WSJ Albertson-Kroger merger case

English Course for Logistics & Distribution Students

Level: 4th Year University

Based on The Wall Street Journal Podcast

I. The Podcast Transcript

Date: Thursday, December 12th

Podcast: The Journal (The Wall Street Journal)

Topic: The blocked Kroger-Albertsons merger

Speakers

• Jessica Mendoza – Host/Journalist

• Patrick Thomas – WSJ Colleague covering the trial

Introduction

JESSICA MENDOZA: One of the biggest corporate dramas of the year played out recently inside a sweltering courtroom in Oregon. Our colleague Patrick Thomas was there covering the trial.

PATRICK THOMAS: It’s a smaller courtroom, not accustomed to these kinds of high-profile antitrust trials, and it got really hot in that courtroom. Everybody got packed together in the back benches, and it would get pretty toasty.

JESSICA MENDOZA: The case? The Federal Trade Commission was suing to block a merger between the country’s two largest supermarket chains, Kroger and Albertsons.

PATRICK THOMAS: At a high level, it was about the largest grocery store deal of all time, and whether these two companies combining would mean higher food prices for consumers.

JESSICA MENDOZA: The deal would have been worth $20 billion, and it would have created a mega grocery store operator. This week, months after the FTC filed its suit, a judge finally ruled on the case.

NEWS CLIP: The federal judge has blocked the merger of grocery giants Kroger and Albertsons after a three-week hearing. It’s a deal that didn’t check out.

JESSICA MENDOZA: And so you would think that the judge’s ruling here—no, you cannot push through with this merger—would be the end of the story, but was it?

PATRICK THOMAS: Of course not. Shortly after the judge made this decision, Albertsons decided they were going to sue Kroger for billions of dollars.

Background on the Merger

JESSICA MENDOZA: In 2022, Kroger, the country’s largest supermarket chain, announced plans to buy a big competitor, Albertsons. Kroger operates more than 2,700 supermarkets across the country, which means if you shop at a Ralph’s on the West Coast, a Mariano’s in the Chicago area, or a Harris Teeter in the Southeast, you’re shopping at a Kroger-operated store.

PATRICK THOMAS: And then on the other side of this, you have the second-biggest supermarket operator, Albertsons, which is a little bit more known on the West Coast. The name is a little bit less known, but think of Safeway, a storied name like that that falls under the Albertsons company.

JESSICA MENDOZA: A Kroger-Albertsons merger would have created a $200 billion company with about 4,500 stores across the United States. Back in February, the FTC sued to block this deal under antitrust law. What was the FTC’s case in trying to block the deal in the first place?

PATRICK THOMAS: So the FTC’s case, essentially, is you can’t take the number one and the number two biggest supermarkets, put them together and not expect there to be a loss in competition in the market and not expect consumers to feel that, and it would give Kroger enough dominance where they could raise prices unchecked.

JESSICA MENDOZA: But Kroger and Albertsons said, hold up. We may be the largest supermarket chains in the country, but we’re still small fries compared to some mega-corporations that sell groceries, especially Walmart.

PATRICK THOMAS: The company’s central case is that they’re in trouble because Walmart is actually the biggest seller of groceries in the United States, by a lot. Well over 20% of the grocery market share goes to Walmart, and Kroger’s only 9%. So people really go to Walmart for groceries, and their argument is we have to be on the same level as Walmart when it comes to scale and buying power. Kroger says if you want lower grocery prices, we need to be on that level.

II. Fill in the Blanks Exercise

Instructions: Complete the following sentences with the appropriate words from the text. The words to use are marked with asterisks (*) in the word bank below.

