MONOPOLY CAPITALI$M

Grocery Store Workers Stand to Lose Over $300 Million Annually if Kroger and Albertsons Merge

Workers’ ability to negotiate better pay and working conditions rests on their capacity to switch jobs. By decreasing the number of outside options available to workers, the merger will limit competition.

Unionized grocery store workers rally to oppose the proposed merger between Kroger and Albertsons outside a Ralph's supermarket in Los Angeles on April 13, 2023, out of concern for less competition, increasing food prices and putting union jobs at risk.
(Photo: Frederic J. Brown/AFP via Getty Images)

BEN ZIPPERER
May 07, 2023

EPI Blog

In October 2022, Kroger, the largest supermarket chain in the U.S., announced plans to acquire Albertsons, the second largest, for $24.6 billion—a deal that faces antitrust scrutiny from the Federal Trade Commission and state regulators. Historically, antitrust concerns have focused on the damage to consumers caused by concentration in product markets that gives large firms pricing power. However, a recent wave of economic research has called attention to potential damages to workers’ bargaining power over wages stemming from concentration in labor markets. In this policy memo, we discuss these labor market implications of the proposed merger. We find that the merger of two of the largest supermarket chains in the country will increase employer concentration and reduce the wages of all grocery store workers in affected cities across the country.

Workers’ ability to negotiate better pay and working conditions rests on their capacity to switch jobs. By decreasing the number of outside options available to workers, the merger will limit competition for hiring and retaining employees, and grocery store worker earnings will fall as a result. Crucially, the wage effects we identify are solely driven by this increase in labor market concentration. If the merger also leads to layoffs or hours cuts, this would add another dimension of damage to affected workers.

Our analysis uses grocery store employment and earnings data and the specific locations of Kroger and Albertsons stores. We find that:The merger will lower wages for 746,000 grocery store workers in over 50 metropolitan areas of the U.S. Increased concentration will suppress wages for all grocery store workers in affected cities—not only those workers currently employed by Kroger or Albertsons;
The total annual earnings of grocery store workers will fall by $334 million in affected metropolitan areas;
Because Kroger and Albertsons employ about one quarter of all grocery store employees, most of the wage losses caused by the merger will be a negative externality that falls on grocery store workers employed by other firms. On average, all grocery workers in affected markets will lose about $450 per year in wage income;
Earnings losses will be smaller in areas with a stronger union presence or a tighter labor market. In areas with weaker worker bargaining power, workers will experience larger wage declines; and
The expected earnings losses are a pure windfall for the employers. In our analysis, wages fall solely because of a change in labor market power brought about by increased concentration. Quantitatively, this windfall represents a significant transfer of income from wages to profits: The decrease in wages is equivalent to 2% of Kroger and Albertsons’ profits or three times the companies’ CEO compensation.
Analysis

Recent research has established that concentrated labor markets can reduce worker pay. As explained in Abdela and Steinbaum (2018), much of this research estimates the expected change in average wages for a given change in employer concentration in a particular industry- or occupation-specific labor market.

This analysis uses estimates from that research and applies them to labor markets, which we define as grocery store industry employers or employees in metropolitan areas using the 4-digit North American Industry Classification System (NAICS) industry 4451, Grocery and Convenience Retailers. For each of these metropolitan area labor markets, total grocery store wage losses are calculated by estimating percent changes in employer concentration due to the merger and multiplying those concentration changes by the wage responses estimated in the research literature described above.

To estimate the percent change in concentration due to the merger, we first estimate the level difference in the metropolitan area grocery store industry concentration before and after the merger and then divide that level change by an estimate of the baseline, pre-merger concentration.

On average, each of the affected 746,000 workers will lose about $450 in annual wage income.

To estimate the pre-merger concentration levels, we choose an average pre-merger concentration level by relying on the existing research literature that calculates trends in retail or grocery concentration. Measuring concentration as the Herfindahl-Hirschman Index (HHI) for 4-digit NAICS industries in commuting zones, Rinz (2022) found that the average HHI for the retail trade sector trended between 0.1 and 0.2 between 1976 and 2015. Zeballos, Dong, and Islamaj (2023) also calculated that the average HHI for two 6-digit industries associated with food retail markets in metropolitan areas rose from about 0.1 in 1990 to about 0.2 in 2019. In the following analysis, we choose a constant 0.15 as the average pre-merger concentration level in metropolitan areas for the grocery store industry. Coincidentally, 0.15 is the threshold at which the Department of Justice considers a market to be “moderately concentrated.”

In our analysis, the pre- and post-merger difference in concentration levels assumes Kroger and Albertsons act as two separate firms prior to the merger and as one single firm after the merger, and then we calculate the level change in HHI where it is possible to estimate store-level employment for each Kroger and Albertsons store. This estimate is a linear prediction based on a subset of 153 stores for which we have employment estimates, square footage data, and Quarterly Census of Employment and Wages (QCEW) metropolitan area-level average employment per establishment.

All told, this analysis covers 205 metropolitan areas containing 3,770 Kroger and Albertsons stores for which we can estimate store-level employment—and hence potential concentration changes—and for which we have 2022 QCEW data for baseline metropolitan area grocery store employment and earnings levels. According to the 2022 QCEW data, there are about 1.6 million grocery store workers in these cities and about 2.8 million grocery store workers nationwide. In 55 of these metropolitan areas, concentration will increase after the merger because these areas contain both Kroger and Albertsons stores.

