Kroger CEO vows $1B price cut on groceries if Albertsons merger closes

A possible $24.6 billion deal between supermarket rivals, Kroger and Albertsons, has hit another roadblock with the U.S. government, but the CEO has pledged to cut prices by $1 billion on day one to try and save the proposed deal.

After the U.S. government's request for a preliminary injunction that would block the deal, chief executive of the nation's third-largest general retailer Rodney McMullen took the stand in a federal courtroom in Oregon on Wednesday as part of a three week hearing to defend the merger with Albertsons.

McMullen argued that the move would allow the company to drop prices and compete with bigger retail companies like Walmart, Amazon, and Costco.

The definitive merger agreement was first announced in October 2022 and last month the Federal Trade Commission, and states of Colorado and Washington, filed a lawsuit to stop the merger, arguing it would "eliminate competition" in the 22 states where the companies currently compete and raise grocery prices for millions during a time when Americans are already paying more due to high inflation on food.

On Wednesday, McMullen said Albertsons prices are 10 to 12% higher than that of Kroger's and argued that the merged company could aim to shrink that gap in its new strategy to retain customers.

If combined, Albertsons and Kroger would control around 13% of U.S. grocery sales, which is still short of Walmart that currently controls nearly 22%.

Cincinnati-based Kroger operates 2,800 stores across 35 states, with brands including Ralphs, Smith's and Harris Teeter.

Boise-based Albertsons operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw's.

If the deal does go through, it would be the largest grocery chain merger in U.S. history.

Food prices continues to come up as a recurring topic for politicians, with Vice President Kamala Harris saying on the campaign trail that if elected President, she would crack down on prices.

Former President Donald Trump has campaigned on inflation and recently reminded the public that grocery prices increased by more than 20% under President Joe Biden.

More details will emerge from the multi-court hearing on the proposed grocery chain merger, which will include upcoming testimony from Albertsons CEO Vivek Sankaran.