Kroger Deal Will Harm Workers, State Treasurers Tell FTC (1)

Seven state treasurers urged the FTC to oppose the $24.6 billion merger between grocery giants Kroger Co. and Albertsons Cos., citing concerns about a reduction in employees’ wages as a result.

In a Wednesday letter to Federal Trade Commission Chair Lina Khan, the treasurers of Colorado, Delaware, Maine, Massachusetts, Nevada, New Mexico, and Washington pointed to a May Economic Policy Institute study that found the merger could result in the loss of $334 million in wages for three-quarters of a million grocery workers across more than 50 metro areas. That’s an average annual wage shortfall of about $450 per worker.

They also raised concerns about how consolidation could harm worker bargaining power and increase the risk of food deserts, “which disproportionately affect vulnerable populations and can have severe health implications,” the treasurers wrote in the letter, shared first with Bloomberg Law.

The Wednesday letter—organized with For the Long Term, a nonprofit group that works with local officials on ESG-related policy goals—is the latest salvo in a long-running war of advocacy around the merger, mainly from Democrat-led states and progressive interests.

“The impact on wages would not be limited to employees of Kroger and Albertsons alone; all grocery store workers in the affected cities would potentially experience suppressed earnings,” the treasurers wrote. “Furthermore, if the merger leads to layoffs or hours cuts, the consequences for affected workers would be even more severe.”

The merger, announced in October 2022, would combine two of the leading grocery chains in the US into a retail giant with nearly 5,000 stores—large enough to take on leading grocer Walmart Inc. The companies have publicly committed to divest up to 375 stores to satisfy regulators, although their merger agreement allows for the spin-off of up to 650 locations.

“Kroger joining with Albertsons will mean lower prices and more choices for more customers in more communities, higher wages and more industry-leading benefits for associates, and growing union jobs,” Kroger said in a statement. “The only parties who would benefit if this merger is not completed are large, non-unionized competitors such as Walmart and Amazon.”

Seven secretaries of state last week also called on the FTC to block the deal. The United Food and Commercial Workers union, which represents several hundred thousand Kroger employees, publicly opposes the merger.

Kroger and Albertsons’ motives—to increase shareholder value—are understandable, Dave Young, Colorado’s treasurer, said in an interview.

“That’s their primary job, right? However, my job as an elected official and that of the FTC is to look out for the public good,” Young said. “In my opinion, the risks that this merger poses to the public, the workers, the families here in Colorado and across the country far outweigh the benefit to the shareholders of Kroger and Albertsons.”

The merged company’s suppliers could also be forced to lower prices, further harming their workers’ wages, the treasurers wrote. Those wage effects would be exacerbated by greater consolidation, diminishing workers’ ability to organize and collectively bargain for better pay and working conditions, the treasurers wrote.

“By reducing the number of outside options available to workers, the merger would significantly limit competition in hiring and retaining employees, undermining their bargaining power,” they wrote.

Kroger CEO Rodney McMullen promised a group of skeptical US senators at a hearing in November that the merged company wouldn’t close any stores or lay off any “frontline associates” as a result of the tie-up.

“The unions across the US are incredibly important partners, and we will work together with the unions,” he said.

To contact the reporter on this story: Dan Papscun in Washington at [email protected]

To contact the editor responsible for this story: Anna Yukhananov at [email protected]

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