A trial asks: Do workers suffer if grocery rivals merge?
Leonard De Monte felt settled in 2015. He was 31 years old, had health insurance, and earned a union-negotiated wage at Vons in Woodland Hills, Calif. where he worked for over a decade. He was a familiar face in the store’s bakery, and knew the orders of dozens of regular customers. As part of the deal Mr. De Monte’s store was sold to another chain. Within months of the sale, the new owner declared bankruptcy. He lost his seniority and was demoted to minimum wage. “All my hardwork was flushed down to the toilet,” said Mr. De Monte.
Now that he is nearly 10 years older, and has finally worked his way up from a wage nearing $27 an hour, he is experiencing deja vu. Albertsons and Kroger are merging in a $24.6-billion deal, which will be the largest grocery combination in the history of the world if it’s approved. The two chains agreed to sell 579 of their approximately 5,000 stores to a third party in order to satisfy antitrust authorities. Mergers can be a source of anxiety for employees who fear losing their jobs or benefits. The United Food and Commercial Workers International Union (U.F.C.W.) which represents the majority of in-store employees at Kroger and Albertsons has spoken out against this proposed deal. However, it does not have much power to stop it. The F.T.C. sued to block the merger, and a federal court trial in Oregon will begin on Monday to decide whether the two chains are allowed to join forces. is making arguments typical of antitrust enforcers in recent decades: The merger will decrease competition, leading to higher prices for consumers.
But within its legal complaint is another claim, one that has surprised some antitrust experts because of its novelty. The F.T.C. argues that the combination of two of the country’s largest supermarket chains would erode the bargaining power of unions and harm not only consumers, but workers as well. argues, would erode the bargaining power of unions and harm not just consumers, but workers as well.
Starting in the late 1970s, after a period of robust antitrust enforcement, regulators eased up on challenging corporate mergers. The Biden administration has made it a priority to crack down on corporate concentration. For the first time ever, merger guidelines were updated by the F.T.C. last year. and the Justice Department explicitly outline the agencies’ emphasis on how corporate mergers could reduce competition for workers and result in lower wages or worse benefits.
“Recognizing that there’s a web of intersecting harm that can happen is an extension, in my mind, of the underlying principles of antitrust enforcement,” said Christine Bartholomew, a professor at the University at Buffalo School of Law who teaches antitrust. “The pendulum is swinging back to recognize the broader types of harm from anticompetitive conduct.”
The attorneys general of Colorado and Washington State, who have separately sued to block the supermarket deal, also centered workers in their complaints.
The grocery industry has seen waves of consolidation since the 1990s. Walmart, Kroger Costco, and Albertsons account for approximately half of all grocery sales. The new corporation will operate under the Kroger brand, and a Kroger spokesperson said that all frontline workers will keep their jobs and union contracts. The F.T.C. has changed its position since 2015. The U.F.C.W. The U.F.C.W. did not object strongly to that merger, or to the sales of stores. This was something the union regretted once Haggen filed bankruptcy and thousands lost their jobs. But the F.T.C. is not convinced that separating out about a tenth of the stores would effectively maintain competition or mitigate the harm to workers and consumers.
Although only about 13 percent of grocery store workers are unionized, most of the workers at Kroger and Albertsons are represented by the U.F.C.W.
“I have great health benefits because I’ve been with the company so long,” Mr. De Monte said, adding that he needs regular checkups because of a past cancer diagnosis. “If I lost my health benefits, then I would have to pay for them myself.”
The U.F.C.W. The U.F.C.W. is concerned that the combined power of Albertsons and Kroger would intensify the power imbalance with the union. John Marshall is a financial analyst at U.F.C.W. Chapters in California and Washington State said that both chains were aggressive at the bargaining tables. In 2003, both companies demanded concessions, including a two-tiered salary structure, from the U.F.C.W. Despite setbacks unionized workers have maintained health and retirement benefits, which their nonunion counterparts like Walmart do not. Walmart employs 2 million people, and has been accused by the company of illegal union busting. Walmart has denied these allegations. A Kroger spokesperson said that nonunion rivals will become “even stronger and unaccountable,” if the merger is blocked. The F.T.C.’s complaint states that union grocery workers leverage the fact that Kroger and Albertsons are separate companies competing for customers and workers to negotiate better terms of employment for union grocery employees. A representative of the agency declined to comment beyond the legal complaint. An agency representative declined to provide additional comment beyond the legal complaint.
Eric Posner, a professor at the University of Chicago Law School who focuses on antitrust, noted that a more dominant Kroger would chip away at unions’ ability to use strikes as a bargaining tool.
“If the worker can find an equally good job elsewhere, then the workers can stay on strike longer, and that means the employer will have to give and make concessions,” Mr. Posner said.
He said he was not aware of any other antitrust cases that limited the scope of harm to unionized workers. Posner said that regulators raised labor-related issues in only one case that went to court. In that 2022 suit, the Justice Department successfully blocked a merger of book publishers, focusing on authors as workers who stood to be harmed by the deal.
Closings and Layoffs Feared
On top of weakened bargaining power, workers — especially those who experienced the fallout from Albertsons’s takeover of Safeway a decade ago — are concerned about potential store closings and layoffs.
Michael Lawing, a meat manager at an Albertsons in the Seattle area, has been an employee of the company on and off since 1987. He and his colleagues lost their job when their store changed ownership to Haggen in 2015.
“I lost all of my seniority, as far a vacation time, as a far as health benefits,” said Mr. Lawing. “I had to restart from the beginning.”
Kroger has portrayed C&S, which has signed up to buy the 579 stores that would be shed under the merger, as a pro-union operator. Lauren La Bruno, a C&S spokeswoman, said the company would recognize the union work force and honor all collective bargaining agreements.
But Mr. Marshall of the U.F.C.W. C&S representatives refused to commit to negotiating new collective bargaining contracts with the union at two meetings held in January. He said that contracts covering more than 100,000 Kroger workers and Albertsons employees, mainly on the West Coast will expire next year. Ms. La Bruno declined to comment on the meetings. While Ms. La Bruno claimed that the company has the financial strength and retail experience to operate hundreds of stores, antitrust regulators and experts say a Haggen-style collapse would be likely if the deal went through. They argue that C&S doesn’t appear to be equipped to efficiently operate hundreds of supermarkets.
“This company might just shut down the stores after buying them,” Mr. Posner said.
Yasmin Ashur, who has been an Albertsons employee for nearly 25 years, works as a cashier at one of the company’s stores in Port Orchard, Wash., which is set to be sold to C&S. She is worried about her pension and health insurance when she considers what will happen to the U.F.C.W. contract after it expires. contract expires.
Ms. Ashur earns about $10 more than the minimum wage of her state, earning $26 per hour. “But then again, it’s a new start,” Ms. Ashur said. “Nobody is going to hire you at what I was making. I’m going have to start at the bottom.”
