It’s hard to imagine Lina Khan’s F.T.C. ignoring Kroger’s acquisition of its rival Albertsons, for $24.6 billion, at a time when Americans are rightfully anxious about food costs and rising inflation—so why attempt the merger at all? In this evening’s issue, I look at the off-camera action behind the deal, before turning to Morgan Stanley’s hot potato risk management strategy and Ben Bernanke’s legacy in light of his winning the Nobel Prize in economics.
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Where to begin with Kroger’s acquisition of its rival, Albertsons, for $24.6 billion? It’s pretty clear that the proposed merger of the nation’s two largest supermarket chains will be a major test for Biden’s Justice Department and its antitrust division. It’s also clear that the executives and boards of directors for both Kroger and Albertsons know that there is serious antitrust risk in this deal. They are already trying to position the combination as a bulwark against both Walmart and Amazon as they both continue their encroachment into selling groceries—itself a compelling argument. They have also admitted the combined company will have to divest a bunch of stores where the two companies have overlapping properties, particularly in California and other Western states.
On the one hand, being upfront about the likely Justice Department challenge is good politics. But, on the other hand, do they really think they can get this deal through a Justice Department that is making no secret of its willingness to challenge horizontal mergers? After all, the D.O.J. has already gone to court to block the...