FTC's Bold Move: How the Kroger-Albertsons Merger Could Reshape Labor Markets and Grocery Prices
By Jody Godoy
(Multibagger) - The Federal Trade Commission (FTC), under Chair Lina Khan, is testing new waters by leveraging antitrust laws to safeguard workers' rights in a landmark trial that commenced on Monday. The case revolves around the proposed merger between major grocery chains Kroger (NYSE: KR) and Albertsons (NYSE: ACI), which the FTC alleges would undermine the bargaining power of unionized workers and drive up grocery prices.
Antitrust Laws: A New Frontier for Worker Protection
Lina Khan, a former law professor and congressional antitrust counsel, has made labor market competition a cornerstone of her tenure since taking over the FTC in June 2021. Historically, antitrust laws have primarily focused on protecting consumers from high prices. However, Khan's administration is now striving to tackle anticompetitive practices that they believe are squeezing workers' paychecks.
"Since stepping into the role of Chair, I have been reminded, over and over, of the ways that the FTC’s decisions deeply and directly affect the well-being of people who work for a living," Khan stated in a speech at Harvard University in February.
The Stakes of the Kroger-Albertsons Merger
The FTC's lawsuit argues that the merger would concentrate ownership, leading to higher grocery prices and diminished bargaining power for unions. According to the attorneys general of Washington and Arizona, the new entity would control over 50% of grocery stores in Washington and nearly half of grocery sales in Arizona.
The United Food and Commercial Workers union has expressed concerns that store closures and job losses could follow if the merger proceeds. In Los Angeles and Orange counties, for instance, 115 out of 159 Albertsons stores are located within 2 miles of a Kroger store, making them vulnerable to closures.
Kroger's Stance and Legal Arguments
Kroger's attorney defended the merger in opening arguments, stating that the company is a "proud union shop" and would honor existing collective bargaining agreements. Kroger has also pledged not to close any stores, assuring that frontline employees will not lose their jobs and promising to invest $1 billion in improving wages and benefits.
"The only winners if this merger is blocked will be larger, non-unionized retailers who will continue to fight union growth," a Kroger spokesperson declared.
Kroger and Albertsons have also contended that they could collectively bargain with unions even without merging. They argue that antitrust laws should not intersect with labor relations, a stance the National Labor Relations Board disputes.
The Broader Implications
Experts note that one of the FTC's challenges will be to demonstrate that union grocery store jobs constitute a unique labor market, distinct from other retail jobs. This case builds on previous efforts where antitrust laws were successfully applied to labor issues, such as restrictions on college athletes and the blocked merger of Penguin Random House and Simon & Schuster over concerns about author contract rates.
Claire Kelloway of the Open Markets Institute suggests that even if the case is decided based on grocery prices alone, any ruling on the FTC's labor claims could pave the way for future challenges to mergers that adversely affect workers.
"It would definitely open up a lot of new potential areas for thinking about how mergers harm labor markets," Kelloway said.
What This Means for You
In simple terms, this trial could significantly impact both grocery prices and job security for workers in the industry. If the merger goes through and results in reduced competition, you might see higher prices at your local grocery stores. Conversely, blocking the merger could help maintain lower prices and better working conditions for grocery store employees.
For everyday consumers and workers, understanding how mergers like this one can affect the market and labor conditions is crucial. If the FTC succeeds, it could set a precedent that prioritizes worker rights and fair wages in future antitrust cases, potentially reshaping the landscape of labor markets across various industries.
Stay tuned for updates as this landmark case unfolds, as its outcomes could have far-reaching implications for both your wallet and the broader economy.