Empty Promises, Big Paydays: Kroger and Albertsons CEOs Fail to Justify Largest Supermarket Merger in History

Looks like tgings are being said that are no legally enforceable. Let me see . . . Deleted emails, Albertson’s CEO can walk away with a $40-something million bonus if he can close the deal, a special dividend to private equity investors worth $4 billion and paid with borrowed money, the $4 billion came after Albertsons swore to both a judge and to Congress that it was in “excellent financial condition.”

There has to be more to this . . .

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Washington, D.C. — Following testimony this week from Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran in the Federal Trade Commission v. Kroger-Albertsons hearing in the U.S. District Court for the District of Oregon, where the Federal Trade Commission (FTC) and nine state attorneys general are seeking a preliminary injunction to hit “pause” on the biggest supermarket merger in history, the American Economic Liberties Project released the following statement.

“While Kroger’s CEO made lofty promises during his testimony, including a pledge not to close stores, the simple truth is that—as McMullen admitted on the stand—such promises are not legally enforceable,”  said Laurel Kilgour, Research Manager at the American Economic Liberties Project. 

“If this merger is finalized, there will be nothing stopping Kroger from raising prices, eliminating jobs, shuttering stores, or cutting back its ‘price investments.’ Indeed, in the past Kroger has redirected money initially earmarked for ‘price investments’ to boost quarterly earnings per share instead. Moreover, hypothetical ‘reputational harms’ from price hikes do not serve as real restraints on corporations with lots of market power, and Kroger knows it.”

Background: 

  • Albertsons is in excellent financial condition. Our balance sheet is strong, with significant cash and relatively little debt. . . . Most importantly, the dividend does not affect any of our future plans to invest in our stores, our capabilities, and our employees. We will have more than sufficient resources to continue with our current strategic and operating plans. Our employees will continue to receive the increases in wages and benefits agreed to in our collective bargaining agreements, including our contributions to pension funds.” (bold in original).

During cross examination, Kroger CEO McMullen admitted that his corporation’s promises were not legally enforceable:

Q: And Kroger is only committing to not closing stores at the initial time of the merger; is that correct?

A: Correct.

Q: And, in fact, Kroger may, indeed, close stores later; is that right?

A: Yes.

Q: Meaning that Kroger could relocate a store; is that right?

A: Yes.

Q: Or consolidate two stores into one?

A: Correct.

During cross examination on September 5, 2024, Kroger’s Chief Marketing Officer Stuart Aitken admitted that in the past Kroger has siphoned money initially earmarked for ‘price investments’ to shareholder payouts instead.

Q: So, for example, this year Kroger has about $250 million set aside for price investments?

A: It does

Q: And the merchandising department and team can make the decision not to spend all of the price investment funds; is that right?

A: That’s right.

Q: And one reason they may do this is because Kroger, as a whole, may not want to spend that money. Is that fair?

A: That’s correct.

Q: For example, Kroger may not spend all its price investment funds to help Kroger achieve certain targeted earnings per share for a quarter; is that right?

A: That’s correct.

Q: And Kroger has, in fact, decided not to invest everything it had planned in order to meet certain earnings per share targets in the past; is that right?

A: That’s correct too