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The Federal Trade Commission (FTC) is probing Albertsons executives for allegedly deleting text messages related to the company's $24.6 billion acquisition by Kroger amid a three-week antitrust hearing in a federal court in Portland.
On Tuesday (September 3), FTC lawyer questioned Albertsons' Denver division president Todd Broderick about missing texts on his device. Broderick admitted that he might have deleted texts but it is not his intention to hide information.
Albertsons Execs Allegedly Deleted Important Texts Linking to Proposed Merger
Four Albertsons executives face accusations of destroying potential evidence as the FTC look into the proposed merger. According to Oregon Live, the missing messages reportedly included conversations between Broderick and Scott Shores, Albertsons' senior HR director.
The missing texts reportedly discussed the merger's effect on prices following Kroger's announcement and FTC's instructions to preserve conversations. The FTC argues that these texts could have an effect to their case against the merger.
Broderick admitted deleting texts as part of his regular routine, treating them like items on a to-do list, but claimed he did not recall specific messages related to the proposed merger. FTC attorneys are arguing that the missing texts might have been damaging to Albertsons' defense of the merger.
Meanwhile, Albertsons CEO Vivek Sankaran is expected to testify this week, with the FTC alleging he also deleted relevant messages. Nicholas Hill, an economic consultant for the FTC, testified that the merger would reduce competition and questioned whether a plan to sell some stores to a new competitor, C&S Wholesale Grocers, would address these concerns.
Kroger CEO Defends Merger
Kroger CEO Rodney McMullen claimed that the merger would lower prices and improve competitiveness against other major retailers like Walmart and Amazon. McMullen said that Albertsons' prices are higher than Kroger's and the merger would help reduce this gap.
The proposed merger sparked criticism from the FTC and labor unions, who are concerned about potential job losses and store closures. Critics argue that the merger could create "food deserts" and reduce workers' wages and benefits.
Under the merger agreement, Kroger and Albertsons plan to sell 579 overlapping stores to C&S Wholesale Grocers. Despite this, the FTC remains concerned about C&S's ability to manage these stores. C&S CEO Eric Winn expressed confidence in handling the new stores, but internal FTC documents reveal doubts about the deal, said CBS News.
As the hearing progresses, US District Judge Adrienne Nelson will decide whether to grant a preliminary injunction to block the merger. If blocked, the FTC plans to start in-house hearings in October.
Moreover, Kroger filed a lawsuit against the FTC, challenging the agency's proceedings as unlawful and seeking a federal court decision on the merger.
Several state attorneys general supported FTC's effort to block the merger. Washington and Colorado have filed separate cases in state courts against the deal.
Related Article: Kroger Executive Admits Company Raised Milk and Egg Prices Beyond Inflation Needs