Wages will fall on average for all grocery store workers in these areas due to the decrease in employer competition. (In other metropolitan areas, we assume there will be no wage change due to the merger because there is no estimated change in concentration.) The exact magnitude of the wage response is based on estimates published in Rinz (2022): Specifically, our analysis assumes that a 10% increase in concentration in a labor market will lower the average wage by 0.4%.

Table 1 summarizes the results. The metropolitan areas with concentration increases contain 746,000 grocery store workers, and the total annual wage bill is $26.3 billion. Across these areas, earnings-weighted average concentration will increase by 32% because of the merger. As a result, wages will decline by 1.3%, given the assumed elasticity of wages with respect to a concentration of -0.04. The Kroger-Albertsons merger will cause annual wages to fall in these affected cities by a total of $334 million. On average, each of the affected 746,000 workers will lose about $450 in annual wage income.

Because the wage losses will, on average, affect every grocery store worker in a metropolitan area where there is a merger of Kroger and Albertsons’ stores, cities with large grocery employment bases will experience particularly large losses in total wage income. Table 2 shows the 10 largest wage losses by metropolitan area. For example, the merger will cause annual grocery store wages to fall by $51 million in the Los Angeles-Long Beach-Anaheim, California, metropolitan area and $32 million in the Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin, metropolitan area

The effects described above represent average losses, and some individual workers may experience larger or smaller wage declines. In particular, the losses may be reduced in labor markets where workers have more bargaining power. Benmelech, Bergman and Kim (2022), in the case of manufacturing, and Prager and Schmitt (2021), in the case of hospital workers, show that the negative wage effects of employer concentration are larger in areas where union density is below average or right-to-work laws reduce unions’ bargaining power. For example, union coverage rates in the grocery store industry are only 8% in the South, but 20% in the Northeast.

As wage declines entail significant losses for grocery store workers, they simultaneously represent sizable parts of Kroger and Albertsons’ bottom lines. Some reports estimate total employment at Kroger and Albertsons to be about 710,000 workers, about one quarter of the total 2.8 million employees in the grocery store industry. Accordingly, a reasonable expectation for wage losses for employees at Kroger and Albertsons is one quarter of the $334 million, or about $84 million. Since Kroger’s profits were $2.3 billion and Albertsons profits were $1.5 billion in 2022, the merger-induced decline in grocery store worker wages is equivalent to about a 2% increase in Kroger and Albertsons’ profits. Because grocery profits were relatively high in 2022, the wage reductions would represent an even higher share of “normal” pre-pandemic profits. The wage losses also represent a significant windfall for company executives: Wage losses for workers at Kroger and Albertsons are about three times the size of the total CEO compensation of the two companies.
Conclusion

The Kroger and Albertsons merger will reduce the number of outside employment options available to workers and place downward pressure on grocery store workers’ wages. Based on existing empirical research showing the labor market effects of employer concentration, we find that the merger will permanently reduce the wages of 776,000 grocery store workers. Their annual earnings will fall by $334 million—about a $450 loss in annual wages per worker. If unionization rates were significantly higher in areas affected by the merger, union contracts and bargaining power could mitigate some of these losses.

For additional notes and references, see the original Economic Policy Institute report.

© 2023 Economic Policy Institute

BEN ZIPPERER is an economist at the Economic Policy Institute. His areas of expertise include the minimum wage, inequality, and low-wage labor markets. He has published research in the Industrial and Labor Relations Review and has been quoted in outlets such as the New York Times, The Washington Post, Bloomberg, and the BBC.
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CANADA

Rising grocer profit margins underscore need for competition, regulator finds

The Canadian Press
Tue, June 27, 2023


Canada's grocery sector needs more competition to help keep food prices down, give shoppers more choice and encourage new entrants, the country's competition watchdog says.

In a highly anticipated study released Tuesday, the Competition Bureau said concentration in the grocery industry has increased in recent years and the largest grocers have increased the amount they make on food sales.

Most Canadians buy groceries in stores owned by a handful of grocery giants, with Canada’s three largest grocers — Loblaws, Sobeys, and Metro — collectively reporting more than $100 billion in sales and $3.6 billion in profits last year, the study found.

Food gross margins have generally increased over the last five years by a "modest yet meaningful" amount of one or two percentage points, the Competition Bureau said.

"This longer-term trend predates the supply chain disruptions faced during the pandemic and the current inflationary period," it said.

That's roughly equivalent to $1 to $2 on each $100 that Canadians spend on groceries, the study found.

The regulator said this signals the need for more competition in Canada’s grocery industry.

"Canada needs solutions to help bring grocery prices in check," the study said. "More competition is a key part of the answer."

The competition watchdog proposed four recommendations to improve competition and lower prices, including an innovation strategy to support new grocery businesses and expand consumer choice.

It also recommends governments encourage the growth of independent grocers and the entry of international grocers into the Canadian market, standardize unit pricing to help Canadians easily compare prices, and curb real estate practices in the industry that limit competition, such as putting covenants on sold land that prevents any new grocer from operating there.

Gary Sands, senior vice-president of public policy with the Canadian Federation of Independent Grocers, said the study recognizes that more needs to be done to support independent grocers in Canada.

"They've drawn attention to some of the challenges that are faced by independent grocers," he said. "There are a lot of barriers to entry that make it hard to compete with the chains and this will hopefully lead to some changes."

