FTC Faces Crucial Test in Labor-Focused Antitrust Battle Over Kroger-Albertsons Merger

The Federal Trade Commission (FTC) is set to face a critical test in its efforts to apply antitrust laws to protect workers’ rights in the Kroger-Albertsons merger. On Monday, the agency will argue in court that the proposed merger between major grocery chains Kroger and Albertsons could significantly undermine the bargaining power of unionized workers, a move that could set a precedent for future labor-focused antitrust actions.

Under the leadership of Lina Khan, the FTC has taken a more aggressive stance in using antitrust laws not just to protect consumers from high prices but also to address practices that negatively impact workers. According to Reuters, the agency alleges that the merger would lead to concentrated ownership in the grocery market, particularly in Washington state and Arizona, potentially driving up grocery prices and reducing competition.

The FTC’s concerns extend beyond just consumer prices. The agency argues that the merger would diminish the ability of unions to leverage competition between Kroger and Albertsons in negotiations for wages and benefits. This is especially relevant in states like California, where the two grocery chains have a significant presence. The United Food and Commercial Workers (UFCW) union has highlighted that in areas such as Los Angeles and Orange counties, a significant number of Albertsons stores are located within close proximity to Kroger locations, making them vulnerable to closures if Kroger does not honor its commitment to keep these stores operational.

In response, Kroger and Albertsons have defended the merger to the FTC, stating in court documents that they would still engage in collective bargaining with unions, even in the absence of a merger. They also argue that antitrust laws should not interfere in labor relations, a point of contention that the National Labor Relations Board (NLRB) recently challenged, urging the court to dismiss Kroger’s arguments.

Read more: Kroger-Albertsons Merger Could Give Walmart Shoppers A Low-Cost Grocery Alternative

Experts believe that a major challenge for the FTC will be proving that unionized grocery store jobs constitute a distinct labor market, one that is not easily interchangeable with other retail positions. This point will be crucial in determining whether the court sides with the FTC’s interpretation of labor-focused antitrust law, per Reuters.

Khan’s focus on labor market competition has been a hallmark of her tenure, drawing criticism from some business groups who argue that the agency’s approach is overreaching. This is not the first time the FTC has faced pushback in its labor-related initiatives; a recent court ruling in Texas blocked the FTC’s ban on noncompete agreements following a lawsuit by the U.S. Chamber of Commerce.

The FTC and the Department of Justice have increasingly factored labor concerns into their merger reviews, as seen in cases involving Tempur Sealy International and luxury brand Tapestry. While the Kroger-Albertsons case marks the first trial centered on the impact of a merger on unionized labor, it follows a growing trend of legal challenges that seek to apply antitrust laws to protect workers. Previous cases, such as those involving college athletes and the blocked merger of Penguin Random House and Simon & Schuster, have successfully used antitrust arguments to address labor concerns.

As the trial unfolds, the outcome could have far-reaching implications for how antitrust laws are applied in labor markets.

Source: Reuters