Teamsters gives thumbs-down to Kroger-Albertsons merger

Another major union in the grocery industry is officially against the planned $24.6 billion Kroger-Albertsons merger.

The International Brotherhood of Teamsters late Monday announced its formal opposition to the pending mega-deal, which would be the largest-ever U.S. supermarket merger. In early May, United Food and Commercial Workers International—the nation’s biggest grocery retail union—said it officially opposes the Kroger-Albertsons transaction.

Teamsters noted that its decision to formally come out against the merger stems from months of discussions with Kroger and Albertsons about safeguarding the basic interests of union members employed by the retailers.

“Kroger and Albertsons management likes to talk the talk on job security when they’re sitting in front of Congress, but talk means little when it comes protecting our members,” Teamsters General President Sean O’Brien said in a statement. “We expected better from these two longtime Teamster employers. Clearly, they are more interested in guaranteeing big payouts for management.”

Unveiled in mid-October, The Kroger Co.’s deal to acquire Albertsons Cos. would join the nation’s two largest conventional supermarket operators, creating a company with annual revenue of about $210 billion and 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies, 2,015 fuel centers and 710,000 workers in 48 states and the District of Columbia. Currently, the transaction is in the antitrust review stage with federal and state regulators.

Teamsters said it now represents more than 22,000 members in Kroger and Albertsons stores, distribution centers and manufacturing plants across the country. Overall, the union’s membership numbers 1.2 million in the United States, Canada and Puerto Rico.

“In our discussions with Kroger and Albertsons, we made clear that our members need more than vague promises about their future,” according to Tom Erickson, vice president for Teamsters International and director of the Teamsters warehouse division. “If either company were truly sincere about protecting our members, they would agree to recognize our existing union contracts, or agree to successorship language for any of our member units sold to third parties, once the merger is complete. Instead of finding a path to ensure our members succeed in lockstep with the companies, Kroger and Albertsons apparently want to go down this road alone.”

Cincinnati-based Kroger responded to the Teamsters' anti-merger declaration on Tuesday, citing its communication with the union about the Albertsons acquisition and the deal's competitive benefits versus non-union rivals.

“We have and will continue to engage constructively with the Teamsters regarding the merger benefits and our divestiture plan, which includes no store closures or frontline associate layoffs as a result of the transaction," Kroger said in an emailed statement. "The merger is a win for our associates, customers and communities. The only parties who would benefit if this merger is not completed are large, non-unionized competitors such as Walmart and Amazon.”

Albertsons, based in Boise, Idaho, also emphasized that the merger would bolster union jobs.

“We have a rich history of creating quality jobs and working collaboratively alongside Teamsters," Albertsons stated in an email on Tuesday. "Our proposed merger with Kroger will secure the long-term future of union jobs by establishing a more competitive alternative to large, non-union retailers. The combined company will also invest in associate wages, training and benefits to ensure it is able to bring even more value to the customers and communities our associates so proudly serve.”

Questions linger during regulatory review phase

To get the OK from regulators, Kroger and Albertsons have said they plan to divest 100 to 375 stores through direct sales to other operators and/or a newly formed spinoff company, dubbed SpinCo. Their agreement includes a cap of 650 store divestitures, at which point the companies could opt to re-evaluate the transaction. Kroger has said the merger deal is on track to close in early 2024.

Opponents of the Kroger-Albertsons merger have said it will lead to higher prices for consumers, potentially thousands of job cuts from closings and/or divestitures of stores and other facilities, pressure on wages and an imbalanced playing field for smaller grocery retailers, manufacturers and food producers. The scale of the combined retailer also would give union workers a more formidable party on the other side of the bargaining table at contract time.

Kroger and Albertsons’ assurances that the deal wouldn’t cost union jobs haven’t eased such concerns, since potential buyers of divested stores may be non-union and the financial state of new owners or spun-off stores remains to be seen.

When Kroger and Albertsons announced the merger pact on Oct. 14, Teamsters O’Brien  noted that the union “will oppose any merger that threatens jobs or weakens working conditions”—a stance also taken by UFCW International.

“The proposed merger between Kroger and Albertsons will have serious implications for the more than 18,000 Teamsters employed at both companies and is another example of why real antitrust reform is needed,” O’Brien stated at the time. “Historically, mergers of this magnitude have a negative impact on workers and the public. Less competition almost always means higher prices and fewer choices. We will be monitoring developments as the regulatory process plays out. There are a lot of unanswered questions that need to be addressed.”

In early May, Kroger Chairman and CEO Rodney McMullen and Albertsons Cos. CEO Vivek Sankaran called out what they see as public “misconceptions” about their companies’ pending merger in a Cincinnati Enquirer op-ed article. The two CEOs essentially restated what they’ve said publicly since the deal was announced: No store closings or job cuts are upcoming, and the combined company aims to use its scale to lower prices, not raise them.

“We value and respect our associates and would never move forward with this combination if it could risk their careers. No frontline workers will be laid off as a result of the merger,” McMullen and Sankaran said in the Enquirer column. “The combined company will have one of the largest unionized workforces in the country. We are committed to protecting and expanding opportunities for union jobs.”