By Siddharth Cavale
NEW YORK (Reuters) -Kroger Co’s acquisition of Albertsons Companies Inc could exacerbate income inequality through job losses and eroding wages at a time of high inflation, a group of the retailers’ biggest unions and antitrust experts wrote in a letter seen by Reuters on Thursday.
“In many markets across the country, grocery competition would cease, likely resulting in employee layoffs and higher prices,” they wrote in a letter addressed to the Federal Trade Commission (FTC) chair Lina Khan, urging the agency to block the deal.
“The merger should be blocked, as it would harm workers, consumers and communities,” said the United Food & Commercial Workers (UFCW) Local 400, who authored the letter.
Twenty-six organizations undersigned the message, including the American Economic Liberties Project, Center for Economic and Policy Research, along with seven UFCW local chapters representing more than 100,000 Kroger and Albertsons’ workers.
“People living in poverty will suffer most of all—not only because of skyrocketing prices as competition vanishes, but through probable store closures,” they added.
The letter, first seen by Reuters, also urged the FTC to immediately investigate Albertsons’ “unusual” $4 billion dividend to shareholders on Nov. 7, which it said would leave the company “largely depleted of liquid assets” and “unsustainable as an ongoing concern.”
Attorneys general of three states and the District of Columbia have made similar claims this week, filing lawsuits seeking to block the dividend payment announced as part of Kroger’s $25 billion acquisition of rival Albertsons last month.
The deal has faced resistance from several quarters besides its unionized workers. U.S. senators are conducting hearings, while a group of attorneys general are conducting their own investigations.
It is not clear if the FTC will take measures against this deal, but the agency has blocked smaller deals previously, including that of publisher Penguin Random House and Simon & Schuster.
“The allegation that this dividend will somehow hinder our ability to compete in the marketplace is meritless,” an Albertsons spokesperson said in an emailed response to the letter.
As part of the deal, the combined companies have said they will make investments of about $500 million to lower prices, $1.3 billion into Albertsons’ stores to improve the customer experience and $1 billion to continue raising associate wages and benefits in response to inflation.
On Thursday, Kroger said it expects a growth in union jobs to continue and that it looks forward to “continuing our active engagement with key leaders of the UFCW and 106 locals” and “working constructively” with the FTC, to complete the deal.
The FTC did not offer comment.
(Reporting by Siddharth Cavale in New York; Editing by Aurora Ellis)