Karl Littler, senior vice-president of public affairs with the Retail Council of Canada, said the study proves that major grocery chains have not made an excessive profit on food.

"We see this as another nail in the coffin of the greedflation hysteria," he said, referring to allegations that higher prices during the pandemic have been due to grocery chains engaged in price gouging and so-called greedflation — raising prices by more than the rate of inflation.

However, the Bureau said its inability to compel information as part of the study limited its access to some details and highlighted the need for more formal information-gathering powers.

It said it also needs to approach its work in the grocery industry with "heightened vigilance and scrutiny" to ensure Canadians benefit from greater choice and more affordable groceries.

"We need to thoroughly and quickly investigate allegations of wrongdoing, and we need the power to act when issues arise," the study said.

In a survey of consumer attitudes and opinions about the grocery sector, some Canadians said the country's laws don't go far enough to stop deals that are bad for competition, while others felt the Competition Bureau has just not done a good enough job enforcing those laws, the study said.

When the Competition Act was introduced in 1986, there were at least eight large grocery chains across Canada, the study said. Each was owned by a different company.

Today there are five large chains that operate in Canada: Loblaw, Sobeys, Metro, Costco and Walmart.

The competition watchdog committed to taking steps to better promote competition in the Canadian grocery industry, including providing a pro-competitive perspective to support the implementation of Canada’s grocery code of conduct.

It also committed to revisiting the findings of its study in three years to assess the progress on recommendations it has made to government.

The concentrated nature of Canada's grocery's sector has come under intense scrutiny in recent years.

The big three grocery chains have been embroiled in an alleged bread price-fixing scheme, which observers say has triggered distrust of the grocery industry.

The large grocers have also been accused of wage fixing after simultaneously scrapping pandemic bonuses for front-line workers.

It's behaviour the House of Commons industry committee likened to "cartel-like practices" in a June 2021 report.

Yet Canada's grocers have argued that consolidation increases efficiencies and provides consumers with more value, even as their profits have climbed.

The House of Commons agriculture committee has floated the idea of a windfall tax on those profits to "disincentivize excess hikes in their profit margins for these items."

Meanwhile, a grocery industry committee is continuing to hammer out a new code of conduct that would help level the playing field between large grocers, independents and suppliers.

Food prices have recorded a massive spike in Canada since November 2021 — the last month for which grocery inflation was under five per cent.

Since then, grocery prices have consistently risen by close to double digits, peaking at an 11.4 per cent year-over-year price hike last September and again in November before easing somewhat in recent months.

Statistics Canada said Tuesday grocery prices rose nine per cent year over year in May.

This report by The Canadian Press was first published June 27, 2023.

Companies in this story: (TSX:L, TSX:EMP.A, TSX:MRU)

Brett Bundale, The Canadian Press

How the fight over 'hero pay' for grocery workers reveals chain stores' massive corporate greed

PAUL CONSTANT
FEB 27, 2021, 

LM Otero/AP Photo

A grocery store worker inspecting meats while wearing PPE during the pandemic.

Paul Constant is a writer at Civic Ventures and a frequent cohost of the “Pitchfork Economics” podcast with Nick Hanauer and David Goldstein.
In this week’s column, Constant talks about the ‘hero pay’ raises some stores like Trader Joe’s and Kroger adopted last year.

Kroger later blamed this raise for store closures, despite paying out billions in profits to the company’s shareholders.

Last March, when lockdowns began, grocery store workers and delivery drivers were rightfully hailed as heroes of the pandemic. Even as restaurants and bars closed to stop the spread of coronavirus, grocery store employees risked their health, and the health of their families, to keep Americans fed while white-collar workers transitioned to home offices. From the very beginning of the pandemic they put on homemade masks to stock shelves, ring up customers, and keep the supply chain working when everything else shut down

At the beginning of the pandemic, public respect for grocery workers was overwhelming and unanimous

Rodney McMullen, the chairman and CEO of the Kroger chain of grocery stores, was effusive in his praise: “Our associates have displayed the true actions of a hero,” McMullen wrote in a press release, acknowledging his staff for “working tirelessly on the frontlines to ensure everyone has access to affordable, fresh food and essentials during this national emergency.”

McMullen backed up his words of support for the heroes on his staff with a bold policy: Kroger, the largest grocery chain in the nation and the second-largest retailer after Walmart, announced on March 31, 2020 that it would “provide all hourly frontline grocery, supply chain, manufacturing, pharmacy and call center associates with a Hero Bonus – a $US2 ($3) premium above their standard base rate of pay, applied to hours worked March 29 through April 18.”

Kroger’s Hero Bonus pay program eventually ended in May, two months into the pandemic. But the pandemic has continued unabated, and grocery store workers continue to live with a very high risk of COVID-19 infection. A Kroger-owned Fred Meyer grocery store in Seattle had an outbreak infecting 10 workers in December, for example. 

Although the risks for grocery workers are still very high, the hero talk has all but disappeared

And so has the hero pay: Kroger employees from around the country report on Indeed that baggers at Kroger grocery stores earn an average of $US9.28 ($12) an hour, while cashiers report pay of $US10.53 ($14). (Bear in mind, too, that those average wages are likely inflated due to cities like Seattle and New York City that embraced a $US15 ($19) minimum wage .) According to nearly 37,000 employee reports, Indeed said, “Few people think they are paid fairly at Kroger Stores.” In exchange for putting their health on the line for a full year in thankless public-facing jobs, many Kroger workers earn wages that don’t even lift them above the poverty line.


