On the second day of the trial regarding Colorado’s attempts to block the Kroger-Albertsons merger, Kroger’s Senior Director of Pricing, Andy Groff, testified about a pricing strategy called the “mountain no-comp zone” implemented in several mountain towns in Colorado. Under this program, prices were raised in eight City Market stores on the state’s Western Slope where Kroger faced less competition. The state argues that the merger would harm consumers by eliminating competition, while Kroger contends that it would lead to better deals for customers.
Groff explained that the zone was created to pass on rising costs due to fuel and labor expenses, and was successful in raising prices without losing customers. Kroger also implemented a similar program in Washington. The attorney general’s office questioned Groff regarding the program as part of the state’s case against the merger.
If the merger is approved, Kroger plans to sell Safeway stores to help facilitate the deal. The state highlighted that the “no-comp stores” have no Safeway competitor nearby, and raised questions about the impact on competition. Groff indicated that more stores could potentially be added to the pricing zone in the future, but none have been added so far.
Overall, the trial is highlighting the potential impact of the merger on competition and pricing in the grocery sector in Colorado. Both the state and Kroger are presenting their arguments on whether the merger would benefit or harm consumers in the state.
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Photo credit denvergazette.com
