FTC Sues to Stop Big Retailer Merger, Could Packers & Fast Food Be Next?
Steve Dittmer | AFF Sentinel
Colorado Springs, CO
Originally sent to subscribers 02/28/24
President Biden has been very clear that he is a union man. When he brags about “creating” jobs, he specifies them as good union jobs. Of course, that includes government union jobs, which have been backbones of the employment statistics.
Biden’s DOJ and FTC are, consequently, very protective of union jobs. His appointments to the NLRB have been Democrat union supporters and that board’s rules have made it easier for unions to organize and harder for employers to oppose union organizers.
Interestingly, Trader Joes’s, the food retailer, and Amazon, also doing food sales and grocery store retailing, are two of four big corporations cited by the NLRB for labor violations, The Hill noted, along with Starbucks and SpaceX. All are challenging the constitutionality of the NLRB and its authority, SpaceX citing the lack of accountability of the NLRB board and judges.
The Hill, a quite liberal publication, explained that “The NLRB is key to President Biden's mission to be the most `pro-union’ president in history and a bulwark for the rise in union activity.”
Just recently, we mentioned our fears of the trend against corporate business through anti-trust law at USDA and potential future action, prompted and aided by Biden’s DOJ and FTC.
So, it was no shock that in the lawsuit the FTC filed to stop the merger of Kroger and Albertsons, the claim was that the deal would harm union workers’ bargaining power, as well as lead to higher food prices for consumers.
We take that concern about food prices with a grain of salt. This administration and the left have not shown that much concern about the average consumer. Pet political causes, like climate change, or economic class warfare or perceived race discrimination, etc. etc. etc. yes. Average American consumers, not so much.
The profligate spending and overreaching rules have been a significant cause of the inflationary food prices Biden professes to worry about. His war on fossil fuels was an even more direct contributor to food price inflation. Biden’s actions fueled, aided and abetted it, while he accuses grocery chains of “gouging.” He and his party are a lot more concerned about voter rage about food prices at the ballot box than real concern for family grocery budgets.
A Kroger spokesperson said higher food prices were likely from blocking the merger, not from allowing it. They also see nonunionized retailers gaining competitive benefits from the merger being blocked.
Increasingly, old line food retailers fighting for market share have had to contend with not just nonunion competitors like Walmart, Amazon and club stores like Costco but online food sources, expanded convenience stores, dollar stores and farmers’ markets.
Kroger and Albertson’s officials have pointed out that Walmart’s grocery market share is already double the size of their proposed merger.
The Wall Street Journal’s editorial board termed the FTC blocking the merger as “The FTC’s Gift to Walmart.”
“The main reason the FTC moved to block the deal appears to be opposition from the United Food and Commercial Workers union (UFCW), which represents workers at both companies,” the Journal said.
The Journal also pointed out another factor. The UFCW often pits Kroger’s wages and benefits against Alberton’s in union negotiations, to gain the back-and-forth leverage that drives up wages in many industries. The merger would lessen that competitive leverage.
But part of the reason for our skepticism of the Biden administration’s deep concern for consumers is the change in stated FTC policy under FTC Chair Lina Khan. For decades, the guiding consideration for the FTC in evaluating major mergers in any industry was whether it would be deleterious for consumers or not. Kind of like AFF’s description of the economic pyramid for the beef industry. The consumer is at the top and everything any segment of the industry does must be evaluated on that basis.
Khan, on the other hand, rewrote the FTC’s longstanding merger guidelines to instead put priority on workers and labor-market competition.
As the Journal story points out, this is a “radical departure from modern anti-trust law, which emphasized consumer welfare.” One expert marked the Biden and Khan’s stance the highest ever emphasis of labor in anti-trust law.
That is what concerns us about USDA, as some of the same policy thinkers we’ve seen over the years at meetings like the Organization for Competitive Markets are ones this administration is leaning on. Their philosophy has been beating up on big ag corporations all across the board, from seed companies, farm equipment manufacturers, chemical companies, pharmaceuticals and, of course, the big packers.
As the Journal also points out, supermarket margins “are thin,” and higher labor costs are one of the reasons unionized retailers like Kroger and Alberson’s have become less competitive with nonunionized retailers.
The story also notes that putting more economic pressure on the unionized retailers, makes self-checkout a stronger tactic for stores, pushes more automation in other areas and contributes to more store closings, things that do not help workers. Self-checkout, however, has proved problematic for some stores, due to theft and fraud.
The UFCW represents union workers at a number of the Big Four’s packing plants and, as would be expected, their concern is union workers, not consumers or employers. It’s very possible that the political antennae at USDA are carefully tuned to the UFCW. If the forces of the administration -- the FTC, DOJ and USDA -- become aligned in a serious campaign against the Big Four, as well as big retailers, the beef industry could be in for tough times. And likely, the next targets would be big restaurant, fast food and steakhouse chains.
The political left will be grasping at any straw with the outlook for the Democrats’ election chances looking bleak.
Things to think about with presidential elections coming this fall, a significant upheaval going on in the makeup of Congress and at least some uncertainty in this economy.
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