Breaking News: Two Major Grocery Chains Allegedly Struck A Backroom Deal To Weaken Workers’ Union

The grocery giants Albertsons and Kroger illegally colluded to weaken workers’ leverage amid strikes and contract negotiations in 2022, according to a lawsuit Colorado’s attorney general filed this week.

As workers at 78 Kroger-owned King Soopers stores in Colorado were preparing to walk off the job that January, an Albertsons labor relations executive informed a counterpart at Kroger that his company would not poach strikers during the work stoppage, the lawsuit states.

“We don’t intend to hire any King Soupers [sic] employees and we have already advised the Safeway division of our position and the division agrees,” Albertsons’ senior vice president of labor relations wrote in an email quoted in the complaint.

The lawsuit also alleges that Albertsons agreed not to solicit King Soopers customers to switch their prescriptions over to Albertsons in-store pharmacies, likely helping King Soopers hold onto those customers during the strike.

Colorado Attorney General Philip J. Weiser said in the lawsuit that the alleged agreements were meant to diminish the bargaining power of the United Food and Commercial Workers Union Local 7, which led the King Soopers strike and was about to bargain a new collective bargaining agreement with Albertsons-owned Safeway.

“We will never know what concessions we could have got from these employers.”

– Kim Cordova, president, UFCW Local 7

The suit is aimed at blocking a proposed $25 billion merger between Kroger and Albertsons that was announced in 2022. It also seeks to bar any no-poach agreements between the companies, and calls for each company to pay a $1 million civil penalty for any alleged agreements.

A Kroger spokesperson said in an email that Weiser had “mischaracaterize[d] the facts.”

“There was not then, and there is not now, non-solicitation or so-called no-poach agreements between Kroger and Albertsons,” the spokesperson said. “Employees at both companies regularly join our teams from — and exit our companies for opportunities to work at — Albertsons, Kroger, Walmart, Amazon, Costco and other retailers.”

They also said blocking the Kroger-Albertsons merger “would only serve to strengthen larger, non-unionized retailers like Walmart, Costco and Amazon.”

Albertsons did not respond to a request for comment.

Companies can suppress workers’ wages and clout by agreeing not to hire them away from one another. In the case of a strike like the one at King Soopers, workers may have sought to pick up shifts at a competitor like Safeway just to stay afloat. Having less money coming in would make it harder for workers to hold out at the bargaining table.

The lawsuit quotes testimony collected as part of the Federal Trade Commission’s investigation into the merger. Per that testimony, another Albertsons executive said it was important Kroger “hold the line” and “stay strong” in bargaining with UFCW.

Albertsons had recently extended its own contracts with UFCW Local 7 but would soon renegotiate them.

Weiser argues in the suit that the Albertsons-Kroger merger should be blocked because it would “increase the likelihood of anticompetitive collusion.” He cited the alleged no-poach pact as one example, saying it “strengthened Kroger’s ability to resist union demands at the negotiating table.”

Albertsons allegedly agreed not to poach workers from Kroger-owned King Soopers when workers at 78 stores went on strike in 2022.

Hyoung Chang/MediaNews Group/The Denver Post via Getty Images via Getty Images

Kim Cordova, the president of UFCW Local 7, told HuffPost that her union only became aware of the emails through Weiser’s lawsuit. She said the union immediately filed unfair labor practice charges against both companies with the National Labor Relations Board, which investigates union-busting allegations. The union is also considering suing, she said.

“We will never know what concessions we could have got from these employers” absent the alleged no-poach and no-solicitation pacts, Cordova said. “We did well [with our contracts] but we could have done even better.”

UFCW Local 7 has opposed the $25 billion Kroger-Albertsons merger since it was announced in 2022, arguing that it would reduce competition for both workers and consumers, leading to lower wages and higher grocery prices. Both companies have more than 2,000 stores apiece under a slew of brand names.

Sen. Elizabeth Warren (D-Mass.), a vocal critic of the merger, told HuffPost in a statement that the two companies “are supposed to be competitors.”

“But rather than compete over lower prices for consumers and higher pay for workers, it appears that corporate executives for Kroger and Albertsons colluded to hurt working people,” Warren said.

Cordova argued that the week-and-a-half King Soopers strike is turning out to be a good example of how a merger would be bad for workers. The job market was extremely tight at the time of the strike, so it should have been easy for a worker at a King Soopers to pick up a job at a Safeway if they needed to. She said in Colorado it’s common to see one store “right across the street” from the other.

“Everybody was fighting for a workforce,” Cordova said. “So while we had strikers that walked out, [the alleged no-poach agreement] limited their ability to get a job within the industry.”

“That’s a ploy so workers won’t walk out on strike, and wont have options for other income,” she went on. “That was leverage they were trying to use against us.”

“Weiser argues in the suit that the Albertsons-Kroger merger should be blocked because it would ‘increase the likelihood of anticompetitive collusion.’”

Cordova said she believes an agreement not to solicit King Soopers pharmacy customers during the strike could have had a significant impact. She said quite a few shoppers crossed workers’ picket lines at King Soopers stores because they needed to get their prescriptions. They often said they were only getting their medications and not buying anything else, Cordova said, but it made the picket line look weaker than it was.

In the lawsuit, Weiser called the alleged agreements between Kroger and Albertsons “unconscionable and per se unlawful,” and asserted that “executives at the very highest levels of both companies knew” about them.

While the two companies had to bargain their own, separate contracts with the union, the agreement with Kroger’s King Soopers stores was bound to influence the agreement reached later with Albertsons’ Safeway stores. Cordova said it’s important for workers to be able to “play them off of each other” in order to secure the best deal from both.

Given what she saw in the lawsuit this week, she now wonders if the strike could have played out differently.

“Maybe we could have struck longer,” she said, “or could have struck [Safeway] if we knew they had entered into an agreement like that.”

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