Earlier this week, the FTC filed a lawsuit alleging that the deal would eliminate competition and raise grocery prices
It’s likely that the place you shop for groceries every week is owned by one of two companies — Kroger, or Albertsons. Together, these two corporate behemoths own more than 5,000 supermarkets across the country, including regional chains like King Soopers, Harris Teeter, Safeway, Ralphs, and Vons, and now they’re looking to consolidate the grocery industry even further by joining forces in a $24.6 billion merger.
In October 2022, Kroger and Albertsons announced that both companies’ respective boards had voted to approve a merger. If completed, Kroger-Albertsons would be the second-largest grocery retail chain in the country, right behind Walmart. In order to actually happen, though, the merger needs approval from federal officials, who will determine whether or not such a merger is a violation of the country’s antitrust laws. According to the Federal Trade Commission, these laws require big companies to notify the government of their intention to merge, and prohibit mergers in which the result “may be substantially to lessen competition, or tend to create a monopoly.”
On February 26, 2024, the FTC filed a lawsuit alleging that the deal would significantly impact competition in the grocery market. “Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” Henry Liu, director of the FTC’s Bureau of Competition, said in a press release. “Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”
In a 2023 statement to Eater, Kroger said that it “will not lay off any frontline associates or close any stores, distribution centers or manufacturing facilities as a result of this merger.” Its CEO, Rodney McMullen, said the same thing to the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights in November.
Reuters previously reported that the companies would sell 250 to 300 stores to “alleviate U.S. antitrust concerns” over the merger. In March 2023, Kroger said in a statement that the company “will work with the Federal Trade Commission to develop a thoughtful divestiture plan — either through divesting stores to strong buyers or by creating a standalone independent company. Kroger intends to position any store that is not part of the combined company for success going forward.”
But according to the FTC, Kroger and Albertsons’ divestiture plan, in which it would sell hundreds of stores to a small grocer called C&S Wholesale Grocers, is “inadequate.” The FTC describes the proposed sale as a “hodgepodge of unconnected stores, banners, brands, and other assets that Kroger’s antitrust lawyers have cobbled together,” and notes that it “falls far short of mitigating the lost competition between Kroger and Albertsons.”
In March 2023, dozens of labor unions, advocacy groups, and elected officials like California Rep. Katie Porter united to form a coalition called Stop the Merger. The coalition insists that the merger is a monopoly that will lead to “store closures, thousands of lost jobs, and higher food prices.” The group argues that the impacts of the merger will be devastating for workers, farmers, and consumers.
How the Kroger-Albertsons merger would affect customers
If the Kroger-Albertsons merger is completed, its critics say that grocery prices will increase due to diminished competition. There is a strong historical correlation between big mergers like these and price increases. “Market consolidation has eroded a key foundation of our capitalist economy — competition,” Porter said in a statement supporting Stop the Merger. “Without competition, families are forced to pay higher and higher prices often for less and less of the product.”
Kroger has argued that the merger allows the two companies to streamline their operations, and that the companies would pass those savings along to consumers. It said in a statement, “As we have in past mergers, we will hold ourselves accountable to our customer commitments, including investing $500 million to lower prices starting on day one post close.” The company also said providing choices and low prices is of “critical importance to us, and we have a long track-record of investing in prices to lower costs, including investing more than $5 billion in lowering prices since 2003.”
But according to Rebecca Wolf, a food policy analyst at the nonprofit Food & Water Watch, mergers resulting in a better deal for customers isn’t how it’s worked in the past. “Grocery Goliaths often make this claim when they announce plans to merge. In reality, mergers give these large companies the power to dictate prices. That means, at some point, they become higher,” Wolf says. “As big companies keep getting bigger, their competitors disappear and prices keep going up. In fact, Food & Water Watch research found that in 2019, just four companies took in nearly 70 percent of all grocery sales in the country.”
There are also concerns that this merger would lead to even more food deserts in vulnerable communities. Because many cities and towns have multiple grocery stores, often owned by one of these two chains, experts say that consolidating the two brands will likely lead to store closures. “This merger is incredibly dangerous,” Stacy Mitchell, co-executive director of the nonprofit Institute for Local Self-Reliance, told the Guardian. “It’s highly likely if it goes through it will result in more communities not having a grocery store.”
How the Kroger-Albertsons Merger would affect grocery workers
Jane St. Louis has already been through two mergers in her 30 years working in Maryland at Safeway, a subsidiary of Albertsons, and she is seeing some familiar patterns. She says requests for new equipment have been denied, and workers have been pressured to watch their spending. A spokesperson for Kroger, who spoke on behalf of the combined companies, did not comment directly on this charge, but said that it is “business as usual in [their] stores.”
“They always hurt the little guy to get the bottom line to look better,” St. Louis says. “I always thought mergers were going to be for [employees’] benefit; it would be better. And as the years go on, that hasn’t been the case.”
There are a few ways corporate consolidation spells worry for workers. The first is that consolidation could lead to store closures, which would lead to job loss. Workers say this pattern has happened in the past, when mergers and acquisitions meant two stores in the same area became redundant.
