Did you know the U.S. is on the verge of a grocery-store monopoly? That’s what the Federal Trade Commission is trying to argue. It has sued to block the merger between Kroger and Albertsons, first announced in October 2022, in a move called for by progressives such as Senator Elizabeth Warren (D., Mass.). The FTC’s argument is weak and contradictory.
To get a combined Kroger and Albertsons to rise to the level of monopoly, the FTC has to define the market such that many of the places Americans buy food don’t count. Wholesale clubs such as Costco or Sam’s Club are not included. Neither are discount stores such as Aldi. Neither are premium stores such as Whole Foods. Dollar stores and e-commerce are excluded as well.
Those types of businesses are all slightly different from one another, but it’s the case right now that many people do their shopping at multiple stores depending on what they’re buying. That wouldn’t change if Kroger and Albertsons merged.
Another fear that the FTC cites to oppose the merger is that in certain local markets, the merger would bring the only two major competitors under one corporate umbrella. But that problem has been solved in past grocery-store mergers with targeted divestiture of specific stores in specific markets. It doesn’t require outright blocking the merger for that concern to be addressed.
The FTC has precedent against it. Since 1988, only one grocery-store merger has even been challenged in court. Dozens of other mergers were allowed to go through. The FTC’s record under Chairwoman Lina Khan has been a litany of losses in federal courts. Under her leadership, many talented litigators have left the agency, and employee morale has fallen. The project to remake antitrust law along progressive lines has so far been a failure. Picking another fight where precedent is against the FTC seems like a bad idea.
Regardless, the first half of the FTC’s complaint makes the case that the merger would allow the companies to raise prices and harm consumers. But the second half of the complaint essentially says the opposite: that the merger will make it harder for unions to shake down grocery stores and go on strike — which would, well, raise prices and harm consumers.
Kroger and Albertsons are the two largest employers of union grocery employees in the U.S., represented mostly by the United Food and Commercial Workers International Union (UFCW), which announced its opposition to the merger last year. The FTC views “union grocery labor” as another relevant market for antitrust enforcement and expresses concern that the UFCW might not be able to play Kroger and Albertsons off each other in contract negotiations in several geographic areas.
The FTC specifically mentions the ability to strike as one of the union powers it seeks to protect by blocking this merger. Keep in mind, though, that labor unions are legally protected monopolies in the markets in which they operate. Under the National Labor Relations Act, unions have “exclusive representation,” which gives them monopoly power to bargain for all employees in a bargaining unit, even ones who aren’t members of the union. Starting a competitor union or negotiating one’s own compensation is effectively not permitted in a unionized workplace.
What the FTC is now saying is that it is not enough for the union to have a monopoly guaranteed by federal law. It must also be helped to exercise its market power, even if it means temporarily closing grocery stores over labor disputes. This is antithetical to the FTC’s supposed mission of protecting the consumer.
The UFCW is, like virtually all labor unions in the U.S., part of the progressive political coalition. It donates to Democrats and left-wing groups, including groups that support Khan’s efforts to change antitrust enforcement. That it plays such a big part in the FTC’s complaint hurts the FTC’s appearance of impartiality in fighting for consumers, which is what it is supposed to do.
Making a weak argument that the merger will lead to monopoly while also arguing for protecting organized labor’s power at consumers’ expense is not what the FTC should be doing. But this is what the Biden administration’s whole-of-government progressivism looks like in practice.