Hawley Rips Kroger's ESG Pitch for Albertsons Merger: 'Frankly, Is Ridiculous' (November 29, 2022)

Sen. Josh Hawley, R-Mo., wasn’t buying it. When Kroger CEO Rodney McMullen came to Capitol Hill to sell his company’s $24.6 billion takeover of rival Albertsons, Hawley went after one of the deal’s advertised benefits, what he called the two grocers’ “complementary ESG strategies,” and took it apart: “The fact that you’re using this as a justification for your merger, I think, frankly, is ridiculous.”

The exchange came on Nov. 29, 2022, at a hearing of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, where McMullen and Albertsons CEO Vivek Sankaran testified [1]. The video above shows Hawley’s ESG questions. Quotes are from HYGO News’ transcription of the video and a second clip of Hawley’s questioning, checked against Bloomberg News’ report on the hearing [2].

”Why Would That Be Relevant at All?”

Hawley opened with a simple question. “Why would having complementary ESG strategies be a justification for a merger? Why would that be relevant at all?” he asked [2]. ESG stands for environmental, social and governance [5].

McMullen pointed to Kroger’s charity and sustainability plan. “Well, if you look at some of the things that both of us have done from Kroger’s commitment to zero hunger, zero waste, and we’ve, by merging with Albertsons as an example, we’ll be able to have that positive impact,” he said.

Hawley told him he was asking the wrong question. “Don’t you think you should be asking what positive impact you’re going to have on the people you serve? Like, for instance, the ability to provide food at a reasonable cost to people who need it, the ability to actually offer a product that consumers need and want.”

It Was Right There in the Press Release

Hawley didn’t have to dig for the ESG pitch. When Kroger and Albertsons announced the deal on Oct. 14, 2022, their press release listed “Powers Continued Progress Toward Shared ESG Initiatives” among its benefits. The release said the combined company “will be better positioned to advance a comprehensive ESG strategy,” including initiatives “focused on increasing workforce diversity and fighting food insecurity,” and that Albertsons’ program “will accelerate progress on Kroger’s Zero Hunger | Zero Waste social and environmental impact plan to create a more equitable and sustainable food system” [3].

Other Republicans pressed the point in written questions after the hearing. Sen. Thom Tillis, R-N.C., asked what social issues the combined company would focus on. Sen. Marsha Blackburn, R-Tenn., noted that the press release touted a “greater focus on ESG” initiatives and wrote: “In essence, these initiatives are a way for corporations to promote woke, leftist policies.” She asked whether they would lower prices. Kroger answered that its ESG work is “grounded in our commitment to providing fresh, affordable food for everyone by keeping prices low and minimizing waste.” In its written answers, the company called Zero Hunger | Zero Waste “the centerpiece of our ESG strategy” and said it had donated more than 2.3 billion meals since 2017 [4].

”Lina Khan Sat Where You’re Sitting”

Then Hawley brought in an unlikely ally, President Joe Biden’s antitrust chief. “You know, here’s what I find interesting. Lina Khan sat where you’re sitting, the chairman of the FTC, just a few weeks ago, and she testified under oath that she’s seeing an accelerating trend of companies justifying mergers on the basis of ESG, as if that should somehow allow them to evade scrutiny for the merger,” he said. “She testified that she thought it had absolutely no relevance whatsoever. And I think that she is absolutely correct.”

Khan, chair of the Federal Trade Commission, had testified before the same subcommittee on Sept. 20, 2022. According to a summary by the law firm Hogan Lovells, Hawley asked her about reports that the FTC conditioned merger approval on companies’ ESG policies. Khan said the agency would “absolutely not” do that, testified that merging companies had offered ESG commitments and asked the FTC to “take those as a reason to bless the merger,” and said she did not think “ESG commitments or anything in that vein can ever rescue an illegal deal” [5].

At the same hearing, Sen. Tom Cotton, R-Ark., asked whether there is an antitrust exemption “because you call something ESG.” Khan replied: “No. To the contrary, we’ve seen firms come to us and try to claim an ESG exemption and we’ve had to explain to them clearly that there is no such thing,” the American Action Forum reported [6].

