How the business press doesn’t understand M&A

Karl Bode of Techdirt writes about the business news media’s recent coverage of Kroger’s pending acquisition of grocery store chain Albertsons.

Bode writes, “Kroger (and tell me if you’ve heard this one before) is pinky swearing that increased consolidation in the already consolidated grocery space will increase jobs, boost competition, and lower prices for consumers. On that last point, the company this week told the press that if the merger is approved, they’ll dole out $1 billion in immediate savings to consumers.

“The promise is baseless. As you see in tech and telecom, pre-merger promises are utterly valueless. U.S. regulatory enforcement of merger promises is completely feckless, and getting weaker in the wake of major Supreme Court rulings. Antitrust academics insist there’s nothing in the promise that’s worth anything. And yet Bloomberg, Reuters, and CNBC all parroted the claim mindlessly:

“Not a single one of the news reports took the time to speak to a single antitrust academic or expert, who’d be quick to point out the promise isn’t real. There are people, surprisingly enough, who’ve spent their entire lives studying consolidation in grocery markets, but they’re rarely quoted by major business journalism outlets whose job, purportedly, is to convey the truth to the U.S. public.

“One local Boise outlet, BoiseDev, actually crunched the numbers, and found that even if Kroger followed through on the promised price cuts (which again they wouldn’t, because that’s not how consolidation works), they’d amount to about four cents per store visit per consumer.”

Read more here.