U.S. retailer Kroger filed a motion for preliminary injunction against the U.S. Federal Trade Commission's (FTC) challenge of its merger with Albertsons, one week after confirming it would lower grocery prices by USD 1 billion (EUR 900 million) if the merger is approved.
Simultaneously, UFCW Local 555, a union representing grocery employees, pulled its support for the Kroger-Albertsons merger and voted to strike against Fred Meyer, a Kroger subsidiary.
“While our local [union chapter] was the only local to publicly support the merger of Kroger and Albertsons, we have changed our position as a result of new information as part of the bargaining process,” UFCW Local 555 said. “Kroger’s continued failure to not live up to [its] commitments in current contracts while being given every opportunity is disappointing. We’ve had no other option but to file a federal lawsuit on the matter and withdraw our support for the merger.”
Meanwhile, Kroger said it filed the injunction in the U.S. District Court for the Southern District of Ohio partly because the FTC is violating its constitutional protections by challenging the merger in two separate tribunals, "in an inappropriate attempt to receive multiple opportunities to litigate the same issues.”
“Despite forcing Kroger to participate in this unconstitutional administrative proceeding, the FTC has also filed a motion in the federal court proceedings seeking to block the merger for the duration of its administrative proceeding – which will likely take several years to resolve,” Kroger noted.
Hearings for the federal court proceeding will commence 26 August in the U.S. District Court for the District of Oregon.
Kroger also said that the FTC is violating Article II of the U.S. Constitution because the administrative law judge presiding over the proceeding is not removable by the president. Additionally, the FTC is “seeking to adjudicate Kroger's private rights to contract with another private party administratively through the executive branch rather than in the independent judicial branch,” the retailer said.
"The merger between Kroger and Albertson's is squarely focused on ensuring we bring customers lower prices starting day one while securing the future of good-paying union jobs," Kroger Chairman and CEO Rodney McMullen said. "We stand prepared to defend this merger in the upcoming trial in federal court – the appropriate venue for this matter to be heard – and we are asking the court to halt what amounts to an unlawful proceeding before the FTC's own in-house tribunal."
On 15 August, Kroger said it plans to lower grocery prices by USD 1 billion – double the amount it had originally announced publicly – if the merger is allowed to proceed.
Kroger had previously promised to lower grocery prices by USD 500 million (EUR 454 million) at Albertsons locations.
“We can confirm this number is correct and consistent with what we continue to share with regulators,” a Kroger spokesperson told SeafoodSource. “As we’ve prepared for integration since announcing our planned merger nearly two years ago, we continued our ongoing work to confirm and increase opportunities to generate efficiencies to invest back in customer prices, associate wages and store experience. After the merger closes, Kroger will invest USD 1 billion to lower Albertsons' prices, consistent with Kroger’s track record of fighting inflation and providing value to customers.”
Kroger also defended its actions after a group of 25 U.S. legislators filed an amicus brief on 2 August calling for the deal to be blocked from advancing. U.S. Senator Ron Wyden (D-Oregon) and U.S. Representative Pramila Jayapal (D-Washington) led a group of congresspeople in urging the U.S District Court for the District of Oregon to grant the FTC request for a preliminary injunction in the case.
Their brief outlines three major concerns with the merger: harm to consumers, harm to workers, and the growing consolidation of grocery chains leading to monopolistic practices.
“It is disappointing that elected officials continue to misinform their constituents and attempt to influence the independent judicial process that is underway,” a Kroger spokesperson told SeafoodSource. “The reality is that Kroger joining with Albertsons will mean lower prices and more choices for more customers in more communities, long-term job security, higher wages and more industry-leading benefits for associates, and a strong unionized workforce.”
Kroger intends to invest an additional USD 1 billion to increase wages and expand comprehensive benefits for associates beginning day one post-close – building on the additional USD 2.4 billion (EUR 2.2 billion) the company has invested to support associates since 2018, the spokesperson said.
The divestiture plan ensures that zero stores, including pharmacies, will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading benefits alongside bargained-for wages, the spokesperson said.
“If the merger is blocked, non-union retailers like Walmart and Amazon will become even more powerful and unaccountable,” the spokesperson said.
Kroger and Albertsons have spent more than USD 800 million (EUR 727 million) on merger costs, including fees to lawyers, bankers, and advisors, Bloomberg reported.