Hawley’s verdict on Kroger’s pitch followed: “The fact that you’re using this as a justification for your merger, I think, frankly, is ridiculous."

"Not That I’m Aware Of”

Hawley also tested how Kroger’s diversity push treats religious workers. McMullen said diversity, equity and inclusion “means including everybody, and we do not make judgments on anybody in terms of any of their personal beliefs.” Hawley asked: “So that includes people of faith, I think is what you’re saying.” McMullen: “It includes everything.”

So, Hawley asked, has Kroger “ever fired an employee or disciplined an employee” over religion? “Not that I’m aware of,” McMullen said.

“Well, that’s interesting, because Senator Cotton just read at some length into the record an EEOC lawsuit,” Hawley shot back. “That’s a government lawsuit, which your company just settled after an adverse ruling by a federal district court in which you apparently took disciplinary action to the extent of firing employees in Arkansas based on their religious beliefs. Do you think that’s workplace inclusion?”

“As I told Senator Cotton, I personally am not aware of the details of that,” McMullen said.

“You’re being sued by the federal government. You’ve settled the suit and you don’t know about it?” Hawley said. When McMullen said he does not always know, Hawley replied: “That’s extraordinary.” He added: “Do your shareholders know about that? I mean, what else do you not know about?”

The case Hawley cited was real. The Equal Employment Opportunity Commission sued in 2020, charging that Kroger’s store in Conway, Arkansas, fired two employees who asked for a religious accommodation so they would not have to wear an apron emblem they believed contradicted their religious beliefs [7]. In June 2022, the federal judge in Little Rock threw out the EEOC’s retaliation claim but sent its failure-to-accommodate claim toward trial [8]. In October 2022, Kroger’s subsidiary agreed to pay $180,000 and create a religious accommodation policy. Kroger denied the allegations, and the parties said they settled “to avoid additional costs and uncertainties of future litigation” [9].

Cotton’s own grilling of McMullen over the rainbow-heart apron, which Fox News covered at the time [16], is in our page on that exchange.

By the Numbers

$24.6 billion: the deal’s total enterprise value, or $34.10 per Albertsons share, including about $4.7 billion of Albertsons debt [3].
4,996 stores and more than 710,000 workers: the two chains combined at the time of the announcement [3].
No. 2 and No. 4: Kroger’s and Albertsons’ rank among U.S. grocers by market share, behind Walmart and Costco, according to market researcher Numerator [10].
About half a billion dollars: cost savings Kroger promised to reinvest in lower prices, plus $1.3 billion to upgrade Albertsons stores [3].
$4 billion: the special cash dividend Albertsons planned to pay its shareholders as part of the deal [3].
$180,000: the Conway religious discrimination settlement [9].

What Happened Next

The feds sued. The FTC and nine states sued to block the merger on Feb. 26, 2024. Kroger said a ruling against it would only strengthen “larger, non-unionized retailers like Walmart, Costco and Amazon” [11].
The courts said no. On Dec. 10, 2024, U.S. District Judge Adrienne Nelson in Oregon halted the deal, and a Washington state judge ruled that it violated that state’s consumer protection law. “The overarching goals of antitrust law are not met, however, by permitting an otherwise unlawful merger in order to permit firms to compete with an industry giant,” Nelson wrote [12].
The deal collapsed. The next day, Albertsons walked away and sued Kroger, seeking “billions of dollars” in damages and the $600 million breakup fee, which Kroger said Albertsons is “not entitled” to [13].
McMullen resigned. On March 3, 2025, Kroger announced that McMullen had resigned after an outside investigation found that his “personal conduct,” which the company said was “unrelated to the business,” was inconsistent with its business ethics policy [14].
Religious workers won in court. On June 29, 2023, the Supreme Court ruled unanimously in Groff v. DeJoy that an employer refusing a religious accommodation must show the burden “would result in substantial increased costs in relation to the conduct of its particular business” [15].