The FTC’s federal court victory Tuesday in blocking Kroger’s (KR) attempted $24.6 billion acquisition of rival Albertsons (ACI) didn’t advance labor-related antitrust law as far as advocates had hoped. But U.S. District Judge Adrienne Nelson’s opinion did provide some guidance on how U.S. enforcers can bring future so-called labor monopsony cases.
The FTC in its complaint argued that by merging, Kroger and Albertsons would deny their unionized workers the opportunity to play the companies off each other during collective bargaining sessions. Often the United Food and Commercial Workers union, which represents more than 100,000 workers at the two companies, reaches an agreement with one company, then threatens to strike at the other until it agrees to the same terms.
A loss of that leverage would lead to contracts with worse wages, benefits and working conditions, the FTC told Nelson.
“With only one union employer in many markets, defendants would be in a relatively stronger, and union grocery workers in a relatively weaker, bargaining position,” Nelson wrote in her opinion.
The federal judge’s decision was one of two this week against the deal. A judge in Washington state court also said the deal was anticompetitive but wasn’t asked to rule on the agency’s labor market argument.
Nelson said that the FTC’s argument made more sense than Kroger and Albertsons’ view that the loss of direct competition between Kroger and Albertsons “would not change the balance of power at the bargaining table and, on the contrary, would be beneficial for union grocery workers.”
But Nelson ultimately declined to rule on the FTC’s argument that the deal would concentrate the market for union grocery store workers, driving down pay and benefits. She found enough other problems with the transaction, which would have created the largest U.S. supermarket chain, to side with the agency.
“There is no economic modeling of how wages, benefits, and other compensation might change as a result of changes in bargaining power, either in absolute terms or relative to non-union grocery wages,” Nelson wrote. “Even if those calculations were available, plaintiffs have not explained what they believe would be a ‘substantial’ reduction in competition.”
The agency failed to use the case to meaningfully advance the law on the increasingly important overlap between worker issues and antitrust, said Eric Posner, a former DOJ labor market adviser who’s a professor at the University of Chicago Law School.
He criticized the FTC for not providing Nelson with the economic research that would have supported a more favorable ruling on the labor argument. Such an outcome was plausible, Posner added, pointing to the DOJ’s use of market data to convince a judge in 2022 to block Penguin Random House’s attempted takeover of rival publishing houses Simon & Schuster over the deal likely lowering cash advances for blockbuster authors’ books.
“I think the FTC just blew it” in the Kroger/Albertsons case, Posner said. “They got the end that they wanted, and workers as well as consumers will benefit. But it just seemed like a big missed opportunity to get on the books a nice opinion recognizing that a merger would have negative effects on the labor market.”
Nelson’s decision illustrates the difficulty in building case law on labor markets, a major goal of the Biden administration as it sought to find new ways to protect workers with antitrust laws.
Labor economics is a distinct field from industrial organization economics, said Marshall Steinbaum, a professor of economics at the University of Utah who wrote a white paper on the merger’s impact on workers. And while the FTC has sought to hire labor economists, Steinbaum said, there may be a delay before new ideas take hold about mergers’ effects on the workforce.
While some economic literature exists on the role of unions in negotiating terms and conditions—the type of information the judge sought from the agency—Steinbaum said, he hoped her opinion would generate more interest in the topic among researchers.
Merit in market definition. Nelson’s decision did contain some good news for the FTC on its labor argument. She agreed with the agency’s definition of a market encompassing unionized grocery store workers. That’s a major step forward in the struggle to define a market for low-wage workers—often a fraught endeavor due to the long-running assumption that it’s easy for employees making less money to switch jobs—said Laura Phillips-Sawyer, a professor at the University of Georgia School of Law.
“It’s a promising signal to organized labor that this is being taken seriously in the Kroger/Albertsons case, because often the specialized labor argument sort of assumes that all low-skilled workers are interchangeable in some ways,” Phillips-Sawyer said. Tuesday’s decision “moves us closer to evaluating economic realities,” she said.
Steinbaum, who worked with UFCW locals to research the competitive impact of the deal on workers, said Nelson’s opinion should encourage antitrust enforcers to bring labor market arguments to bear against anticompetitive mergers.
If a federal court is willing to accept that unionized grocery workers are a distinct market, there’s no limit to the number of ways a creative enforcer could use that in bringing a case against future anticompetitive deals, he said.
“Rather than placing more burdens on enforcers to try and bring a novel theory, I would say this really shifts the dial to offering a new option to enforcers to get what they want through an alternative means,” Steinbaum said. “Every single aspect of the labor part of this decision is something I could easily imagine being quoted in future cases on labor theories.”
Even if Nelson didn’t reach a full conclusion, her train of thought implicitly recognizes that merger enforcement can enhance unionization, Steinbaum said.
The decision is the first in an antitrust merger case to explicitly designate unionized workers as a relevant labor market distinct from non-unionized workers. Amanda Lewis, a partner at Cuneo Gilbert and LaDuca who filed an amicus brief on behalf of members of Congress in support of the FTC’s challenge, described that as a historic win.
The terms in which Nelson defined union workers as a relevant labor market were highly favorable to the FTC’s argument, Lewis said: The judge accepted that the merger would produce a loss of competition within that market and undermine unionized workers’ ability to bargain.
Although the decision stopped short of accepting that the harms met the standard of a “substantial” loss of competition, Lewis said that it invites U.S. enforcers to bring similar challenges in future cases and lists the evidence they would need to support their claims.
Randy Stutz, president of the American Antitrust Institute and a former FTC adviser, also spoke about the possibility of future merger challenges pushing forward labor market theories.
“Courts are going to insist on a comparable caliber of evidence for labor market harms that it’s become accustomed to seeing in product markets,” said Stutz, whose group supports aggressive enforcement. The judge “wanted some more comfort in the form of expert proof before going out on what some might call a limb.”
NLRB chair’s renomination shot down in Senate. Two former Democratic senators, Joe Manchin (I-WV) and Kyrsten Sinema (I-AZ), sided with Republicans Wednesday to close debate on the renomination of National Labor Relations Board Chair Lauren McFerran.
The vote effectively ended the chance McFerran would continue in her role and that Democrats would retain control of the agency as President-elect Donald Trump, a Republican, prepares to take office next month.
The vote is a stinging defeat for organized labor, which saw significant legal gains under McFerran’s tenure. Worker advocacy groups had lined up behind her renomination.
President Joe Biden renominated McFerran, who has served as chair since 2020, to a third term in May. The agency’s five board spots open sequentially every year, and if the Senate had approved her, McFerran would have locked in a Democrat majority until a third seat opened up for Republicans in August 2026.
It’s now likely that Trump will appoint a new chair once his second term begins, establishing a Republican majority at the agency.
The vote against McFerran is one of Manchin’s and Sinema’s last; neither senator sought reelection.
The NLRB, Manchin and Sinema didn’t respond to requests for comment.
