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Is Schnucks-to-Kroger sale an anti-trust violation?

Congressman Steve Cohen sent a letter to U.S. Atty. Gen. Eric Holder requesting an investigation into whether the sale of Schnucks supermarkets to Kroger supermarkets in Memphis presents any anti-trust violations. Congressman Steve Cohen on Thursday sent a letter to U.S. Atty. Gen. Eric Holder requesting an investigation into whether the sale of Schnucks supermarkets to Kroger supermarkets in Memphis presents any anti-trust violations.

The Memphis-based Kroger Delta Division, a division of The Kroger Co. (NYSE: KR), announced last Friday (Sept.2,) its purchase of eight Memphis-area Schnucks stores, with plans to convert and re-open under the Kroger name over the next few weeks.
Kroger operates 37 stores in the Memphis metropolitan area. The new deal increases the number of Kroger stores to 43, with two of the acquired Schnucks locations replacing two smaller existing Kroger locations.

In his letter to Holder, Cohen indicated his concern that “consumers may face increased prices and diminished choice as a result of this deal and I ask that you determine whether it will negatively affect competition.”
As a result of the sale, Kroger could control substantially more than 43 percent of the market share, with no comparable competitor, Cohen wrote, also noting the impact that the closing of stores would have on current Schnucks employees.

In the Memphis area, 1,193 people work in Schnucks stores, he wrote.

“And while employees have been told that they may reapply for their jobs at Kroger, there is no guarantee that they will be re-hired, particularly since several stores will be closing. At a time of heightened unemployment in Memphis, this could be especially damaging to our community.”

Without any equivalent competitors, there is a risk that Kroger may be able to take advantage of its market power to increase prices and reduce consumer choice, Cohen concluded. “I respectfully request that you investigate the competitive impact of this sale to ensure that consumers are protected.”

Reduce-inventory sale

The Kroger-Schnucks deal is keying a reduce-inventory sale at area Schucks stores through Saturday (Sept. 10).

Here are the sell-off sale hours: Thursday and Friday, 8 a.m. to 8 p.m.; Saturday, 8 a.m. to 6 p.m. Fifty percent markdowns on existing markdowns are available.

In Kroger’s announcement of the deal to buy Schnucks, Kroger Delta Division president noted that Kroger had served the Memphis community proudly for over 60 years.

“Kroger has demonstrated its commitment to the Memphis area by investing over $70 million on remodels, expansions and fuel centers over the last five years.  We continue to focus on upgrading our store base in an effort to provide our customers the best shopping experience possible.  With this acquisition, we are pleased to be able to provide more convenient locations for our customers to shop at in the Memphis area.”

The following Schnucks locations will be converted to Kroger: 1761 Union Ave.; 1212 East Shelby Dr.; 799 Truse Parkway; 576 South Perkins Rd.; 7735 Farmington Blvd., Germantown; 9025 US Highway 64, Lakeland; 2942 Kirby Whitten Rd., Bartlett; and 3926 Goodman Rd., Horn Lake

The Schnucks Store at 1212 East Shelby Dr. will be converted and re-open as Kroger and replace a smaller Kroger Store at 1234 Finley in Whitehaven. The Schnucks Store at 9025 US Highway 64 in Lakeland will also be converted and re-open as Kroger and replace a smaller Kroger Store at 9050 US Highway 64 in Lakeland.

“We plan to convert these stores and re-open within two weeks after they close.  Our primary goal is to minimize the inconvenience to our customers as we transition the stores to Kroger,” said Prestidge said.

“While the acquired stores will be temporarily closed during the conversion process, the pharmacies and in-store banks will be accessible and remain open to customers during regular business hours.”

Pharmacy customers in the Schnucks locations that will close permanently will have their prescriptions available at the nearest Kroger pharmacy to avoid any disruption in service.  During the conversion process, all Schnucks pharmacy customers will receive notification from Kroger to inform them of their new Kroger pharmacy location and information about how to move their records to a more convenient Kroger location.

Customers with questions should contact Kroger at 1-800-KROGERS.

What about the Schnucks employees?

On Wednesday (Sept. 7), Kroger started interviewing non-management Schnucks  workers. Still, many employees are expected to be out of work because there just won’t be enough positions available.

“We are always looking for great people to become part of the Kroger team.  We have positions available in many of our stores and we will also need to staff the newly acquired stores,” said Prestidge.  “We will be relying on many of the Schnucks employees to fill those positions.”

Kroger’s Delta Division, based in Memphis, currently operates 109 stores and 68 fuel centers in five states under the Kroger banner in Memphis and west Tennessee, Arkansas, Mississippi, southern Missouri, and southwest Kentucky.

In making the announcement, Kroger noted that the Delta Division and its customers contributed more than $3.5 million in support of their local communities, community marketing efforts focused on hunger relief, education and women’s health issues.

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