OLYMPIA, Wash.—Siding with the United Food and Commercial Workers, but for a different reason—the end of competition in 50% of the state’s grocery market—Washington Attorney General Robert Ferguson is suing to block the merger of the Kroger and Albertson’s grocery chains.
The multibillion-dollar deal, which federal officials are also reviewing on antitrust grounds, has drawn the union’s vehement opposition not just for that reason, but because the merger could drive shoppers’ prices up while driving workers out of jobs.
“This merger is bad for Washington shoppers and workers,” Ferguson said. “Free enterprise is built on companies competing, and that competition benefits consumers. Shoppers will have fewer choices and less competition, and, without a competitive marketplace, they will pay higher prices at the grocery store. That’s not right, and this lawsuit seeks to stop this harmful merger.”
Ferguson’s suit, filed January 15, seeks a nationwide injunction by the King County (Seattle) Superior Court against the merger. He says the merger violates the state’s Consumer Protection Act and its antitrust provisions.
The chains are so large that many shoppers, especially on the West Coast, do not realize that two other prominent chains, Fred Meyer and Safeway, are actually subsidiaries of Kroger and Albertson’s, respectively.
Kroger and Albertson’s hoped to sweeten the deal for federal regulators by selling 413 stores to a small regional grocery chain, C&S. But C&S didn’t have the infrastructure to suddenly become a national chain and a year later filed for bankruptcy reorganization. Kroger and Albertson’s bought 40 of their former stores back, some for as little as $1.
This leaves the union worried about the impact
The merger itself and the C&S sequence, which AG Ferguson mentions in his court papers, leaves UFCW President Marc Perrone leery of the merger’s impact, on shoppers and workers.
“As we have made clear since the day the proposed Kroger Albertsons merger was announced, our focus is, and will always be, on a stable and long-term solution that protects our members’ wages, benefits, and pensions,” he said in a statement last year.
“Any deal must be in their best interest, as it is our members–and all Kroger and Albertsons workers–who perform the invaluable job of helping feed and serve our nation every single day. These companies are successful because it is our members who make them a success, and no proposed merger or divestiture of stores should endanger or threaten the vital role they play.”
“UFCW and all our locals remain absolutely united to using every tool we have to protect our union members’ livelihoods and their families’ future health and well-being,” Perrone concluded.
“This proposed transaction will likely substantially lessen supermarket competition or tend to create a monopoly in many Washington communities where defendants currently compete head-to-head,” says the state’s suit.
“The ultimate effect of that lessening of competition would be to increase the likelihood that prices of food and other grocery products in supermarkets offered to Washington consumers will increase and that the quantity and quality of choices available to Washington consumers will decrease.”
Ferguson, too, emphasized that stores will close, shoppers will have fewer choices—or be forced to shop at less-desirable stores of the remaining chain. And workers will lose their jobs, too, the AG warned.
“The proposed transaction would combine the two largest—and, in some areas, the only—supermarkets in many communities across Washington, which is likely to lead to higher prices, lower quality, and less variety in many local markets throughout Washington.
“The proposed transaction is also likely to lead to store closures. As a result of the proposed transaction, Kroger will own overlapping stores in many Washington communities, and will have an incentive to close some of them, further concentrating these markets and reducing choice for consumers, as well as eliminating jobs,” the suit says
The two chains know they’re creating a monopoly, too.
“When rumors of the Proposed Transaction began circulating, one Albertsons’ Vice President wrote ‘you are basically creating a monopoly in grocery with the merger so [it] makes no sense,’” followed by “’[i]t’s like AT&T and Verizon wanting to merge.’”
We hope you appreciated this article. At People’s World, we believe news and information should be free and accessible to all, but we need your help. Our journalism is free of corporate influence and paywalls because we are totally reader-supported. Only you, our readers and supporters, make this possible. If you enjoy reading People’s World and the stories we bring you, please support our work by donating or becoming a monthly sustainer today. Thank you!
CONTRIBUTOR
Comments