The U.S. Justice Department is being urged by unions and advocates to investigate whether Kroger Co. and Albertsons Cos. engaged in illegal collusion. Evidence supporting this claim has been uncovered in recent lawsuits that aim to block the proposed merger of these two grocery giants.
In February, the U.S. Federal Trade Commission, backed by a group of states, sued the two companies attempting to halt their $24.6 billion tie-up in federal court. This was closely followed by a similar lawsuit, filed by the Colorado attorney general in state court. Both complaints cited instances of non-solicitation agreements and pacts not to poach each other’s employees and customers — practices, the advocates and labor groups say, warrant a criminal investigation by federal antitrust authorities.
The American Economic Liberties Project – an anti-monopoly group – in addition to a coalition of seven United Food and Commercial Workers local unions, have penned a letter prompting the DOJ to launch an investigation. In particular, they suggest that activities such as “price-fixing via non-solicitation agreements” and “wage-fixing via no-poach agreements” could be subject to criminal penalties.
The allegations have been vigorously denied by a representative of Kroger, who argued that employees frequently transfer between the two companies as well as numerous competitive retailers. Despite these claims, the DOJ has increased its scrutiny of antitrust violations harming labor market conditions, recently holding first criminal trials on the allegations of these breaches.
Should the allegations from the FTC and Colorado lawsuits prove true, they would be accounted as direct violations (or, ‘per se’ violations) of Section 1 of the Sherman Act, as suggested by the alliance’s letter to Attorney General Merrick Garland and DOJ Antitrust Division Chief Jonathan Kanter.
A mid-August hearing has been scheduled in Colorado’s court. Coincidentally, this hearing is just prior to when the FTC’s case goes to trial in Oregon’s federal court.