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The Arizona Attorney General’s Office will investigate the proposed merger between supermarket giants Kroger Co. and Albertsons Cos., checking for anti-trust violations that could raise grocery prices and looking for signs that store closures or employment changes might harm local communities.
In Arizona, Kroger operates Fry’s Food & Drug Stores, Fry's Mercado, Fry's Marketplace and Smith’s stores, while Albertsons operates supermarkets under the Albertsons and Safeway brands. They account for nearly half of the state’s grocery market sales.
The two companies are major players in the grocery business around the state and nation, raising concerns that the combined corporation could close or divest certain stores, cut jobs or take other potentially detrimental steps.
"In addition to skyrocketing prices, the proposed merger raises questions about the potential for store closures that could force consumers to travel farther for groceries — possibly creating food deserts that disproportionately affect minority communities,” Attorney General Kris Mayes said in a prepared statement.
Food deserts are low-income, high-poverty areas where residents have limited access to affordable, nutritious groceries. About 17% of Arizonans lived in food deserts as of a 2015 study by the U.S. Department of Agriculture. Arizona’s food deserts are clustered in the far northwest and southeast corners of the state, in southern Arizona around Ajo and, especially, in the tribal areas of northeast Arizona.
Only three of Albertsons' 30 Arizona stores are outside of the Phoenix or Tucson areas, but 40 of the 104 Safeway stores are located outside of the state’s two main metro areas. Of roughly 129 Fry’s and Smith's stores in Arizona, all but a dozen or so are located in the Phoenix or Tucson areas.
Kroger and Albertsons have said they might need to spin off certain stores to satisfy regulators’ concerns about having too high of a market share in certain areas.
Grocery inflation also a concern
But even in large cities, grocery prices have risen, and reduced competition could hasten that trend. Metro Phoenix had the nation’s second-highest overall urban inflation rate in 2022 at 9.5%, second only to 9.9% for Miami/Fort Lauderdale, according to the Bureau of Labor Statistics.
Around the Valley, prices for food consumed at home jumped 11.2% on average last year, led by an 18.3% surge for milk/dairy products, a 13.4% increase for cereals/baked goods and a 11.3% rise for fruits/vegetables.
The Attorney General’s Office announced plans to host a series of “listening sessions” around the state in coming weeks to elicit comments from families and communities that could see harm from the proposed merger.