The US Federal Trade Commission’s challenge to
The FTC’s emphasis on the effect on unions brings a fresh dimension to its interest in using competition law to police labor. The FTC move against the deal between the two largest unionized US grocery chains highlights collective bargaining as a competition concern.
“This is not the first time any federal agency has challenged a deal based on effects on workers. But this is absolutely the first time any federal agency has challenged a deal based on a theory of harm in a unionized labor market, specifically,” said John Newman, a law professor at the University of Miami and former FTC Bureau of Competition official.
If the FTC succeeds in blocking the deal over labor market concerns, the case could spur more worker-focused antitrust complaints and reinforce the overlapping goals of antitrust and labor law in protecting competition and collective bargaining power. The FTC’s arguments appear to be in line with traditional merger analysis that defines markets based on who could be injured by a deal, meaning the court could respond favorably, antitrust professors say.
Alongside more traditional consumer welfare arguments, the FTC delves into how the merger could harm workers by weakening union leverage. The agency’s complaint singles out unionized grocery workers—a subset of the broader workforce—as a relevant market in which competition could be harmed.
“By eliminating the current competition for union grocery labor between Kroger and Albertsons, the proposed acquisition would prevent the unions from being able to play them off each other during collective bargaining negotiations, substantially increasing Kroger’s negotiating leverage,” the FTC said in its complaint.
See also: Kroger-Albertsons Competition Fix Rejected by Skeptical FTC
The agency, eight states, and Washington, D.C. also
The United Food and Commercial Workers union represents the majority of employees at both Kroger and Albertsons nationwide. UFCW negotiates collective bargaining agreements that determine wages and working conditions for hundreds of thousands of workers at the two companies.
UFCW International President Marc Perrone praised the FTC’s lawsuit, saying it “reflects clear concerns over the impact such a megamerger could have on workers, food prices, and millions of customers.”
Kroger denies claims that the merger would harm unionized workers. The deal is “inherently pro-union,” a Kroger spokesperson said, adding that “the only winners if this merger is blocked will be larger, non-unionized retailers who will continue to fight union growth.” The companies have positioned their deal as a way to better compete with Amazon.com Inc. and Walmart Inc.
‘Appropriate and Consistent’
The FTC’s focus on unionized labor is novel, antitrust professors and former agency officials say. But the agency’s approach is a standard application of antitrust law, just applied to this particular market for the first time, said Bill Baer, former head of the DOJ’s Antitrust Division and a former FTC official.
Regulators performing a merger analysis assess who might be injured if a deal were to close.
“That the FTC is laser-focused on the impact on unionized workers in this transaction is both appropriate and consistent with merger analysis,” said Baer, now a visiting fellow at the Brookings Institution. “Those are the upstream workers that potentially suffer if this deal goes through.”
The collective bargaining focus is a “valid theory of competitive harm” stemming from the Kroger-Albertsons merger, Marshall Steinbaum, an assistant professor of economics at the University of Utah, said.
Judges have often considered low-wage labor markets to be competitive due to a range of potential employers. But for unionized workers such as those employed by Kroger and Albertsons, the only reasonable alternative employers are those also subject to collective bargaining agreements, Steinbaum argued. Unionized workers are locked into union benefits, meaning a nonunion employer wouldn’t count as an adequate competitor, he added.
The FTC’s argument folds antitrust law into labor law and policy, Steinbaum said.
“The idea that it’s in the purview of the antitrust laws to protect workers’ collective power on the job makes the Clayton Act start to sounds like the National Labor Relations Act,” Steinbaum said. “That is what’s novel here.”
Goals ‘in Harmony’
The federal complaint builds on antitrust agencies’ existing focus on labor markets, said Eric Posner, a professor at the University of Chicago Law School who advised the DOJ’s Antitrust Division on labor issues last year.
The DOJ blocked Penguin Random House’s acquisition of rival book publisher Simon & Schuster Inc. in 2022 over concerns about Penguin’s leverage over author payouts.
Posner said the FTC’s narrow definition of the relevant market as unionized grocery workers is something he’d never seen before.
“It is an interesting development because sometimes people think there is some tension between labor law and antitrust law,” Posner said. “This seems like a case in which the goals of labor law and antitrust law are in harmony.”
The FTC complaint references UFCW Local 7’s 2022 strike against Kroger in Colorado as evidence of how unions play competing employers against each other during a strike. Kroger workers encouraged customers to shop at Albertsons, a tactic that pressured Kroger to agree to wage increases and safety protections in its collective bargaining agreement with the union.
The FTC’s discussion of preserving employees’ right to strike—a key tenet of the National Labor Relations Act—is a positive step, Sharon Block, a professor at Harvard Law School focused on labor law, said. The FTC is linking the right to collective bargaining, protected by federal labor law, with the broad goals of antitrust, Block said.
“Even though those two areas of law may not have always been thought of as having a common purpose, in this lawsuit you see how closely connected they really are,” Block said.
The case is Federal Trade Commission v. Kroger Co., D. Or., No. 24-cv-00347.
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