This year, leaders began to demand that grocery stores pay their employees extra during the pandemic. Lawmakers in Long Beach and in Seattle, among other cities, passed a $US4 ($5)-per-hour hazard pay bonus for workers at large grocery store chains.

The laws brought some much-needed attention back to workers who have disappeared from the public consciousness, and that pressure seems to have worked: After Seattle’s City Council approved hazard pay, grocery chain Trader Joe’s responded by temporarily raising worker pay around the country by $US4 ($5) an hour.

This is great economic news for everyone: not only are workers being rewarded for performing tasks that white-collar workers would never do, but those workers also have extra money in their pockets, which they’ll spend in their communities – including at grocery stores.
How Kroger responded very differently than Trader Joe’s

In both Long Beach and in Seattle, Kroger issued press releases announcing that they were closing two stores, blaming the hazard pay for the closures.

I suspect the situation in Long Beach is similar, but since I live in Seattle I can better speak to the closures here. The two QFC grocery stores that Kroger is closing in Seattle are small, underperforming stores in upscale, walkable neighborhoods that have other – most would argue superior – grocery options nearby. (The other thirteen QFC stores owned by Kroger in Seattle will remain open, as well as Kroger’s three Fred Meyer stores inside Seattle city limits, where the hazard pay applies.)


And, at least one of the targeted Seattle QFC locations had already been slated for redevelopment in the near future. In other words, it seems likely that Kroger could be exploiting stores that were failing before the pandemic to make the point they really want made – if city councils elsewhere try to raise wages, Kroger will continue to hold their employees’ lives and livelihoods hostage in order to keep wages low and profits sky-high.

Giant corporations love to use splashy intimidation tactics like this to create fear-inducing headlines which help to peel support away from worker protections. But make no mistake: Even though Kroger’s press releases suggested that the grocery business relies on “razor-thin” profit margins, Kroger has been making a ridiculous amount of money during the pandemic.

Because people have been working and eating at home over the last year, Kroger has boasted of record-breaking profits. For the first two quarters of 2020, reports the Detroit Free Press, its net earnings nearly doubled “to more than $US2 ($3).031 billion compared with $US1.069 billion in the same period of 2019.” 

In the third quarter of 2020, Kroger announced operating profits of $US792 ($1,020) million

And with grocery spending in Washington state up by double-digit percentages since the beginning of the pandemic, it seems highly unlikely that hazard pay is the tipping-point expense that forced Kroger to pull the plug on these stores.

And while Kroger isn’t willing to pay the “heroes” its leadership loves to praise in press releases, the corporation happily opened their wallets for shareholders this year, paying out a dividend of 18 cents ($0.23) per share.

Last year, Kroger said in a press release, “We have returned approximately $US6.4 ($8) billion to shareholders via dividends and repurchased shares [also known as stock buybacks] since the beginning of fiscal 2017.” As thanks for returning obscene profits to shareholders, CEO W. Rodney McMullen received $US21 ($27) million in total compensation in 2019, an increase of 76% over the year before and 798 times the median annual Kroger employee salary that same year.

McMullen wasn’t the only one who received hero pay a year before the pandemic, ExecPay noted: “In 2019, six Kroger executives received on average a compensation package of $US8.7 ($11) million, a 46% increase compared to previous year.”

While Kroger can find plenty of money for its CEO, its executive team, and its shareholders, the corporation picks up its toys and heads home when city lawmakers ask it to increase pay for the frontline workers who have been putting their lives on the line so that Kroger can boast about their unprecedented profits.

The math is clear: Kroger’s coffers are more than full enough to reward its employees for their essential work in the midst of a global pandemic. McMullen and his executive team apparently prefer to keep that “hero pay” for themselves.

CANADA

MONOPOLY CAPITALI$M

House of Commons committee recommends feds tackle 'excessive' profits in food sector

Rosa Saba, The Canadian Press

The federal government should consider policies to tackle “excessive net profits” in the food industry, the House of Commons committee studying food prices said in its latest report. 

The committee recommended the government look into ways to address these profits in "monopolistic and oligopolistic sectors in the food supply chain," which it says are driving up prices for farmers and consumers.

In a report presented on Thursday, the committee detailed its research into the causes of food inflation and insecurity in Canada, including the high-profile testimony of grocery executives over the past several months.

The leaders of Loblaw, Metro, Sobeys-owner Empire, Walmart Canada and Costco have all faced questions from MPs over the size of their profits amid high food inflation, which the grocers say they haven't unduly profited from.  

The committee report offered a number of recommendations that range from lowering the barriers to entry for new companies to Canada, to making legislative changes to strengthen competition law regarding mergers. 

The committee also recommended that the government discuss with the provinces and territories legislation to make the grocery code of conduct mandatory.

It comes on the heels of an announcement from Loblaw that it plans to sign on to the code after months of pressure on the country's largest grocer to participate.

The industry-led code is intended to help level the playing field for smaller companies in the industry. 

It's meant to be voluntary, but in recent months pressure has grown on the government to make it law instead as not all of the major grocers appeared to be willing to sign on.

In December, Loblaw and Walmart told the committee they were concerned it would increase prices for Canadians. And earlier this year, the committee wrote a letter to those two grocers, saying if they didn't sign on, it would recommend that the code be made mandatory.

