Biggest Supermarket Merger in History with C&S Wholesale Grocers in the Spotlight.

The stage is set for what could be the largest supermarket merger in U.S. history. Kroger's $20 billion bid to acquire rival Albertsons faces a crucial test in an antitrust trial starting Monday in Oregon. The Federal Trade Commission (FTC) is pushing back, arguing that the merger would stifle competition and drive up prices. However, a key part of the deal hinges on C&S Wholesale Grocers, a 106-year-old grocery distributor, which has been brought into the spotlight.

Kroger and Albertsons have proposed selling 579 stores to C&S as a remedy to the FTC's concerns. This divestiture is intended to mitigate the merger's impact on competition by creating a new, significant player in the grocery market. C&S, known for operating Piggly Wiggly and Grand Union stores, would see its store count rise to 744, positioning it alongside major competitors like Trader Joe’s and Whole Foods.

Eric Winn, C&S’s CEO, is optimistic about the company’s future, asserting that it will become a major industry leader. He believes that acquiring these stores will not only enhance C&S’s retail footprint but also give it greater leverage with suppliers, benefiting its extensive network of grocery clients. However, the FTC remains skeptical, citing C&S’s history of acquiring and then closing or selling many of its stores. The Commission is concerned that C&S may lack the capability or desire to effectively operate the new stores long-term.

Adding to the drama, internal documents reveal that C&S’s former CEO questioned whether the company would actually keep the acquired stores open or eventually close them. This uncertainty adds a layer of complexity to the trial, as the FTC seeks a preliminary injunction to potentially halt the merger.

For Kroger, the merger is seen as a strategic move to better compete with discount giants like Costco and Walmart. Kroger’s CEO, Rodney McMullen, has emphasized that the merger would help bring lower prices to customers from day one. But University of Buffalo School of Law professor Christine P. Bartholomew warns that if the merger proceeds, it could set a precedent for more consolidation in the industry, potentially leading to higher prices and reduced consumer choice.

As the trial unfolds over the next few weeks, the fate of this landmark merger—and its implications for the grocery industry and shoppers—hangs in the balance. Will C&S prove its capability to handle the expanded operations, or will the FTC's concerns about competition prevail?

Information is sourced from The Wallstreet Journal.