One of the concerns from the FTC’s complaint is that the merger will make it harder for unions to shake down grocery stores for bigger compensation packages.
The Federal Trade Commission has announced it will seek to block the merger of grocery-store companies Kroger and Albertsons. The first half of the FTC’s complaint is about the grocery-store market and the merger’s potential effects on consumers, and that has consumed most of the media attention on the issue so far. But the second half of the complaint is about something else entirely.
The second half of the complaint is about labor unions. Kroger and Albertsons are the two largest employers of unionized grocery-store workers in the U.S. The FTC believes that “union grocery labor” is also a relevant market for antitrust enforcement against Kroger and Albertsons.
The complaint says that in many markets, Kroger and Albertsons negotiate contracts with the same local union. The FTC is concerned that the merger will prevent unions from “playing competing grocery chains against each other during CBA [collective bargaining agreement] negotiations.”
It also says, “Union grocery workers’ primary leverage during CBA negotiations is the ability to credibly threaten a strike.” The FTC describes how that works: “Once either Kroger or Albertsons agrees to a certain term in a union contract, the union can turn to the other firm and threaten a strike if it does not agree to a similar or better term.”
It then outlines efforts by Kroger and Albertsons to counter that strategy, saying they have “tried to coordinate and align more closely during negotiations.” It says that when such coordination fails, union contracts have “more favorable salaries and benefits for workers.”
The concern from the first half of the complaint is that the merger will allow the combined company to raise prices and harm consumers. But the concern from the second half of the complaint is that the merger will make it harder for unions to shake down grocery stores for bigger compensation packages and go on strike — which would raise prices and harm consumers.
Most unionized Kroger and Albertsons employees are members of the United Food and Commercial Workers International Union (UFCW). The UFCW opposes the Kroger/Albertsons merger.
The UFCW has about 1.2 million members. Despite losing 106,000 members between 2014 and 2022, its net assets have increased from $199 million to $521 million in that same span.
The UFCW, like virtually all major unions in the U.S., is heavily involved in progressive activism. It supported Democrats’ so-called Inflation Reduction Act and applauded Joe Biden’s 2022 State of the Union speech. Local 3000, the largest UFCW local, called for a cease-fire in Gaza last year only days after the October 7 Hamas attacks on Israel.
Nearly all of the UFCW’s political contributions go to Democrats or left-wing groups. Those include groups close to the Biden administration. Its most recent disclosure form showed a $125,000 contribution to Building Back Together, a lobbying group led by former Biden campaign staffers and Democratic operatives that supports the administration’s agenda.
It paid $70,000 in membership dues to Democracy Alliance, which Politico has called “the most powerful network of Democratic donors.” The Washington Free Beacon reported that Democracy Alliance had contributed $1.83 billion to left-wing causes between its founding in 2005 and 2019. It names as one of its goals to “support worker power and unions as core building blocks for democracy.”
The UFCW gave $10,000 to the Consumer Federation of America, which applauded the FTC and DOJ’s adoption of new merger guidelines under Biden appointees. Those are the same guidelines the FTC is now using to block the Kroger/Albertsons merger.
The UFCW paid the Economic Policy Institute, a left-wing advocacy group, $40,000 for “professional services” on October 6, 2022. The Kroger/Albertsons merger was officially announced eight days later. On May 1, 2023, EPI released a report that found the merger would reduce workers’ wages by over $300 million per year. Then, in a statement from June 1, 2023, encouraging people to oppose the merger, the UFCW says, “Independent organizations like the Economic Policy Institute (EPI) have been doing their own research, too,” and cites the $300 million number.
Chairwoman Lina Khan has attempted a progressive takeover of the FTC that has spurred the departure of numerous career staffers and yielded poor results in court. The illogic of the FTC’s complaint, combined with the obvious fact that the UFCW is part of the Democrats’ political coalition, ought to raise questions about why the Kroger/Albertsons merger is really being held up. The FTC’s job is to protect consumers, not organized labor.