Kroger and Albertsons’s recent decision to merge is a potential $24.6 billion deal that will likely interest the Federal Trade Commission. Antitrust hawks should be aware of two things about this proposed deal: the relevant-market fallacy, and how the deal fits into the grocery market’s century-long tradition of continuous change, disruption, and innovation.
First is the relevant-market fallacy, which I’ve written about before. This means defining a company’s relevant market very narrowly in order to make the company look more dominant than it really is. For example, Apple has a monopoly on the iPhone market — but not on the smartphone market. Which of these market definitions is more realistic?
Kroger and Albertsons are the country’s two largest supermarket chains. They have a combined market capitalization of about $47 billion, and combined revenues of $209 billion. For comparison, Germany-based Aldi is America’s third-largest supermarket chain, with $134 billion in 2021 sales, though it is also the fastest-growing.
Notice that up to now I have only used the term “supermarket” to describe Kroger, Albertsons, and Aldi. This was on purpose.
Read the full article on National Review.