When grocery chains Kroger and Albertsons — which together own more than 5,000 supermarkets across the country, including regional chains like King Soopers, Harris Teeter, Safeway, Mariano’s and Vons — first announced plans to merge in 2022, they promoted the idea by saying that in combining forces as the nation’s biggest and second biggest American grocery companies, they could lower prices, increase staff wages, protect union jobs and overall enhance customers’ shopping experiences.
Quickly, national union leadership and some liberal lawmakers, including Senators Elizabeth Warren and Bernie Sanders, voiced major concerns about the merger, specifically in how it would affect the cost of groceries amid sustained inflation, the retention of union jobs and in how the resulting conglomerate would impact labor market competition.
In the ensuing two years, the supermarkets and those opposed to their merger have argued their points, including in various state-level lawsuits, while the Federal Trade Commission (FTC) investigated the potential impacts of the deal. This process reached a critical climax last week when, after 16 months of debate, the FTC filed suit in the U.S. District Court in Portland to block Kroger’s proposed $24.6 billion acquisition of Albertsons — it has also filed a complaint through an in-house administrative court at the FTC in Washington, D.C.— leading to serious speculation about whether the mega-merger proceedings are simply paused or permanently sunk.
In its lawsuit, the FTC wrote that the aggressive competition between Kroger and Albertsons is beneficial to union-represented grocery workers.“This competition has resulted in higher wages, better benefits, and improved working conditions for employees,” it said. “The proposed acquisition would eliminate this competition, threatening the ability of hundreds of thousands of grocery store workers to secure stronger contracts with improved wages and benefits.”
In its response, Albertsons pushed back against the FTC’s estimation of the impacts of the deal and pointed its fingers at other corporations.
“If the Federal Trade Commission is successful in blocking this merger, it would be hurting customers and helping strengthen larger, multi-channel retailers such as Amazon, Walmart and Costco — the very companies the FTC claims to be reining in — by allowing them to continue increasing their growing dominance of the grocery industry,” an Albertsons spokesperson said in an emailed statement.
As the Cincinnati Enquirer wrote on Sunday, the FTC’s case in Oregon is seeking a preliminary injunction, which would essentially be a “‘mini-trial’ with evidence and witnesses,” but no jury, which would lead to a pretty significant delay in merger proceedings, which could cause Kroger and Albertsons to call the deal off. William Kovacic, the director of the Competition Law Center at George Washington University, told the publication that “90% of companies that fail to block preliminary injunctions abandon their merger plans.”
However, the preliminary injunction, as the term would suggest, is only the first part of the process. Antitrust cases can take a year if they go through the full administrative proceeding that functions as a federal trial, legal experts told the Enquirer, and Kroger has thus far declined to comment on how far it will push its case against the FTC.
In the meantime, numerous labor and fair competition advocates have commended the FTC’s decision.
“FTC’s action today is a critical step forward for America’s farmers, workers, and consumers,” said Angela Huffman, the president of Farm Action, a nonprofit centered on preventing corporate monopolies and encouraging competitive rural markets. “A combined Kroger-Albertsons would have catastrophic impacts across our entire food system — from decreasing the number of purchasers for farmers to sell to, cutting jobs for workers, and increasing prices for consumers, this is a bad deal for everyone except the companies’ shareholders.”
The Institute for Local Self-Reliance is a nonprofit advocacy founded in the 70s that assists communities in helping develop local solutions for local problems, instead of turning to corporations. Their co-executive director, Stacy Mitchell, said in a statement that the proposed merger would have been “a disaster for American communities” and applauded the FTC for blocking it.
“This decision shows the FTC sees what we have long argued –– there was no upside to this merger for anybody other than the top executives at these two companies and their investors,” they said. “Concentration in grocery retail has already caused food prices to skyrocket. We know from past grocery mergers that this one would have sent prices for consumers even higher. It would have left many communities, especially on the West Coast, with little to no competition or choice about where to shop. And it would have hurt retail workers by giving the combined companies even more leverage to push down wages and dictate terms.”
Marc Perrsone, the president of UFCW International, the union that represents many supermarket workers across the country, issued a more temperate statement that didn’t outright commend or decry the FTC’s decision and instead centered the workers.
“As this legal process now moves ahead, our focus will remain the same,” Perrone said. “The UFCW will continue to advocate for a stable and long-term solution that is in the best interest of our members and the customers and communities they serve. That means that any company who is looking to purchase stores must first and foremost honor our collective bargaining agreements and be committed to protecting these essential jobs now and in the years ahead.”
He continued: “Regardless of the next legal steps, we must never forget that Kroger and Albertsons are successful because of these incredibly dedicated workers, and no proposed merger should be allowed to endanger their jobs or their livelihoods.”
In an emailed statement, a spokesperson from Kroger said that from their point of view, "the only winners if this merger is blocked will be larger, non-unionized retailers who will continue to fight union growth.”
"Kroger’s merger with Albertsons is inherently pro-union, and we have the track record to prove it," they said. "As union membership continues to decline nationwide, especially in the grocery industry, Kroger added more than 100,000 good-paying union jobs since 2012 and invested $1.9 billion to grow associate wages and industry-leading, comprehensive benefits since 2018. Kroger has committed to build on this work by investing $1 billion to raise associate wages and comprehensive benefits and ensuring zero layoffs or store closures related to the merger. Additionally, Kroger, Albertsons and C&S have committed to honoring all current collective bargaining agreements."
UPDATE: This story was updated with a statement from a Kroger spokesperson.
