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Unions praise FTC lawsuit blocking Kroger and Albertsons' merger

A screen displays the company logo for Kroger Co on the floor of the NYSE in New York

By Siddharth Cavale

NEW YORK (Reuters) -Unionized workers at Kroger and Albertsons supermarkets on Monday mostly celebrated the U.S. Federal Trade Commission's lawsuit to block the retail merger, citing the possibility of lower wages and higher prices at a combined grocery chain.

The FTC sued to block Kroger's $24.6 billion deal to buy smaller rival Albertsons' on Monday saying it would lead to higher grocery prices, financially straining Americans.

"The FTC's decision reflects clear concerns over the impact such a megamerger could have on workers, food prices, and millions of customers," Marc Perrone, president of the United Food and Commercial Workers International Union said in a statement.

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The union, which represents more than 100,000 Kroger and Albertsons workers, has steadfastly opposed the deal since it was announced in October 2022.

A coalition of UFCW Locals jointly issued a statement applauding the lawsuit saying the FTC "recognizes the threat" that the merger would have caused.

"This is a step in the right direction for building a better food system in this country," the UFCW Local chapters 5, 7, 324, 400, 770, 1564, 3000 said in a statement.

The UFCW and its local chapters met with state attorney generals and federal officials, organizing protests and launching a website called nogrocerymerger.com to rally opposition to the deal.

"This is such an important time in history where this consolidation is dangerous," Kim Cordova, president of UFCW Local 7 told Reuters, pointing to the inflation-squeezing effects on Americans. The union represents hundreds of King Soopers and Safeway workers, chains owned by Kroger and Albertsons, in Colorado and Wyoming.

"What would this do to economies if they suppress wages along with their ability to control the prices of groceries?" Cordova asked.

Kroger and Albertsons say the $24.6 billion merger would help them better compete against Amazon and Walmart, which are not unionized. As a combined retailer, Kroger and Albertsons said they would invest $500 million to lower prices and $1.3 billion to improve Albertsons' stores. They have also promised no union job losses.

The chains proposed to divest 413 stores and eight distribution centers to C&S Wholesale Grocers. However, the states of Colorado and Washington have already sued to block the deal.

Kroger, in response to the unions' comments, said it had a proven track record of being pro-union, adding more than 100,000 union jobs since 2012.

"The only winners if this merger is blocked will be larger, non-unionized retailers who will continue to fight union growth," a Kroger spokesperson said.

One labor union primarily representing Fred Meyer, Albertsons and Safeway stores, expressed support for the deal.

They argued that Cerberus Capital, which acquired Albertsons in 2005, would sell the supermarket chain to someone else if it does not end up being acquired by Kroger.

"When you look at all the pieces on the table, at the end of the day, the status quo is not an option," Miles Eshaia, communications co-ordinator for UFCW Local 555 told Reuters.

"I'd rather be working with C&S than Amazon , Walmart or Target," he added saying they are not pure-play grocery companies.

(Reporting by Siddharth Cavale in New YorkEditing by Alistair Bell)