Word Bank: *merger* | *antitrust* | *dominance* | *competition* | *market share* | *supply chains* | *termination fee* | *breach* | *layoffs* | *consumer choice*

1. The FTC sued to block the _____________ between Kroger and Albertsons.

2. The case was brought under _____________ law to prevent monopolistic practices.

3. The FTC argued that the merger would give Kroger enough _____________ to raise prices unchecked.

4. Walmart controls well over 20% of the grocery _____________ in the United States.

5. The judge ruled that the merger would erode _____________ and lead to higher prices for consumers.

6. Albertsons sued Kroger for not paying the $600 million _____________.

7. Albertsons claims that Kroger committed a _____________ of the merger agreement.

8. Kroger may invest money back into their stores or _____________.

9. Albertsons’ CEO warned that in two to three years they might have to consider _____________.

10. If Albertsons closes stores, it could limit _____________ in certain areas.

III. Essential Vocabulary

Key Terms and Expressions from Logistics & Distribution

IV. Comprehension Questions (Multiple Choice)

Instructions: Choose the best answer for each question. Questions range from easy to very difficult. The answer key is provided at the end of this section.

A. Background on the Merger (Questions 1-5)

1. What was the total value of the proposed Kroger-Albertsons merger? (Easy)

• a) $10 billion

• b) $20 billion

• c) $50 billion

• d) $200 billion

2. Which company operates the Safeway brand? (Easy)

• a) Kroger

• b) Albertsons

• c) Walmart

• d) Amazon

3. What percentage of the U.S. grocery market does Walmart control? (Medium)

• a) 5%

• b) 9%

• c) 14%

• d) Over 20%

4. What was the main argument of the FTC in blocking the merger? (Medium)

• a) The merger would be too expensive

• b) The merger would reduce competition and lead to higher consumer prices

• c) The companies were financially unstable

• d) The merger violated international trade laws

5. If Kroger and Albertsons had merged, approximately how many stores would the combined company have operated? (Difficult)

• a) 2,700 stores

• b) 4,500 stores

• c) 6,000 stores

• d) 10,000 stores

B. The Trial (Questions 6-10)

6. Who was the star witness for Kroger during the trial? (Easy)

• a) The Kroger CFO

• b) Rodney McMullen, Kroger CEO

• c) The Albertsons CEO

• d) Judge Adrian Nelson

7. In which decade did Rodney McMullen witness a Walmart opening near a Kroger store in Dixon, Tennessee? (Medium)

• a) 1980s

• b) 1990s

• c) 2000s

• d) 2010s

8. What year did Amazon purchase Whole Foods, which McMullen called a ‘watershed moment’? (Medium)

• a) 2015

• b) 2017

• c) 2019

• d) 2021

9. What specific item does Rodney McMullen keep in his office as a reminder of the Amazon-Whole Foods deal? (Difficult)

• a) A newspaper article

• b) A copy of the local business journal

• c) A Whole Foods shopping bag

• d) An Amazon package

10. According to the trial testimony, how soon did Albertsons predict they would struggle to compete if the merger didn’t happen? (Difficult)

