Kroger Case tests FTC chairman’s bid to protect workers

Federal Trade Commission Chairman Lina Khan’s push to use antitrust laws to protect workers faces a key test starting Monday, when the agency will argue that a merger between grocery chain Kroger and rival Albertsons would crush the bargaining power of unionized workers.

Khan and his fellow antitrust enforcers in the Biden administration have sought to use antitrust laws — implemented in recent decades mainly to protect consumers from high prices — to combat what they see as anticompetitive practices that squeeze workers’ wages.

The job has been an area of ​​interest for Khan, a former law professor and congressional antitrust adviser, who took over the reins of the agency in June 2021.

“Since stepping into the role of chairman, I have been reminded, time and time again, of the ways in which the FTC’s decisions profoundly and directly affect the well-being of people who work for a living,” Khan said in a speech at Harvard University . in February.

“It’s very important to her,” said Rebecca Haw Allensworth, an antitrust professor at Vanderbilt Law School, referring to Khan. “This is the first high-profile example of them trying to go after a merger using a labor market theory.”

The lawsuit claims the merger would concentrate ownership and lead to higher food prices.

Related: FTC sues to block Kroger’s $24.6 billion deal with Albertsons

The new company would own more than 50 percent of grocery stores in Washington state and account for slightly less than half of Arizona’s grocery sales, both states’ attorneys general warned separately.

The FTC also says the deal should be blocked because it lessens the ability of unions to outbid the two chains in bargaining over wages and benefits, particularly in California and other western U.S. states, where some Kroger stores and Albertsons are located nearby. one another.

The United Food and Commercial Workers union said that in Los Angeles and Orange counties, 115 of 159 Albertsons stores are located within 2 miles (3.22 km) of a Kroger, leaving them susceptible to closing if Kroger does not follow through on its promise to to keep stores. open.

Kroger and Albertsons have argued in court papers that they would be allowed to bargain together with unions even without a merger.

“Text and precedent make clear that antitrust laws have no place in the field of labor relations,” they said.

The National Labor Relations Board weighed in last week, urging the judge overseeing the case to reject Kroger’s argument that labor law preempts the FTC’s claims.

Experts said a hurdle for the FTC would be to show that unionized grocery store jobs form a unique labor market and are not easily interchangeable with other food and retail jobs.

“The court may or may not buy that,” Allensworth said.

Khan made labor market competition a centerpiece of his mandate, to the chagrin of some business groups who complained the agency was going too far.

The FTC’s ban on non-compete agreements was recently blocked by a Texas court after the US Chamber of Commerce sued the rule.

The FTC and Justice Department last year included labor and suppliers among the issues they examine in merger reviews.

The FTC has raised labor concerns in cases seeking to block acquisitions by mattress maker Tempur Sealy International and luxury bag purveyor Tapestry.

While the Kroger acquisition is the first merger case to be litigated for effects on unionized labor, experts said it builds on other cases.

The Justice Department, states, and private plaintiffs have successfully used antitrust laws to challenge restrictions on college athletes, and the Justice Department blocked the merger of Penguin Random House and Simon & Schuster over fears it would reduce contract rates for authors.

Claire Kelloway of the antitrust think tank Open Markets Institute said that while the Kroger case could be decided on food prices alone, any decision on the FTC’s labor claims could spur further efforts to challenge mergers because of the negative effects on workers.

“It would certainly open up a lot of potential new areas for thinking about how mergers hurt labor markets,” she said.