THREE major grocery retailers have agreed to settle a civil law enforcement complaint.
The grocers involved — Safeway, Albertsons, and Vons — will pay nearly $4 million after being accused of false advertising and unfair competition.
The settlement stems from allegations that the grocers charged customers higher prices than advertised at their California locations.
Safeway, Albertsons, and Vons were found to have inaccurate weights on some of their product labels, according to SupermarketNews.
The lawsuit claims that several products sold by weight, including produce, meats, and baked goods, contained less product than the labels indicated.
These violations, along with overcharging at checkout, prompted legal action from California’s Sonoma County District Attorney’s Office.
“Trusting companies to sell products to consumers that are accurately weighed and priced, especially in today’s economy, is a priority to my office,” said Rodriquez, per the outlet.
MORE TO KNOW
The settlement also includes an injunction preventing the grocers from engaging in false or misleading advertising and banning 14 different unfair practices.
This includes misrepresenting product weights or failing to disclose exclusions in promotional programs.
This includes promos like “Just for U” or club card discounts.
As part of the resolution, the grocery chains must implement a price accuracy program to prevent future overcharging.
The program offers compensation of up to $5 to customers who report discrepancies between the advertised price and the price charged at checkout.
Safeway, Albertsons, and Vons operate 589 stores throughout California.
ON DEFENSE
In a related development, Rodney McMullen, CEO of Kroger, defended the company’s proposed $24.6 billion merger with Albertsons during a federal court hearing last month.
McMullen argued that the merger would help the combined grocery giant lower prices and better compete with large-scale retailers like Walmart, Costco, and Amazon.
The deal has faced legal challenges from the Federal Trade Commission, which is seeking to block the merger with a preliminary injunction.
Eleven questions for Kroger
Senators Elizabeth Warren and Bob Casey asked the CEO of Kroger to answer eleven questions about AI, labels, and Microsoft's EDGE technology:
- How many Kroger grocery stores currently use EDGE or other ESL platforms?
- How many customers are served by these stores?
- Did any external entities advise Kroger to adopt EDGE and/or continue using EDGE?
- If yes, who are those external entities?
- Has Kroger prepared internal estimates regarding the potential to increase prices or profit margins by adopting dynamic pricing with EDGE?
- How does Kroger establish dynamic prices using the EDGE system?
- What factors does Kroger consider when changing prices? Please include a description of any time- or volume-based considerations.
- How does Kroger inform customers of recent or upcoming price changes?
- How far in advance does Kroger inform customers of price increases that will be implemented using the EDGE system?
- For all items that have been subject to dynamic pricing using EDGE, what is the average percentage change in price of those items over the first six months of using the system?
- For what percentage of items has the price increased over the first six months of using the system?
- Has Kroger ever used EDGE to change the price of an item more than one time within the same day?
- If not, does Kroger intend to do so in the future?
- If yes, please list:
- The locations at which Kroger has changed the price of an item more than once in a day.
- The complete list of products for which Kroger has changed the price more than once in a day.
- Will Kroger use customers’ data to institute personalized pricing on its ESL platforms?
- Will customers have the option to opt out of the collection of personal data through ESL platforms?
- What safeguards has Kroger put in place to protect against violations of consumer privacy related to ESL platforms?
- How will Kroger ensure that it will not use customer data related to ESL platforms to discriminate based on protected classes, such as race, gender, or age, when offering personalized prices?
The senators requested that Kroger answer these questions by August 20.
Source: Letter from Sens. Warren and Casey
The FTC argues that the merger could reduce competition and lead to higher prices for consumers.
McMullen, however, remains optimistic, telling the court, “The day that we merge is the day that we will begin lowering prices.”
He also addressed concerns about potential store closures, stating that Kroger has no immediate plans to shut down any branches if the merger is approved.
However, future adjustments may be considered for optimal location management.
The merger, if completed, would combine Kroger’s 2,800 stores across 35 states with Albertsons’ 2,273 locations in 34 states, creating a workforce of approximately 710,000 employees.
This merger is poised to be the largest grocery chain consolidation in US history.