• a) Six months

• b) One year

• c) Two to three years

• d) Five years

C. The Ruling (Questions 11-15)

11. Who was the judge that ruled against the merger? (Easy)

• a) Judge Adrian Nelson

• b) Judge Robert Smith

• c) Judge Maria Rodriguez

• d) Judge Thomas Williams

12. In which state was the trial held? (Easy)

• a) California

• b) Oregon

• c) Washington

• d) Texas

13. What was Judge Nelson’s main reasoning for blocking the merger? (Medium)

• a) The merger was too expensive

• b) The chains compete against each other in a way that benefits consumers

• c) The companies didn’t have proper legal representation

• d) Environmental concerns

14. How long did the trial last? (Medium)

• a) One week

• b) Two weeks

• c) Three weeks

• d) One month

15. According to the podcast, which administration’s FTC oversaw this case? (Difficult)

• a) Trump administration

• b) Biden administration

• c) Obama administration

• d) Bush administration

D. Albertsons Sues Kroger (Questions 16-20)

16. How quickly did Albertsons sue Kroger after the judge’s ruling? (Easy)

• a) Less than 24 hours

• b) One week

• c) One month

• d) Three months

17. What was the value of the termination fee that Albertsons claimed Kroger failed to pay? (Medium)

• a) $200 million

• b) $400 million

• c) $600 million

• d) $800 million

18. According to Albertsons, what should Kroger have done to make the merger more likely to succeed? (Medium)

• a) Offered to sell more stores in areas with market overlap

• b) Increased the purchase price

• c) Hired better lawyers

• d) Waited for a different administration

19. What does Kroger claim about Albertsons’ lawsuit? (Difficult)

• a) It’s justified

• b) It’s baseless and an attempt to deflect responsibility

• c) It’s reasonable but premature

• d) It’s a negotiating tactic

20. What alternative actions might Kroger take now that the merger has failed? (Very Difficult)

• a) Close all their stores

• b) Share repurchases or invest in stores and supply chains

• c) Immediately merge with Walmart

• d) Declare bankruptcy

E. Implications for Consumers (Questions 21-25)

21. What is one potential negative consequence for consumers if Albertsons closes stores? (Easy)

• a) Lower prices

• b) More shopping options

• c) Limited consumer choice

• d) Better quality products

22. How much did Kroger promise to invest annually in lower prices if the merger had succeeded? (Medium)

• a) $500 million

• b) $1 billion

• c) $5 billion

• d) $10 billion

23. According to the FTC’s argument, why aren’t Amazon and Walmart considered direct competitors to traditional supermarkets? (Medium)

• a) They don’t sell groceries

• b) They operate in different markets

• c) They aren’t in direct competition with traditional supermarkets (despite selling groceries)

• d) They only sell organic products

24. What potential advantage does the ruling give to Amazon and Walmart? (Difficult)

• a) They must lower their prices

• b) They could potentially acquire other grocery stores without facing the same scrutiny

• c) They are required to merge with Kroger

• d) They lose market share

25. What type of retail presence might Amazon expand, according to industry speculation in the podcast? (Very Difficult)

• a) Online-only stores

• b) Brick and mortar presence

• c) Delivery-only services

• d) Virtual reality shopping

F. Political Context (Questions 26-30)

26. Which administration’s FTC was described as ‘pretty strict about mergers’? (Easy)

• a) Trump administration

• b) Biden administration

• c) Obama administration

• d) Bush administration

27. According to Patrick Thomas, what did some people wonder about the timing of the merger? (Medium)

• a) Whether it should have happened sooner

• b) Whether it would have been better to wait two years

• c) Whether it should have been international

• d) Whether it was legal

28. How many years has the Biden administration’s FTC been strict about mergers, according to the podcast? (Medium)

• a) Two years

• b) Four years

• c) Six years

• d) Eight years

29. What is Patrick Thomas’s conclusion about whether the merger would have succeeded under a different administration? (Difficult)

• a) It definitely would have succeeded

• b) It definitely would have failed

• c) We’ll never know the answer

• d) It would require congressional approval

30. What implicit suggestion does the podcast make about regulatory approaches to mergers between administrations? (Very Difficult)

• a) All administrations have identical policies

• b) Different administrations may have different levels of scrutiny toward mergers

• c) The FTC is completely independent from political influence

• d) Mergers are never political

G. The Supermarket Industry Today (Questions 31-35)

31. How does the podcast describe the supermarket industry’s profit margins? (Easy)

• a) Very high

• b) Low margins

• c) Medium margins

• d) Unpredictable margins

32. What term did Albertsons use to describe competition in the grocery industry? (Medium)

• a) A win-win game

• b) A zero-sum game

• c) A cooperative venture

• d) A friendly competition

33. According to Patrick Thomas, what behavior do supermarket competitors engage in? (Medium)

• a) Sharing pricing strategies openly

• b) Spying on one another

• c) Cooperating on supply chains

• d) Avoiding competition

34. What happens quickly if a supermarket becomes the ‘high-priced guy in town’? (Difficult)

• a) Customers remain loyal regardless

• b) Customers will leave very quickly for better deals

• c) The government intervenes

• d) Suppliers increase their prices

35. What will ultimately determine the impact of the blocked merger on consumers? (Very Difficult)

• a) Government regulations

• b) Whether food prices change over the next couple of years

• c) The size of future mergers

• d) International trade agreements

Answer Key

A. Background on the Merger

1. b) | 2. b) | 3. d) | 4. b) | 5. b)

