. According to analysts, the company’s gross margins are expected to remain in negative territory in the final three months of 2024.

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