Last week, Loblaw announced that after months of discussions it was ready to sign on to the code as long as all stakeholders do.

"The code now is fair, and it will not lead to higher prices," said president and CEO Per Bank. 

At the time, Walmart said the company is reviewing the latest draft of the code. 

The grocer did not immediately respond to a request for comment. Neither did Costco. 

The Retail Council of Canada declined to comment on the report. 

Michael Graydon, CEO of the Food, Health & Consumer Products of Canada association and chairman of the interim board for the code, said the group is "very supportive" of all the committee's recommendations. 

When it comes to the code, "our industry's desire is a fully inclusive code that involves all stakeholders. That remains our goal and so (I) am hopeful that can be achieved," he wrote in an email. 

Francis Chechile, a spokesman for Agriculture Minister Lawrence MacAulay, said the government has been clear that it supports an industry-led code, but that after years of work, "it's well past (time) that all major retailers join the Code."

The government is calling on the remaining large retailers to sign on to the code as their participation is vital to its success, Chechile said in a statement.

"In the meantime, we are exploring all available federal options, including legislation. As key aspects of the Code would fall under provincial jurisdiction, we have encouraged provincial and territorial governments to do the same.”

The committee's report references research the Competition Bureau released last year that noted the Canadian grocery sector has become increasingly concentrated through a series of mergers and acquisitions in recent decades.

The Competition Bureau is currently investigating the use of restrictive clauses in the grocery sector, controls in lease agreements that it claims hamper competition in the industry. 

And industry minister François-Philippe Champagne has said he’s seeking a foreign grocer to strengthen competition in the Canadian market.

The report's recommendations include that the government should empower the Competition Tribunal to dissolve or prohibit a merger if that merger would result in excessive combined market share. It also recommends that the law be strengthened by shifting the burden onto merging companies to prove that their deal won't hurt competition. 

A spokeswoman for Champagne's office highlighted recent changes the government has made to the Competition Act, saying bills C-56 and C-59 "have already addressed concerns such as curbing excessive profits, strengthening competition law, and facilitating fair market access."

The best way to lower prices and help smaller players is to increase competition, spokeswoman Audrey Milette said in a statement, adding that having more players in the market is one way to put downward pressure on prices. 

"We will continue to stand up for Canadians by working with provincial and territorial partners to make life more affordable and continue to hold corporations accountable."

Though grocery inflation has moderated significantly from its highs, reaching just 1.4 per cent in April, prices have risen 21.4 per cent over the past three years. The resulting squeeze on consumers' wallets combined with higher interest rates has led to public pressure for the government — and the grocers — to act. Some consumers have launched a boycott of Loblaw, the biggest of the Canadian grocers, to voice their frustrations. 

The grocers, especially Loblaw, have been expanding the number of discount grocery stores in their portfolios to meet increasing demand from Canadians for lower prices. In turn, their discount stores have been major drivers of overall sales growth. 

This report by The Canadian Press was first published May 24, 2024.

Competition Bureau probes alleged anticompetitive conduct by Loblaws, Sobeys owners

Darryl Greer and Rosa Saba, The Canadian Press

Canada's Competition Bureau has launched investigations into the parent companies of grocery chains Loblaws and Sobeys for alleged anticompetitive conduct, court documents reveal, with Sobeys' owner calling the inquiry "unlawful." 

The Federal Court documents show the Commissioner of Competition launched the probes on March 1, saying there's reason to believe the firms' use of so-called property controls limits retail grocery competition. 

The commissioner claims the controls that the grocery giants have baked into lease agreements are designed to restrict other potential tenants and their activities and are hampering competition in the grocery market.

The Competition Bureau revealed its investigation into the use of property controls in the grocery sector in February.

At the time, deputy commissioner Anthony Durocher told a House of Commons committee that property controls can be a barrier both for independent grocery stores and chains looking to expand, as well as for foreign players looking to enter Canada.

That’s why in a report last June, the bureau recommended the government limit their use in the grocery sector in order to help boost competition and make it easier for new supermarkets to open.

Industry minister François-Philippe Champagne has said he’s seeking a foreign grocer to strengthen competition in the Canadian market.

Loblaw Cos. Ltd. and Sobeys parent Empire Co. Ltd. are two of the three major Canadian grocery companies and each owns a number of grocery chains across the country.

Details of the investigations are contained in a pair of court applications lodged by the commissioner on May 6. 

Sobeys owner Empire has pushed back against the investigation, saying in a separate court application that the probe gave the commissioner "the appearance of a lack of independence" amid public criticism from federal politicians over grocery pricing and retailers' conduct. 

Loblaws' parent company is co-operating with the bureau's review, said spokeswoman Catherine Thomas on behalf of George Weston Ltd.

"Restrictive covenants are very common in many industries, including retail. They help support property development investments, encouraging opening of new stores and capital risk-taking," she said.

The commissioner applied in the Federal Court to order Empire and George Weston to hand over records about real estate holdings, lease agreements, customer data and other records. 

In the court documents, the commissioner describes Empire and George Weston’s holdings in real estate investment trusts, or REITs. In both cases, the companies’ own grocery banners are significant tenants for the real estate companies.

Through a subsidiary, Empire holds a 41.5 per cent interest in Crombie Real Estate Investment Trust, and Empire is an anchor tenant in the majority of Crombie’s properties, the documents say, adding that Empire’s ownership interest in Crombie puts it in a position to exercise influence over the REIT. 

