Alaska unions urge Biden administration to block Albertsons-Kroger merger

Labor unions in Alaska are calling on the Federal Trade Commission to block a $25 billion merger that would combine Fred Meyer and Carrs Safeway grocery stores into one corporate behemoth.

Union officials say the deal between Kroger, the parent company of Fred Meyer, and Albertsons, parent of Carrs Safeway, could lead to store shutdowns and hundreds of layoffs at two of the top employers in Alaska, plus lower wages and job standards.

They say unions currently represent workers across Carrs Safeway stores, while the union presence at Fred Meyer stores is limited. That raises questions about whether a newly merged company will support union contracts, union officials say.

The unions and U.S. Rep. Mary Peltola, D-Alaska, who recently wrote a letter asking the Federal Trade Commission to block the merger, also raise concerns about the impacts to store prices and food security if competition is reduced in Alaska.

Albertsons and Kroger announced the potential merger last year. If approved by the FTC, the deal would combine two of the largest supermarket chains in the U.S. It would create a company with more than $200 billion in revenues, bringing profits more in line with Walmart and Amazon.

The companies have said they will invest to improve the customer experience, reduce prices and increase wages and worker benefits.

A Kroger spokesperson provided an emailed statement saying the merger is “about growing jobs and careers.”

Kroger companies employ one of America’s largest unionized workforces, the statement said. It said the merger “secures the long-term future of union jobs by establishing a more competitive alternative to large, non-union retailers.”

“We will invest an additional $1 billion to increase wages and expand our industry-leading benefits starting on Day One following close, and we expect to provide new and exciting career growth opportunities for many associates,” the statement said. “This commitment builds on our track record of supporting associates, including the incremental $1.9 billion we have invested in wages and comprehensive benefits since 2018.”

Spokespeople with Carrs Safeway could not be reached for comment.

[Earlier coverage: What the proposed Albertsons-Kroger merger could mean in Alaska]

‘Will they recognize the unions?’

In Alaska, the companies consist of 12 Fred Meyers and 35 Carrs Safeways, state officials have said. The stores compete in the state’s urban areas, from Fairbanks to Anchorage to the Kenai Peninsula, and in Juneau in Southeast, sometimes in close proximity.

Joelle Hall, president of the Alaska AFL-CIO federation of unions, said Kroger stores and brands may have a strong union presence elsewhere in the U.S., but not in Alaska.

She said unions at Fred Meyer stores are often limited to some individual departments, such as the small number of butchers at a store. Carrs Safeway stores, meanwhile, are unionized “wall-to-wall,” she said.

Hall said it’s uncertain whether a newly merged company would honor the Carrs Safeway union contracts that provide wages, health care and pensions that support families.

“Will they recognize the unions? Right now, Fred Meyer fights us tooth and nail,” she said.

“We need to be very careful in Alaska because this merger is about having basically a monopoly on our grocery market, and monopolies generally result in higher prices and lower customer service,” she said. “I don’t think anyone wants that, but I think were particularly vulnerable in Alaska because we don’t have many other options to buy groceries. Sure you can go to a Walmart or a Costco, but we don’t have a lot of traditional grocery stores.”

The International Brotherhood of Teamsters, representing 22,000 members employed in the stores’ warehouses and other facilities nationwide, announced its opposition to the merger in June. The United Food and Commercial Workers International Union, the largest union of grocery workers in the U.S., announced in May that it opposed the merger, citing a lack of transparency, in addition to threats to workers livelihoods’ that arise from mergers in general, and this one in particular.

Alex Baker, vice president of the United Food and Commercial Worker’s Union Local 1496, said a merger could lead to fewer stores in Alaska, hurting jobs and wages. He said the Alaska local represents 2,500 workers in the state, including many grocery store employees.

Experts have said the combined chains will likely be required to sell off some stores in Alaska and other states to keep competition alive, though that raises concerns about whether any company can successfully compete against them.

Baker said that Lower 48 stores aren’t likely to expand into Alaska and purchase any stores that might be divested, because of the challenging logistics at the end of the nation’s supply chain and the limited customer base here.

“The juice isn’t worth a squeeze for them,” he said.

Patrick FitzGerald, the political coordinator for Alaska Teamsters Union Local 959, said the union represents about 60 workers at the Carrs Safeway warehouse distribution center in Anchorage and 14 delivery drivers.

“If there’s one grocery store, you’d see more neglect for employees and less protections for employees,” he said.

He echoed concerns that a newly merged company, if it’s allowed to occur, would not recognize existing union contracts.

“It’s easier to promise greener pastures now, but once the merger is over, the question is what they decide to do with that? Will they deliver on those promises?”

The Economic Policy Institute, a think tank in Washington, D.C., said in May that the merger will lower the annual wages for about 750,000 grocery store workers by $334 million collectively, or about $450 for each worker annually.

Brian Albrecht, an economist with the International Center for Law and Economics, a think tank in Portland, Oregon, said the two chains face anti-competition concerns primarily in some areas of the western U.S., but not across most of the U.S. where their brands’ operations do not overlap.

He said regulators will be looking closely at individual markets such as the one in Alaska and can make sure the deal addresses antitrust issues, worker concerns and the state’s unique logistical challenges.

Concerns from Alaska delegation

Peltola, in her one-page letter to FTC Chair Lina Khan, said the merger will create an “incredibly concentrated grocery store market” that thins the number of stores and threatens food security in Alaska.

The merger could be completed in January 2024 unless the trade commission challenges it, Peltola’s office said.

U.S. Sen. Dan Sullivan, R-Alaska, said in a prepared statement on Friday that he shares “the concern about how a proposed merger between Kroger and Albertson’s might impact local competition and prices for hard-working families who are trying to make ends meet in the Biden economy.”

“My team and I are closely following the FTC’s investigation, and will continue working to protect the best interests of Alaskans,” he said.

Sen. Lisa Murkowski, R-Alaska, has previously said the FTC has a responsibility to prevent the merger from happening if it will cause higher prices, reduced competition or negative workforce impacts.

Patty Sullivan, a spokeswoman with the Alaska Department of Law, would not comment on whether the agency was investigating the proposed merger.

“Antitrust investigations in Alaska are confidential, including whether an investigation is even being undertaken,” she said in an email. “The attorney general’s office is aware of the Kroger-Albertson’s merger, and we are committed to vigorously enforcing Alaska’s antitrust laws.”