On Thursday, a community review board advised the Oregon Health Authority to decline Kroger’s $24.6 billion acquisition of its competitor, Albertsons, which owns Safeway. The board opined that the merger could lead to a decrease in competition among the pharmacies of the grocery stores, potentially causing harm to consumers, and failing to enhance Oregon’s access to services.
The proposed sale of Fred Meyer and QFC, two of Oregon’s largest grocery chains owned by Kroger, was assessed by a seven-member health board convened by state health officials.
Over 150 pharmacies located in Albertsons, Safeway, Fred Meyer, and QFC stores across the state would be impacted by the deal.
In October 2022, Kroger and Albertsons revealed their intention to merge. As part of their efforts to address potential antitrust concerns, the two grocers have decided to divest 52 stores that have retail pharmacies. These stores will be sold to C&S Wholesale Grocers.
After conducting six meetings and holding one public hearing this spring, a community review board comprising of two pharmacists, one representative of the Service Employees International Union, and four Oregon residents has made a recommendation based on their analyses.
At the meetings, the members expressed their concerns regarding the current problems with pharmacy access, the inexperience of C&S Wholesale Grocers in managing pharmacies, and the absence of definite commitments from Kroger and Albertsons in resolving these issues. Additionally, they were apprehensive about the possibility of losing access to pharmacies because of changes in the accepted insurance plans at each location.
The board made a decision on Thursday that the merger would not be advantageous for the people of Oregon and might even exacerbate existing issues. They pointed out that the merger would form the most significant retail pharmacy chain in Oregon, which could lead to increased prices for patients due to reduced competition. Additionally, they cautioned that C&S’s lack of expertise could potentially lead to the closure of some pharmacies.
According to a recent study of the industry, Oregon currently ranks second to last in the nation when it comes to the number of retail pharmacies available per capita.
According to Kroger, the merger would level the playing field with retail giants like Amazon and Walmart, ultimately leading to increased competition, lower prices for customers, and a wider range of products.
In a statement released on Thursday, Kroger made a commitment to not lay off any frontline workers or close any stores or pharmacies due to the merger. This ensures that families can still work with pharmacists they know and trust. Kroger also expressed their dedication to Oregon communities, stating that the merger will increase access to crucial health services and resources, ultimately helping these communities to thrive.
In an effort to address the concerns raised by the review board, Kroger Health President Colleen Lindholz wrote a letter to the Oregon Health Authority on Wednesday. She emphasized that the sale to C&S would not result in the closure of any stores or pharmacies.
In a letter, Lindholz expressed confidence in C&S’s ability to operate stores and pharmacies after the merger. According to Lindholz, C&S’s regional expertise and resources, combined with those gained through the divestiture package, will position the company for success. Additionally, experienced leaders from the Pacific Northwest will work alongside C&S to ensure that the stores and pharmacies continue to serve their respective communities.
As part of the Health Care Market Oversight program established by the Oregon Legislature in 2021, the Oregon Health Authority is conducting a regulatory review to examine business deals that involve health care operations, including pharmacies. The agency has the authority to either approve the proposed transaction, approve it with specific conditions, or reject it altogether, in the case of Kroger and Albertsons’ proposed deal.
State and federal agencies are reviewing the proposed merger, which has also been the subject of a lawsuit filed by the Federal Trade Commission and a number of states, including Oregon, on February 21st. The lawsuit aims to prevent Kroger from acquiring Albertsons, citing concerns about potential negative impacts on competition and workers.
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