B. The Trial

6. b) | 7. b) | 8. b) | 9. b) | 10. c)

C. The Ruling

11. a) | 12. b) | 13. b) | 14. c) | 15. b)

D. Albertsons Sues Kroger

16. a) | 17. c) | 18. a) | 19. b) | 20. b)

E. Implications for Consumers

21. c) | 22. b) | 23. c) | 24. b) | 25. b)

F. Political Context

26. b) | 27. b) | 28. b) | 29. c) | 30. b)

G. The Supermarket Industry Today

31. b) | 32. b) | 33. b) | 34. b) | 35. b)

V. Grammar Focus

This section covers the two most frequently used grammar structures in the podcast transcript.

Grammar Point 1: Modal Verbs

Overview

Modal verbs are auxiliary verbs that express possibility, ability, permission, obligation, or advice. They are extremely common in business English, particularly when discussing future scenarios, hypothetical situations, and predictions.

Common Modal Verbs and Their Uses

• WOULD – Used for hypothetical situations, predictions, and conditional statements

• Example: The merger would have created a $200 billion company.

• COULD – Indicates possibility, ability, or permission

• Example: They could buy up other grocery stores.

• MAY / MIGHT – Expresses possibility or permission (might suggests lower probability)

• Example: They might have to consider layoffs.

• SHOULD – Gives advice or indicates obligation/expectation

• Example: Kroger should have offered to sell more stores.

• CAN – Shows ability or possibility

• Example: You can’t take the number one and number two supermarkets and put them together.

Key Patterns from the Text

1. Modal + have + past participle (for past hypotheticals or unrealized actions)

• The deal would have been worth $20 billion.

• It could have empowered big retailers.

2. Modal + base verb (for present/future possibilities)

• This could limit consumer choice.

• Amazon could do more deals.

3. Negative forms (modal + not)

• You can’t take the two biggest supermarkets.

• They wouldn’t match Walmart.

Exercise 1: Modal Verbs (10 questions)

Instructions: Choose the correct modal verb to complete each sentence.

1. If the merger had been approved, it _______ a massive company.

a) will create | b) would have created | c) can create | d) must create

2. Amazon _______ acquire more grocery stores in the future.

a) will | b) should | c) might | d) must

3. You _______ expect lower prices if competition decreases.

a) can’t | b) must | c) will | d) could

4. Kroger _______ have worked harder to show the deal wasn’t anti-competitive.

a) can | b) will | c) should | d) must

5. Albertsons _______ consider layoffs in two to three years.

a) would | b) can | c) might | d) will

6. The merger _______ have led to higher consumer prices.

a) can | b) could | c) must | d) will

7. Walmart _______ experiment with new grocery strategies.

a) would | b) should | c) can | d) might

8. The combined company _______ not have matched Walmart’s market share.

a) can | b) would | c) will | d) must

9. Companies _______ be careful when pursuing large mergers.

a) might | b) should | c) would | d) can

10. The FTC _______ have approved the merger under different circumstances.

a) might | b) will | c) must | d) can

Answer Key – Exercise 1

1. b) | 2. c) | 3. a) | 4. c) | 5. c) | 6. b) | 7. c) | 8. b) | 9. b) | 10. a)

Grammar Point 2: Conditional Sentences

Overview

Conditional sentences express hypothetical situations and their consequences. They are essential in business discussions, especially when analyzing alternative scenarios and outcomes. The podcast uses conditionals extensively when discussing what might have happened if the merger had proceeded.

Types of Conditionals

• Zero Conditional (General truths)

Structure: If + present simple, present simple

Example: If you are the high-priced guy in town, customers leave quickly.

• First Conditional (Real future possibilities)

Structure: If + present simple, will + base verb

Example: If Albertsons closes stores, consumers will have fewer options.

