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FTC argues Kroger ( KR ) merger would harm unionized workers'

bargaining power

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Policing anticompetitive conduct that affects workers is a

priority for FTC Chair Khan

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Experts say FTC must prove union grocery jobs are a unique

labor

market

By Jody Godoy

Aug 26 (Reuters) - Federal Trade Commission Chair Lina

Khan's initiative to use antitrust laws to protect workers faces

a key test on Monday when the agency will argue the merger

between grocery chain Kroger ( KR ) and its rival Albertsons ( ACI )

would crush unionized workers' bargaining power.

Khan and her fellow antitrust enforcers in the Biden

administration have sought to use antitrust laws - deployed in

recent decades mostly to protect consumers against high prices -

to combat what they view as anticompetitive practices squeezing

workers' paychecks.

Labor has been an area of focus for Khan, a former law

professor and congressional antitrust counsel, who took the

reins of the agency in June 2021.

"Since stepping into the role of Chair, I have been

reminded, over and over, of the ways that the FTC's decisions

deeply and directly affect the well-being of people who work for

a living," Khan said at a speech at Harvard University in

February.

"It's really important for her," said Rebecca Haw

Allensworth, an antitrust professor at Vanderbilt Law School,

referring to Khan. "This is the first high-profile example of

them trying to go after a merger using a labor market theory."

The lawsuit alleges the merger would concentrate ownership

and lead to higher grocery prices.

The new company would own more than 50% of the grocery

stores in Washington state and make up just under half of

grocery sales in Arizona, the attorneys general of both states

have warned separately.

The FTC also argues the deal should be blocked because it

decreases the ability of unions to play the two chains off each

other in bargaining for wages and benefits, particularly in

California and other states in the U.S. West where some Kroger ( KR )

and Albertsons ( ACI ) stores are located near one another.

The United Food and Commercial Workers union has said that

in Los Angeles and Orange counties, 115 of 159 Albertsons ( ACI ) stores

are located within 2 miles (3.22 km) of a Kroger ( KR ), leaving them

susceptible to closures if Kroger ( KR ) fails to keep its promise to

keep stores open.

Kroger ( KR ) and Albertsons ( ACI ) have argued in court papers that they

would be allowed to jointly bargain with unions even without a

merger.

"Text and precedent make clear that the antitrust laws have

no place in the field of labor relations," they said.

The National Labor Relations Board weighed in last week,

urging the judge overseeing the case to reject Kroger's ( KR ) argument

that labor law prevents the FTC's claims.

Experts said that a hurdle for the FTC will be showing that

union grocery store jobs form a unique labor market, and are not

readily interchangeable with other grocery and retail jobs.

"The court may or may not buy that," Allensworth said.

Khan has made labor market competition a focus of her

tenure, to the chagrin of some business groups who have

complained the agency is going too far.

The FTC's ban on noncompete agreements was recently blocked

by a court in Texas after the U.S. Chamber of Commerce sued over

the rule.

The FTC and Justice Department last year included labor and

suppliers among aspects they scrutinize in merger reviews.

The FTC has raised labor concerns in cases seeking to block

acquisitions by mattress manufacturer Tempur Sealy International ( TPX )

and luxury handbag purveyor Tapestry.

While the Kroger ( KR ) acquisition is the first merger case to go

to trial over effects on unionized labor, experts said it builds

on other cases.

The Justice Department, states and private plaintiffs have

successfully used antitrust laws to challenge restrictions on

college athletes, and the Justice Department blocked the Penguin

Random House and Simon & Schuster merger over concerns it would

lower contract rates for authors.

Claire Kelloway, of the anti-monopoly think tank Open

Markets Institute, said while the Kroger ( KR ) case could be decided

on grocery prices alone, any ruling on the FTC's labor claims

could boost further efforts to challenge mergers over adverse

effects on workers.

"It would definitely open up a lot of new potential areas

for thinking about how mergers harm labor markets," she said.