According to a new lawsuit filed by Colorado’s attorney general last week, Kroger and Albertsons — two of the country’s largest supermarket companies, which have been petitioning the Federal Trade Commission to approve a mega-merger for over a year — allegedly illegally colluded to weaken striking workers’ leverage in 2022 by agreeing to “no-poach” and “non-solicitation” agreements.
“Despite being competitors, Kroger and ACI [Albertsons Companies, Inc] have already colluded to suppress the wages and benefits of workers,” Colorado Attorney General Philip J. Weiser wrote in the suit. “In January 2022, unionized employees at 78 King Soopers stores in Colorado. Fearful that striking workers might flee to ACI, and that concerned customers would too, Kroger reached out to ACI to make a nefarious bargain.”
Weiser alleges that that an Albertsons labor relations executive reached out to a member of Kroger leadership, informing them they would not hire striking King Soopers’ employees; Kroger manages various supermarket chains across the country, including Mariano’s, Fred Meyer, Harris Teeter, Pick 'n Save and King Soopers, while ACI manages stores including Safeway, Vons and Jewel-Osco. “We don’t intend to hire any King Soupers [sic] employees and we have already advised the Safeway division of our position and the division agrees,” Albertsons’ senior vice president of labor relations wrote in an email quoted in the complaint.
“Kroger and ACI have decided that collusion is more profitable than competition,” Weiser wrote.
This lawsuit isn’t the only factor complicating the long-planned Kroger and Albertsons merger, which both company leadership and many financial analysts predicted would be completely buttoned up by early 2024. Now, as the deal continues to unfold under FTC and state scrutiny, lawsuits and union resistance also continue to mount — but will it have any impact as detractors continue to warn about the monopolization of America’s grocery landscape?
The Colorado lawsuit — which is aimed at blocking the merger and uses the allegations of the 2022 strike-time collusion as one example as to why the deal should be curtailed — comes off the heels of a similar suit filed by Washington state’s attorney general, Bob Ferguson, in early January. That suit, which was filed in King County Superior Court, asserted that “the merger eliminates Kroger’s closest competitor and decreases customer choice by significantly increasing the concentration of stores owned by the same company throughout Washington.”
“This merger is bad for Washington shoppers and workers,” Ferguson said in a statement at the time. “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 lawsuit was endorsed by United Food & Commercial Workers, Local 3000, which represents Kroger and Albertsons employees in Washington, northeast Oregon and northern Idaho, The Seattle Times reported. Similarly, UFCW Local 7 — which led the King Soopers strike in 2022 — has rallied behind Weiser, indicating widespread national unease about the merger from both workers and state representatives.
In an interview with HuffPost, Kim Cordova, the president of UFCW Local 7, said that her union only became aware of the emails between Kroger and Albertsons leadership via Weiser’s lawsuit. She told the publication that the “union immediately filed unfair labor practice charges against both companies with the National Labor Relations Board, which investigates union-busting allegations.” The union is also considering suing, she said.
“We will never know what concessions we could have got from these employers” absent the alleged no-poach and no-solicitation pacts, Cordova said. “We did well [with our contracts] but we could have done even better.”
While Albertsons did not return a request for comment, Kroger told HuffPo that the Colorado complaint has mischaracterized the facts surrounding the strike of 2022.“There was not then, and there is not now, non-solicitation or so-called no-poach agreements between Kroger and Albertsons,” the spokesperson said. “Employees at both companies regularly join our teams from — and exit our companies for opportunities to work at — Albertsons, Kroger, Walmart, Amazon, Costco and other retailers.”
While Kroger has maintained that a merger will actually result in lower prices for consumers, the lawsuits do add more pressure to the already-strained proceedings surrounding the deal, which are still in the works. As Reuters reported last month, the FTC has now asked Kroger to supply more information about the proposed merger, while a Washington Analysis, a research firm in Washington, D.C., that focuses on political and regulatory policy, has put the odds of the merger successfully closing at 35% per the New York Times.
However, leadership from both supermarket giants seem confident the deal will take place later this year.
“We believe our merger with Albertsons and the comprehensive divestiture to C&S will result in the best outcomes for customers, associates and our communities,” The Kroger Co. said in a January release.
“In light of our continuing dialogue with the regulators, we are updating our anticipated closure timeline. We currently anticipate that the closing will occur in the first half of Kroger's fiscal 2024,” it said. “While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing.”
