A $20 Billion Deal Depends on Whether You Think Walmart Is a Supermarket

livemint.com:

Where you go to buy a loaf of bread or a bunch of bananas could help determine the fate of the biggest-ever supermarket merger deal. In Greeley, Colo., shoppers can head to King Soopers in the center of town, owned by supermarket giant Kroger—or they can try a Safeway, owned by rival grocery-store operator Albertsons, about 2 miles away. On the northeast side is a Walmart that sells groceries, and it also has a Sprouts Farmers Market, as well as about a dozen dollar stores within 7 miles of town.

Kroger and Albertsons, which are fighting in court to defend their roughly $20 billion merger deal, argue that markets like Greeley show how intensely competitive the food-retail business has become. Federal antitrust enforcers, who sued last month to block the Kroger-Albertsons deal, look differently at markets such as Greeley, a city of more than 100,000 about an hour north of Denver. By definition, Walmart and Target historically haven’t been classified as supermarkets.

Sprouts ranks as a premium natural and organic store. Dollar stores are too limited in what they sell to be considered grocery competitors. Under the Federal Trade Commission’s view, if Kroger and Albertsons merged, they would be the only major supermarket operator left in town.