Cohen Requests Dept. of Justice Investigation into Sale of Schnucks to Kroger Supermarkets

WASHINGTON, D.C. – Congressman Steve Cohen (D-TN-9) today sent a letter to U.S. Attorney General Eric Holder requesting an investigation into whether the sale of Schnucks supermarkets to Kroger supermarkets in Memphis, Tennessee presents any anti-trust violations.

Congressman Cohen’s letter is posted below:

September 8, 2011

The Honorable Eric H. Holder, Jr.
Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001

Dear Attorney General Holder:

I am writing to ask that the Department of Justice investigate whether the recently announced sale of local Schnucks supermarkets to Kroger supermarkets in Memphis, TN presents any anti-trust violations. I am concerned 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 you may know, in the Memphis market Schnucks is the successor to Seessel’s Supermarkets, which was a Memphis institution for generations. Ownership of Seessel’s changed hands a few times in the late 1980s and 1990s, including to Albertson’s in 1998, but always continued to operate as Seessel’s until it was purchased by Schnucks in 2002. Both Seessel’s and Schnucks provided competition to the other major supermarket chain in Memphis, Kroger.

As Schnucks departs the Memphis market, Kroger plans to convert 8 Schnucks stores into Kroger stores with 5 other Schnucks and Kroger stores closing, giving Kroger a total of 43 stores in the region. It has been reported that before the sale, Kroger accounted for approximately 30 percent of grocery sales in the Memphis metropolitan area while Schnucks accounted for approximately 13 percent of the grocery sales. In the City of Memphis itself, these figures are likely to be much higher. Therefore, as a result of the deal, Kroger could control substantially more than 43 percent of the market share, with no comparable competitor.

It is also important to note the impact that closing these stores will have on current Schnucks employees. 1,193 people work in Memphis area Schnucks stores 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.

Although Memphis does have some smaller grocery stores as well as larger stores like Wal-Mart that include a grocery store component, many consumers do not find these stores to be true substitutes for a supermarket. Many consumers do not feel comfortable shopping in the sort of massive big-box retailers that Wal-Mart represents. Other large stores like Costco and Sam’s Club require membership fees that may be unaffordable, and many smaller stores do not have the variety of products and services that a supermarket generally offers. As one local columnist wrote, “[W]hat I want – and I bet you do, too – is a great store where I can shop at a bakery, get top-quality meats, good cheeses and deli items, specialty foods and still pick up paper towels and cleaning products at a reasonable cost.” I fear that with too much control of the market in the hands of one grocery store chain, Memphians will be deprived of this simple request.

Without any equivalent competitors, there is a risk that Kroger’s may be able to take advantage of its market power to increase prices and reduce consumer choice. I respectfully request that you investigate the competitive impact of this sale to ensure that consumers are protected. I have enclosed several articles from the Memphis Commercial Appeal that describe the issue further and I would be happy to provide you with any additional information you may request. Thank you for your attention to this matter.

As always, I remain,

Most sincerely,


Steve Cohen
Member of Congress