Dive Brief:

• Six local United Food and Commercial Workers (UFCW) unions representing more than 100,000 Kroger and Albertsons workers around the country have called on regulators and members of Congress to oppose both the proposed merger between the two grocery companies and Albertsons’ $4 billion dividend, which is temporarily restrained due to a legal battle. 
• At a press conference on Capitol Hill Tuesday morning, union members said they fear the proposed $24.6 billion merger will decrease competition in the grocery industry, raise food prices for consumers and cause major job cuts from store closures.
• The opposition comes at a time when Kroger and Albertsons have promoted the merger as a union alternative to Walmart and Amazon as a way to help win over regulators. 

Dive Insight:

As Kroger and Albertsons approach the regulatory review process for their proposed merger, the companies are facing pushback not only from politicians but from a sizable group of workers that represent nearly 15% of their combined workforce.

Workers at the press conference Tuesday repeatedly referenced the conditions workers faced following the Safeway-Albertsons merger in 2015, when the Federal Trade Commission required the two companies to sell more than 160 stores. Haggen, a Washington state grocery chain, bought the bulk of the divested stores but then filed for Chapter 11 bankruptcy months later. Albertsons was able to buy back dozens of the stores sold to Haggen, and in 2016, the independent grocer became part of Albertsons.

Some workers shared that they or colleagues had experienced first-hand negative consequences of the Safeway-Albertsons deal, from job cuts to getting rehired with lower pay.

Haggen “ran [the divested] stores into the ground” and caused layoffs, Judy Wood, a cake decorator at an Albertsons store in California and member of UFCW 324 who has worked for Albertsons in Southern California for 34 years, said at the press conference. 

“We were told by the management team that there was nothing to worry about,” Wood recalled about the Albertsons-Safeway merger. “I am now hearing the same message from management again.”

Wood, who has helped with surveys of Ralphs workers, said the Kroger deal is causing anxiety among workers at a time when people are trying to recover from financial downturns during the pandemic and when grocery workers’ wages aren’t high enough to keep up with ongoing inflation. 

“[There are] workers that must live in hotels and some will live in their cars because they cannot afford the basic housing. There are many workers who cannot even afford the groceries that they are selling in their stores,” Wood said.

Naomi Oligario, a Safeway worker and member of UFCW Local 3000, said the Safeway-Albertsons deal resulted in hundreds of store closures across the western U.S. Workers at the press conference said they fear the Kroger deal will result in a similar outcome. 

“The merger would create a ripple effect for potentially tens of thousands of grocery employees and their families: lost wages, lost benefits like hard-earned pension plans, lost healthcare coverage and higher grocery prices,” said Andres Becerril, a Kroger worker and member of UFCW Local 7. Kroger and Albertsons have positioned the deal as a way to lower prices for consumers. 

The six unions represented workers across 12 states and the District of Columbia.

Albertsons’ $4 billion dividend, which is paused at the moment due to a legal battle in Washington state, also came under fire. The grocer has defended the dividend, saying it would not hinder its ability to remain competitive. 

“We know $4 billion could be better used to make Albertsons stronger, lower prices for consumers, invest in store safety and pay higher wages and benefits to recruit and retain essential workers who keep our food and supply safe,” said Faye Guenther, president of UFCW 3000. Guenther said the dividend should be scrutinized as part of the merger. 

The press conference came hours before a hearing by the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights on the proposed merger. The hearing will examine the potential impact the merger could have on competition in the grocery industry. 

Sens. Amy Klobuchar of Minnesota and Mike Lee of Utah, the subcommittee’s chairwoman and ranking member, respectively, have jointly said they have “serious concerns” about the proposed transaction.

UFCW International President Marc Perrone has separately expressed concerns about the Kroger-Albertsons deal’s impact on workers and consumers, but stopped short of opposing the deal.

“Now, more than ever, Kroger and Albertsons executives must provide the answers and information needed to address the serious concerns our members and the American people have about this proposed merger,” he said in a statement.