George Weston has a controlling ownership interest of 61.7 per cent in Choice Properties Real Estate Investment Trust, and Loblaw accounted for more than half of Choice Properties’ rental revenue in 2023, the documents say — and Choice Properties and Loblaw have a strategic alliance under which the REIT has agreed to “significant restrictions” limiting “its ability to enter into leases with supermarket tenants other than Loblaw.” 

The commissioner's probe is focused on the companies' operations in Halifax, but also more broadly across the country. 

The documents show the inquiries are zeroing in on two types of property controls in contracts and commercial leases used by the grocery retailers "in many markets in Canada." 

Restrictive covenants in private contracts, the commissioner says, "limit or restrict" how a piece of land can be used and can apply even after changing ownership. 

The covenants can "leave restrictions or exclusions on competitors that extend beyond ownership of the land, sometimes for decades," the applications say. 

The probes are also looking into "exclusivity clauses" in commercial lease agreements that "limit or restrict" who a landowner can lease to and which products can be sold by other parties close to another leaseholders' business. 

"According to market participants, property controls are widespread in the retail grocery sector, impacting where and how businesses can compete in the retail sale of food products," the commissioner claims. 

The property controls, the commissioner says, may give the companies "the ability to exclude actual or potential competitors from selling food products within certain geographic areas or to dictate the terms upon which they carry on business." 

“This is a novel case,” said Michael Osborne, chair of the Canadian competition practice at law firm Cozen O’Connor.

Previous cases alleging abuse of dominance involved companies with significantly more market power than George Weston or Empire have individually, said Osborne.

Therefore, the Bureau will have to argue that the companies are jointly dominant because they're using the same tools and together represent a large portion of the market, he said. 

“The Bureau has never brought a joint dominance case before.” 

Sobeys parent Empire claims the commissioner was wrong to start the inquiry because it doesn't have a "dominant" market position.

In a separate application in Federal Court that has yet to be decided by a judge, the company denies that property controls are anti-competitive and says they "are not unique to the grocery sector, but have been widely used for decades in a range of retail and other sectors across the country."  

Empire also claims the inquiry was launched for an "improper purpose," claiming the grocery sector has been the subject of an "inordinate" amount of attention from politicians. 

The company says the Competition Commissioner must make decisions independently and "free from political interference and direction." 

Empire says the decision to launch an inquiry, amid a wave of criticism over rising grocery prices, raises "at least the appearance of a lack of independence of the Commissioner."  

The company's lawyer declined to comment since the matter is still before the courts. 

Competition Bureau spokeswoman Sarah Brown confirmed the formal investigations launched March 1 and said the Bureau had filed a motion to strike Empire’s application for judicial review. 

She declined to comment further, citing ongoing court proceedings.

The bureau is using new tools it gained from recent amendments to the Competition Act that broaden the scope of the kinds of agreements it can look into.

Canada’s major grocers have recently been under public and political pressure as food prices have risen by double digits over just a handful of years.

The grocers have denied allegations of so-called greedflation, but the government has called on them to take action to stabilize food prices. All three major Canadian grocers have also agreed to participate in an industry-led code of conduct meant to help level the playing field for suppliers and smaller grocery retailers.

This report by The Canadian Press was first published May 24, 2024.

 

Canadians feel grocery inflation getting worse, 18% are boycotting Loblaw: poll

The Canadian Press

Almost two-thirds of Canadians feel that inflation at the grocery store is getting worse, a new poll suggests, even as food inflation has been steadily cooling.

A new Leger survey found that almost 30 per cent of Canadians believe food inflation has been primarily caused by grocery stores trying to increase profit margins. Another 26 per cent think it’s mostly due to global economic factors, while one in five blame the federal government

Inflation on groceries was 1.4 per cent in April and helped drive overall inflation lower to 2.7 per cent, Statistics Canada said.

However, even low inflation still means prices are going up. And over the past three years, grocery prices have risen 21.4 per cent, according to the agency.

The major grocers have said they did not unduly profit from inflation, amid political and public pressure over the rising cost of food and other necessities.

A group of consumers organized a boycott of Loblaw-owned stores in May over frustrations with higher prices and industry concentration.

Seven out of 10 Canadians polled said they are aware of the ongoing boycott, and 58 per cent said they support it, but only 18 per cent say that they or someone in their household have joined the boycott.

The poll highlights rural and urban residents’ differing views on the boycott, and suggests it’s more difficult for those living outside an urban area to participate in a boycott of Loblaw-owned grocery stores.

Urban residents polled by Leger were more likely to say they support the boycott than suburban and rural residents, and were more likely to be participating in it as well.

About half of Canadians say it seems unfair that the boycott targets only Loblaw, and almost two-thirds of respondents don’t think the boycott will have an effect on grocery prices. Urban residents were more likely to say they think the boycott will help lower prices, with almost three-quarters of rural Canadians polled saying they think the boycott won’t impact prices.

For those taking part in the boycott, 40 per cent say they are turning to a “big box grocery store” such as Costco or Walmart, 31 per cent said they are turning to another national grocery chain like Sobeys or Save on Foods, and 23 per cent said they are shopping at an independent local grocery store.

Rural boycott participants were more likely to be shopping at an independent store than participants in urban and suburban areas.

