CINCINNATI -- Kroger here said last week it will pay approximately $116 million on a pretax basis for the fiscal year ended Jan. 31 to Safeway and Albertsons to compensate them for losses during the 20-week strike-lockout in Southern California that ended in early March.
ing to Kroger's 10-K filing with the Securities and Exchange Commission last week, its payout is the result of an agreement among the three chains "to prevent the unions from placing disproportionate pressure on one or more of [them] by picketing one or more ... but not the others.
"The agreement provided for payments from any of the retailers who gained from such disproportionate pressure to any of the retailers who suffered from such disproportionate pressure, based on a percentage of the sales deemed caused by the disproportionate pressure."
Bill Lockyer, California's attorney general, deemed the agreement to be in violation of federal antitrust laws, and filed suit earlier this year. A spokesman for Lockyer said the suit is proceeding in U.S. District Court in Los Angeles, with the prosecution going through the discovery process.
The labor dispute that prompted the agreement began with a strike by the United Food and Commercial Workers Union against Vons, Safeway's Southern California division, followed by a lockout at Albertsons and at Ralphs, Kroger's Southern California division. However, the union lifted pickets from most Ralphs stores two weeks into the dispute to give consumers a place to shop without crossing picket lines, enabling Ralphs to reap greater sales and profits, which it promised to share with its two primary competitors.
Kroger said expenses related to the agreement were recorded as operating, general and administrative costs, and totaled approximately $116 million pretax in fiscal 2003. The company said the money will be paid during the first quarter.