• Second Conditional (Unreal/hypothetical present)

Structure: If + past simple, would + base verb

Example: If they merged, they would create a mega-operator.

• Third Conditional (Unreal past – most common in the text)

Structure: If + past perfect, would have + past participle

Example: If the merger had been approved, it would have created higher prices.

Key Patterns from the Text

1. Third Conditional (discussing what didn’t happen)

• If the companies had combined, they still wouldn’t have matched Walmart.

• If Kroger had offered more stores, the deal might have succeeded.

2. First Conditional (discussing possible future outcomes)

• If Albertsons closes stores, consumer choice will be limited.

• If Amazon wants to expand, it could acquire more stores.

3. Mixed Conditionals (combining timeframes)

• If the merger had been approved (past), prices would be higher now (present).

Exercise 2: Conditional Sentences (10 questions)

Instructions: Complete each sentence with the correct form of the verb in parentheses.

1. If the judge _______ (approve) the merger, Kroger and Albertsons would have combined.

2. If Albertsons _______ (close) stores next year, consumers will have fewer options.

3. If Kroger _______ (offer) to sell more stores, the FTC might have approved the deal.

4. If you _______ (be) the high-priced store in town, customers leave quickly.

5. If the merger _______ (succeed), the company would be worth $200 billion now.

6. If Amazon _______ (want) to expand, it could acquire more grocery chains.

7. If Walmart _______ (not be) so dominant, the merger might have been approved.

8. If the trial _______ (take place) under a different administration, the outcome might have been different.

9. If prices _______ (increase) after store closures, consumers will be unhappy.

10. If Kroger _______ (invest) more in supply chains, they would have been more competitive.

Answer Key – Exercise 2

1. had approved | 2. closes | 3. had offered | 4. are | 5. had succeeded

6. wants | 7. hadn’t been / weren’t | 8. had taken place | 9. increase | 10. had invested

VI. Essay Topic

Instructions: Write an essay of approximately 400 words on the following topic. Draw parallels between the American case from the podcast and the French retail situation, using your knowledge of French distribution and commerce.

Essay Question:

“The French retail grocery sector has undergone significant changes with the rise of e-commerce giants like Amazon and discount chains. Traditional French supermarket leaders such as Carrefour, E.Leclerc, and Auchan face increasing pressure to maintain their market positions. Drawing parallels from the Kroger-Albertsons case, analyze whether large-scale consolidation among traditional French retailers would be beneficial or detrimental to the French market. Consider the unique characteristics of the French distribution system, consumer preferences, and the role of both hypermarkets and local commerce.”

Writing Guidelines

• Structure your essay with a clear introduction, body paragraphs, and conclusion

• Draw parallels between the podcast case and the French retail situation

• Include business and logistics vocabulary from the course

• Present multiple perspectives before stating your own position

• Use appropriate modal verbs and conditional structures

• Consider short-term and long-term consequences

• Target length: 400 words

Key Themes to Consider

11. The French Retail Landscape: How do French retailers (Carrefour with 20% market share, E.Leclerc with 22%, Auchan, Intermarché) compare in scale and strategy? What are the unique features of French distribution (hypermarkets, drive-through services, local markets)?

12. Amazon’s Impact on France: How has Amazon’s expansion in France (including Amazon Fresh and partnerships with Monoprix) affected traditional retailers? Would a merger between major French chains help them compete against Amazon?

13. Cultural and Economic Considerations: How do French consumers value local products, fresh markets, and shopping experience? What role does the French government play in regulating retail consolidation (Autorité de la concurrence)?

14. Employment and Local Commerce: What would be the impact on employment in France? How would consolidation affect small suppliers and local producers who work with multiple chains? Consider the importance of “circuits courts” (short supply chains) in France.

15. Lessons from the Kroger-Albertsons Case: What parallels can be drawn between the American and French situations? What lessons from the FTC’s decision might apply to French competition authorities? How might French and American regulatory approaches differ?