Leger surveyed 1,519 Canadians between May 17 and May 19, asking about grocery inflation, the Loblaw boycott and grocers’ profits. Online surveys cannot be assigned a margin of error because they do not randomly sample the population.

This report by The Canadian Press was first published May 22, 2024.

This is a corrected story. A previous version misstated the statistic on how many Canadians were boycotting Loblaw in the headline.

FTC and State AGs Sue to Block Kroger-Albertsons 'Mega Merger'

"By suing to block the Kroger-Albertsons merger, the FTC is keeping grocery bills down and workers in their jobs," said one anti-monopoly campaigner.

Unionized grocery store workers rally to oppose the proposed merger of Kroger and Albertsons on April 13, 2023 in Los Angeles, California.
(Photo: Frederic J. Brown/AFP via Getty Images)

JAKE JOHNSON
Feb 26, 2024
COMMON DREAMS

The Federal Trade Commission and a bipartisan group of state attorneys general joined forces Monday on a lawsuit aimed at blocking the supermarket giant Kroger from buying up the Albertsons grocery chain, warning the merger would hamper competition, further drive up food prices, and harm workers.

If completed, the $24.6 billion deal would mark the largest supermarket merger in U.S. history at a time when grocery chains are facing growing scrutiny for driving up prices to pad their bottom lines. A Kroger-Albertsons grocery behemoth would control more than 5,000 stores and 4,000 retail pharmacies across the country, according to the FTC.

"This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years," said Henry Liu, director of the FTC's Bureau of Competition. "Kroger's acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today."

"Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating," Liu added.

The attorneys general of Arizona, California, Washington, D.C., Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming are joining the FTC's suit, which was filed in the U.S. District Court for the District of Oregon.

The lawsuit drew immediate praise from progressive advocacy groups and opponents of food industry consolidation.

Stacy Mitchell, co-executive director at the Institute for Local Self-Reliance (ILSR), said the decision to sue shows that the FTC "sees what we have long argued—there was no upside to this merger for anybody other than the top executives at these two companies and their investors."

ILSR has estimated that if the deal survives legal challenges, Kroger-Albertsons and Walmart—the largest low-wage employer in the U.S.—would control 70% of the grocery market in over 160 cities.

"Concentration in grocery retail has already caused food prices to skyrocket," said Mitchell. "We know from past grocery mergers that this one would have sent prices for consumers even higher. It would have left many communities, especially on the West Coast, with little to no competition or choice about where to shop. And it would have hurt retail workers by giving the combined companies even more leverage to push down wages and dictate terms."




Grocery prices have outpaced overall inflation in the U.S. over the past four years, surging by roughly 25%—and they remain stubbornly high even as inflation has fallen substantially from its peak of 9.1% in the summer of 2022.

The FTC, which has been assessing the proposed merger for more than a year, said Monday that because Kroger and Albertsons are direct competitors, a merger of the two "would eliminate head-to-head price and quality competition, which have driven both supermarkets to lower their prices and improve their product and service offerings."

"If the merger takes place, grocery prices will increase, and Kroger and Albertsons' incentive to improve product quality and customer service will decrease, further harming customers," the agency said.

The deal would also bring economic pain for workers, according to merger opponents. The Economic Policy Institute (EPI) has estimated that if the acquisition is completed, roughly 746,000 grocery store workers in over 50 metropolitan areas of the U.S. would see their annual earnings fall by a combined $334 million.

"Workers' ability to negotiate better pay and working conditions rests on their capacity to switch jobs," EPI senior economist Ben Zipperer explained in a 2023 memo. "By decreasing the number of outside options available to workers, the merger will limit competition for hiring and retaining employees, and grocery store worker earnings will fall as a result."

The FTC said Monday that executives at both Kroger and Albertsons have admitted that the proposed merger is anticompetitive. The agency quotes one unnamed executive as saying, "You are basically creating a monopoly in grocery with the merger."

Morgan Harper, director of policy and advocacy at the American Economic Liberties Project, said in a statement that "by suing to block the Kroger-Albertsons merger, the FTC is keeping grocery bills down and workers in their jobs."

"From higher prices for consumers, worse wages and benefits for workers, a tighter squeeze on producers and farmers, to an increased risk of grocery and pharmacy deserts across the 48 states this merger affects, the harms of this deal were clear from the start," said Harper. "No divestiture or concession would make it work—which is why over 100,000 workers and countless advocates have spoken out against this disastrous merger."

"Kroger and Albertsons would be wise to save everyone's time and abandon this deal," she added.

CANADA 

Grocery’s long war: Part II
Workers at grocery chains across Canada have seen their world replaced by a low-wage, low-benefit, part-time reality

Dan Darrah and Doug Nesbitt / November 25, 2020 CANADIAN DIMENSION
LABOUR

A group of Dominion employees block the entrance to the parking lot as they strike at the Blackmarsh Road location in St. John’s, Newfoundland. Photo by Andrew Waterman/The Telegram.

In part one of this series, we explored how good jobs turned bad in the grocery sector as a result of a country-wide corporate attack. By replacing full-timers with part-timers, smashing benefits, and flattening wages, retailers across Canada redefined the sector in the 1980s and 1990s. Workers fought back, but found themselves disadvantaged by the scale of the attack and the long historical tendency toward “business unionism” within the labour movement. The story picks up in the 2000s, where grocery’s long war continues.

