This article by Chase Woodruff appeared on Colorado Newsline on July 11, 2024.
Colorado grocery workers who fear the impacts of a proposed $24.6 billion merger between the nation’s two largest supermarket chains aren’t swayed by the companies’ announcement this week of the 91 stores across Colorado that would be sold as part of the deal, in a bid to allay antitrust concerns.
Grocery giant Kroger, which operates King Soopers and City Market stores in Colorado, first announced its plans to acquire Albertsons, which operates the Safeway brand, in 2022. The deal, one of the largest retail mergers ever proposed, has been opposed by labor unions and consumer advocates who fear that the consolidation could lead to higher prices and decreased wages and bargaining power for workers.
Colorado Attorney General Phil Weiser is one of two attorneys general who have sued to block the merger.
The two companies’ divestiture plan, detailed this week, would offload 91 Safeway stores in Colorado, along with two distribution centers and a dairy plant, to C&S Wholesale Grocers, a New Hampshire-based grocery supplier.
Bill Valdez, a United Food and Commercial Workers Local 7 member who has worked as a meat cutter for over 50 years, said during a press conference Thursday that while his King Soopers store in Colorado Springs is not on the list of locations to be sold, uncertainty and anxiety over the merger’s consequences is being felt by workers across the state.
“As grocery store workers, we’re all about customer service, and it’s tough to keep a smiling face when you’re not sure about your job,” Valdez said. “During my time as a union member, I’ve been through mergers and closures which have put my livelihood in jeopardy, and it’s not just our wages, benefits and pensions on the line with this merger. We all know the cost of groceries is high, and I fear that the merger would only lead to further increases.”
Kroger and Albertsons say that C&S has committed to not closing any stores or laying off any “frontline” employees as a result of the merger, and existing collective bargaining contracts would continue. But UFCW representatives paint C&S — a wholesaler that currently operates just 23 retail locations nationwide — as a struggling company with shaky finances, unequipped to operate 579 newly acquired stores as an “effective competitor” to the merged Kroger-Albertsons behemoth.
“I think Kroger wanted to have it both ways,” said John Marshall, a financial analyst for UFCW. “They wanted to be able to divest a certain number of stores to give the appearance that they’re trying to remedy the anti-competitive effects of their proposed merger. At the same time, they don’t want to have a real competitor who they would lose market share to.”
UFCW Local 7 President Kim Cordova echoed those concerns in a statement.
“We cannot entrust our grocery stores — which are integral to our communities and our workers — to the untested, inexperienced C&S Wholesale Grocers,” Cordova said. “Kroger and Albertsons have known what stores they plan to divest for months, and the last-ditch release of the list today is an underhanded attempt to influence the courts and create the perception that the mega-merger is close to final, creating more uncertainty for our members.”
After a yearlong investigation into the proposed deal, Weiser in February filed a lawsuit in Denver District Court, alleging that the merger violated state antitrust laws and would have “harmful impacts on consumers, workers, and suppliers.” The U.S. Federal Trade Commission and Washington State Attorney General Bob Ferguson have also challenged the merger in court.
Weiser’s investigation also uncovered evidence of alleged collusion between Kroger and Albertsons during a January 2022 strike by UCFW Local 7 workers at Colorado King Soopers stores: “no-poach” and “non-solicitation” deals in which Albertsons agreed not to hire striking King Soopers employees or to attract King Soopers pharmacy customers.
Marshall said the “very, very compelling arguments” in the state-level lawsuits by Weiser and Ferguson could be pivotal in determining the merger’s fate. The terms of the acquisition expire on October 9, after which the parties could renegotiate or exit the deal.
A key series of hearings in the Colorado case, on Weiser’s request for a preliminary injunction against the merger, is scheduled to begin Aug. 12 in Denver.
“We’re very confident that an impartial judge in each of those states is going to block the merger in those states,” Marshall said. “And we think if that happens, it would be very difficult for the merger to occur nationally without those two states being part of the deal.”