“The 2015 Albertsons and Haggen deal left many workers scrambling around,” Christina Robinett, who now works at Vons in Ojai, California, said in a statement. In 2014, Haggen acquired around 150 stores that Albertsons had divested in order to merge with Safeway. However, Haggen had trouble with the expansion, cut back employee hours, closed stores, and eventually filed for bankruptcy. Albertsons came back and acquired the remaining Haggen stores. “After Haggen went bankrupt and shut down my store, I applied for work at four different stores,” Robinett says. “I wasn’t able to get a job for three months and I had to take side jobs as a seamstress and cleaning houses to make ends meet. That merger caused me a lot of anxiety.”
Janet Wainwright, who works as a meat cutter at a Kroger in Virginia, also worries this would mean the closing of unionized stores. Wainwright says she became frustrated while attending the Senate Committee hearings about the merger and hearing McMullen speak. “Rodney likes to throw out that these are union jobs,” she says. (In his testimony, McMullen said, “Kroger employs one of America’s largest unionized workforces, and this merger secures the long-term future of union jobs by establishing a more competitive alternative to large, nonunion retailers.”) But, Wainwright is skeptical. “If you have several Kroger stores that are in an area, what are the odds he’s going to keep all them open? He’s going to close union shops and keep the nonunion shops open.”
Workers are also concerned their benefits would be affected. “We’ve always lost something,” St. Louis says of the mergers she’s experienced. Most recently she says the price of health care increased, and now she’s concerned it’ll affect pensions. “I feel like I have to be a voice for the retirees. A lot of them are in their 80s and 90s; they can’t go back to work. If they don’t get their pension, they get more stuff taken away from them, it’s just not fair.”
Overall, workers do not trust that this will be a good deal for them, and hope that speaking out against the merger will bring more awareness to their concerns. Wainwright also hopes McMullen will have to listen to workers directly. “I would like to see them open [the Senate hearings] up where we can go and sit in front of the Senate and question Rodney. We’re the ones that work for him. If you have nothing to hide, then give us a seat at the table.”
How the Kroger-Albertsons merger would affect farm workers
While the merger could mean higher prices for consumers, farm workers reiterate that won’t be because that money is being shared equally among those who produce those goods. Edgar Franks of Familias Unidas por la Justicia, an independent farm worker union with a collective bargaining agreement that covers around 500 workers in Washington state, says they are opposed to the merger for the risks it poses to farm workers.
“The way that the grocers buy all the products, they almost set a price,” he says. A letter to the FTC from a group of growers associations explains the process further, saying Kroger already employs an “egregious take-it-or-leave-it contract pricing structure” against which few produce shippers have leverage to negotiate. A merger would just give the grocers even more power, and while farmers could technically not accept their terms, most can’t afford to not sell to them.
“If a farmer’s just trying to get by with thin margins, they’re going to find ways to try to make ends meet. And usually it’s by paying their workers less,” says Franks. “That’s been a big issue from the labor perspective about how much power the grocers have over the lives of not just the farms, but the actual people that are picking and harvesting.”
This is compounded by the fact that many of the labor laws that cover other industries do not cover farm work. There are about 2 million full-time farm workers and another 2 million seasonal workers in the U.S., according to the Occupational Safety and Health Administration, and the vast majority of them do not have collective bargaining agreements that set a standard for pay.
The trickle-down effect of the Kroger-Albertsons merger
The Kroger-Albertsons merger won’t just have an impact on grocery and farm workers. Manuel Villanueva, regional director at the Restaurant Opportunities Center of Los Angeles, has major concerns about the trickle-down effect on restaurant workers outside of those that work at grocery stores, and says that it is another attempt to stifle organizing among these workers. “This is another strategy to crush unions and union contracts and make it harder for people to obtain a living wage,” he says. “All these establishments, in a way, affect restaurants, and anything that is happening at corporations of this scale trickles down into other industries. It’s important that people understand the magnitude of a merger like this.”
Specifically, Villanueva points to major restaurant operators like Darden Restaurants and Brinker International, which could look to consolidate their power in the hospitality industry with a merger of their own. “Our main concern is that this is something that could be replicated at Darden or Brinker,” he says. “Stopping a merger like this would definitely set the tone and show that workers have power, and that we’re aware of what they’re trying to do.”
Villanueva is working to educate restaurant workers on how to support union grocery stores with their dollars. He says that many of the workers he interacts with don’t even know that the merger is happening, and that they mostly shop where they can find the most affordable groceries. “We want people to be conscious and shop where it works for their budget, but also to be aware of what they’re supporting when they do buy groceries,” he says. “We want to help people make better decisions about their consumption, and help build confidence about where they’re spending their money.”
He also notes that many grocery stores also employ some restaurant workers. When you visit a Starbucks inside your grocery store, the barista that makes your iced latte doesn’t actually work for Starbucks. Those workers are employees of Kroger or Albertsons, and this overlap was something that organizers at ROC United, the national workers advocacy group, took notice of, especially during the COVID-19 pandemic. “They were sacrificial workers,” says Villanueva. “They were overworked and they just don’t trust the system anymore.”
A judge recently blocked a Penguin Random House and Simon & Schuster merger over similar concerns of lessening competition, so there is hope that there is momentum around antitrust awareness. “Over the coming weeks and months, we are going to fight like hell to stop this merger,” Rep. Porter said in a statement, “because it’s bad for workers, bad for families, and bad for our entire economy.”
Update: March 24, 2023, 4:08 p.m.: This piece was updated to include further comment from Kroger.
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