Prospects for Kroger’s $24.6 billion acquisition deal with the Albertsons grocery chain made progress last month after the companies moved to demonstrate to the Federal Trade Commission that the merger would comply with antitrust rules.

Taken Nov. 15, the step means the FTC has 30 days to either accept the deal or file a lawsuit to block it.

Concerns over the deal have been raised in places such as Steamboat Springs, where Kroger operates a store under the City Market brand and Albertsons operates a Safeway. Critics have pointed to the prospect of the merger leading to a store closure or negatively impacting consumers who shop at the stores, as well as farmers and ranchers who sell to them.

Colorado Attorney General Phil Weiser, who stopped in Steamboat during a statewide listening tour over the proposed deal in August, is working with other states’ attorneys general to explore the option of contesting the deal in court.

In a statement, a spokesperson for Weiser’s office said, “the attorney general is leading the multistate review of the merger to ensure it is lawful, does not undermine competition and is fair to consumers, workers, farmers and suppliers.”

The head of the grocery, pharmacy and restaurants investment banking practice at Solomon Partners, Scott Moses, spoke about the proposed merger and its potential impacts in Colorado communities like Steamboat where Kroger and Albertsons both operate locations.

Underscoring the importance of the deal amid a continued rise of national discount grocers like Walmart, Target and Amazon, in terms of an “existential threat” they pose to supermarket grocers like Kroger and Albertsons, Moses noted Walmart is the country’s No. 1 grocer “by a very, very wide margin.”

“You might not know that Walmart has a $314 billion U.S. grocery business that has quadrupled in the last 20 years,” Moses said. “Its grocery business is actually three times the size of Kroger, so $200 billion more, three times Costco, five times Albertsons and Amazon and roughly as large as all four of those companies combined. Everyone has had to lower prices and gross margin to compete with these fast-growing national discount peers.”

In Steamboat, where Walmart offers a limited selection of groceries and there are few options outside of City Market, Safeway and Natural Grocers, the fear lies in how decreased competition could affect both consumers and local suppliers.

Tyler Garrett, director of government relations for Rocky Mountain Farmers Union, said the group’s concerns over the merger rest on its potential impact on the livelihoods of Routt County farmers and ranchers.

“Due to the decrease in competition and increase in market concentration, large grocery chains — including Kroger and Albertsons — have been able to force suppliers into selling their goods at a price that is untenable for many family farmers and ranchers to be able to survive,” Garrett wrote in a letter to the Steamboat Pilot & Today in the days following the attorney general’s visit. “According to the USDA Economic Research Service, only 14.3 cents of every dollar spent on food is paid to farmers and ranchers. If Kroger and Albertsons were allowed to merge, this would only aggravate these issues due to the merged company’s power to demand unsustainable price points from suppliers.”

To help ease concerns over decreased competition and potential store closures, and as part of its push to demonstrate to the FTC that the deal will comply with federal antitrust rules, Kroger, which owns about 150 stores in Colorado, and Albertsons, which operates 105 locations, announced in September plans to sell roughly 50 stores in Colorado to New Hampshire-based C&S Wholesale Grocers.

Moses said he could not comment on the regulatory specifics of the third-party deal or which specific stores might be acquired. However, he said it would be “reasonable to infer” that in cases where the companies’ stores are in close proximity to each other and additional competition is scarce, one of the stores would likely be sold to C&S.

“It is certainly safe to assume that that would be the kind of dynamic the government would be looking at as far as whether those stores would be part of the divestiture package,” Moses said, adding that C&S likely would either “be buying or licensing the banners of these stores such that there would be continuity for customers and comfort, which really is important.”

Addressing concerns like those articulated by Garrett, Moses said he believed Kroger intended to increase the number of products bought from local suppliers.

“Guys like Walmart and Costco, the largest national discount grocers, and Amazon of course, they tend to buy from national suppliers, and they tend not to be as focused, because they are national grocers, on the local nature of their stores,” Moses said. “Conversely, Kroger, Albertsons and many other supermarkets, they tend to be a little bit more focused on their local communities.”

This story is from Steamboat Pilot & Today.