PORTLAND, ORE., and SEATTLE, WASH.—To cheers from workers and consumers, U.S. District Judge Adrienne Nelson in Portland, Ore., and King County Superior Court Judge Marshall Ferguson in Seattle, Wash., killed the Kroger-Albertson’s grocery chain mega-merger.
The key issues in both cases were the resulting lack of competition for customers, workers and on prices, had Kroger swallowed up Albertson’s. The resulting monster monopoly would have stretched up and down the West Coast, plus stores in Colorado, Arizona and Chicago.
Its sheer size, of more than 5,000 stores, would drive up prices, drive down competition for customers and prevent workers from bettering themselves. Indeed, in the Oregon case, the Federal Trade Commission, which won the historic verdict, stressed the damage to workers as well as consumers.
After the judges’ rulings on December 10, the two firms declared the $24.6 billion merger kaput.
“We did it! The mega-merger we’ve been opposing for more than two years is officially dead!” exulted United Food and Commercial Workers Local 400. It represents grocery workers—including Safeway workers whose jobs could have vanished in the monster merger—in the D.C.-Maryland-Virginia area.
That local, along with locals in Chicago and Seattle, took the lead in opposing the merger between the nation’s largest and second-largest grocery-only chains. Unionized Kroger and Albertson’s claimed they needed to merge to compete with huger, cheap Walmart and Amazon, which is now invading the retail grocery business. Both those firms are virulently anti-worker and anti-union.
Nobody bought that line. Not the workers. Not their unions. Not Washington state. And especially not the U.S. Federal Trade Commission, established over 100 years ago to combat corporate greed.
“This mega-merger would have been a disaster that threatened thousands of grocery jobs, raised prices, increased food deserts, and further monopolized an industry already ruled by only a handful of corporations,” UFCW Local 400 added. Washington State Attorney General Bob Ferguson told the Seattle judge the two firms together control more than half of the grocery market in the state.
“Without the work of our members testifying before the Federal Trade Commission, meeting with members of Congress, speaking out to the media, protesting in the streets, and more, this would have never happened. We couldn’t be more proud of you for sticking together through this fight.”
The key players seeking the court rulings were the Federal Trade Commission, whose chair, Lena Khan, is an outspoken critic of monopolies and oligopolies, and the Washington state Attorney General’s office. Khan’s FTC won the case in Portland while the Washington AG triumphed in Seattle.
“This historic win protects millions of Americans across the country from higher prices for essential groceries—from milk, to bread, to eggs—ultimately allowing consumers to keep more money in their pockets,” Henry Liu, FTC’s Bureau of Competition director, said in a statement.
“This victory has a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons-owned grocery stores for their everyday needs, whether that’s a Fry’s in Arizona, a Von’s in Southern California or a Jewel-Osco in Illinois.” Or, he could have said, a Safeway anywhere.
Would have been less competition
“If Kroger acquired Albertsons, there would be even less competition in the grocery industry. That means customers would have fewer choices of where to shop and what to buy, and prices would go up higher than they already are. If you could no longer go across the street to get a better deal, Kroger would have no reason to keep prices low,” UFCW Local 400’s statement, the most comprehensive, added.
“It also would have been bad for our members in grocery stores. Kroger would no longer compete with other employers for the same workforce, which would lower wages and benefits.”
The two chains tried to reverse the FTC’s stand by promising to sell almost 600 stores to a smaller chain, C&S Wholesale Grocers, which now owns 23. Judge Nelson in Portland said that wouldn’t work. The judge, agreeing with the FTC, doubted the small chain had the infrastructure or expertise to handle such a huge and sudden addition—or the customers. C&S is anti-union.
“The FTC sought to show in court how Kroger and Albertsons react when they see one another cut prices or offer promotions. The grocers’ regional bosses walk the aisles of competing stores, eyeballing prices, product assortments and any enhancements that might appeal to customers, the FTC’s testimony showed,” news services reported.
And when workers at local Albertson’s stores in the West Coast states were dissatisfied with wages and working conditions under individual union contracts, all they had to do was drive to the nearest Kroger and be welcomed with open arms—and vice versa. Ditto for the two chains’ customers.
Other worker and consumer advocates, in and outside the two chains’ dominant areas, welcomed the mega-merger’s demise. Attorneys General from Maryland, Oregon, Illinois, D.C., California and Arizona sided with the FTC.
“Without FTC action, consumers would see inflated prices and workers would be stuck with anticompetitive compensation,” Sally Greenberg, president of the National Consumers League, said when her pro-worker group testified against the merger in a prior FTC hearing on it.
“Decades of ignoring federal law allowed industry consolidation to grow unchecked, leaving everyone worse off except for a handful of executives at the top. The FTC is rightfully asserting its authority and putting the interest of consumers and workers first. Monopolists should know they can no longer take advantage of the American public without facing legal challenges.”
“The courts heard the concerns voiced by our hard-working members and rejected the proposed megamerger between Kroger and Albertsons. The issues we raised were echoed throughout this process by lawmakers, economists, Attorneys General, consumers, and the FTC,” UFCW President Marc Perrone said in a statement.
“Our focus will remain the same: Looking for a stable and long-term solution that protects our members’ wages, benefits, and pensions. These grocery chains are highly successful because of the hard work of our members and workers across the country, and no merger or divestiture of stores should be allowed to endanger or threaten their vital role.”
“Kroger and Albertsons executives have repeatedly ignored opportunities to do right by hardworking Teamsters who drive their success,” Teamsters President Shawn O’Brien said in a statement. “Instead of cooperating and working with us, they opted for a merger driven by greed, aimed at increasing market power at the expense of workers and communities.
“Their partnership with C&S Wholesale Grocers—one of the most anti-union companies in the industry—exposed the true purpose behind this merger: To squeeze more profits by undermining workers and stifling competition.”
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