“Everybody fought for everybody else.”

Following the corporate attacks of the 1980s and 1990s, and their attending defeats, grocery workers across the country ended the century in a workplace radically different from the one that existed several decades earlier. Workers who spent years making careers at supermarkets watched as their former world unraveled in a few short years and was replaced by a new low-wage, low-benefit, part-time reality.

By the new millennium, these labour practices were the bedrock of the sector’s business structure. It is now so deeply entrenched that the idea of decent work at the big, profitable supermarket chains seems hard to imagine. To many in the business, it’s even harder to imagine that life with decent wages and benefits ever existed at all.

Luckily, grocery workers have not given up the fight. New blood, mounting grievances, and a determination to extract concessions from employers have led to significant battles. Some of them have been very successful, like the 2013 Superstore strike in Alberta.

Within grocery workers’ unions, there have been examples of membership training, reforms to promote democracy, and rank-and-file militancy. Although these proved promising, grocery work is still far from winning back the modest standards of the past. Grocery unions are still fighting company by company, and province by province, against a cartel of corporations spanning the continent.


Striking Dominion workers at the Loblaw Distribution Centre in St. John’s. Photo by Unifor Local 597/Facebook.


Local 597 hits the picket line

“Our police have been reduced to doing the bidding of billionaires,” wrote Unifor rep Sharon Walsh after the Royal Newfoundland Constabulary (RNC) showed up at grocery worker picket lines this summer. “This is public funds protecting billionaires assets against minimum wage [workers].”

In Newfoundland, a grocery strike at Loblaw-owned Dominion stores disrupted business as usual. Walking off the job on August 22, grocery workers spent 12 weeks on the picket lines in a brutal fight for full-time work and the restoration of $2/hour pandemic pay. The cartel of big grocery corporations suspended this special provision in June.

The strike demonstrated incredible tenacity—perhaps the most among any recent grocery strike. The workers were taking on Loblaws, the largest grocery corporation in the country, and its owner, Galen Weston Jr., the third-wealthiest Canadian. During the COVID-19 crisis, these workers were the first to take on Canada’s largest food distributor and its bosses.

As the strike dragged on, workers turned up the heat. Pickets began spreading out, targeting other Loblaws-owned banners like No Frills. They also organized secondary pickets at a subsidiary Weston bakery and distribution centres in different parts of the country, like the massive Loblaws warehouse in Ajax, Ontario.

Secondary picketing cost the company big money, emptied some store shelves, and raised the strike’s profile. It was then that the RNC volunteered their services to the corporation. Despite not having an injunction, police leapt at the union-busting opportunity, and showed up at the secondary picket lines threatening arrests.

With the police threatening violence, workers were told by union leadership to err on the side of safety and head home. They didn’t. They marched to police headquarters and protested.

After another visit from the police a few days later, a mediator got involved. It became clear that Loblaws, known for its hard-headedness and cutthroat commitment to remaining “competitive,” had no intention of budging. The union agreed to put a “final offer” to the membership, and voting began on the weekend of November 7, lasting through to the following week. That same week, the company announced that it beat their profit expectations for the third quarter of 2020 (July-September).

On November 13, the result of the vote was released. To the dismay of many members, workers voted to ratify the contract and the strike was over for almost no gain. The local even acknowledged a feeling of defeat. For example, there are reports that 22 of the 60 full-time job cuts have been restored, but those who lost full-time hours must reapply. Others have reported getting a gift card to Dominion stores as part of the settlement. An anonymous source relayed that, per Canada Revenue Agency rules, the gift cards will be treated as taxable income.

As yet, Unifor and Loblaw have not released the vote numbers. A source inside the union told Canadian Dimension that both the employer and union plan to continue withholding the results for the foreseeable future. Another source mentioned that the company—and it is unclear whether this is occurring at the corporate level, or just among individual stores—has discouraged talk about the strike on social media and in the workplace, including to customers.

Workers speak out

In interviews with Canadian Dimension, Unifor members spoke about the strike and the lessons that might be learned for grocery workers and the wider labour movement.

Brittany*, a Dominion worker, offered some insight. At her store, a perfect storm of full time job cuts, attacks on seniority, and the elimination of pandemic pay pushed workers to strike at the expiry of their contract. Another important factor was the company’s cavalier use of “part-time” classification, an infamous practice in the Loblaw playbook.

“A lot of people were fed up by then,” she says, “because part-timers [were] working forty-plus hours a week, [and there were] less full-time people. I think that was the last straw, plus the wages.”

By keeping part-timers under 40 hours a week, the company can maintain production levels at a significantly lower cost.

The picket lines operated 24/7, and Brittany observed the majority of workers were actually students and young people. “There’s a lot of students in our store, or people who got second jobs, or [are] in university,” she says. “But [mostly] everybody was up for the fight and walking the picket line and showing support.”

“I think that brought us a lot closer together as a group with the students and the older people, the full-time. It definitely brought us all together.”

Beyond Dominion workers, Newfoundland’s Fight for $15 campaigners and members of other unions joined strikers on the picket line. The broader community stepped up, too, supplying the strikers with coffee and homemade food.

“Up to the very end,” Brittany says, “it was going great. I think we were getting a lot of support. We were standing our ground. We were doing secondary picket lines.”

Then the vote happened.

“There’s definitely, I’d say, a majority of people at my location [that] was actually very upset about it, because we did not expect to be back to work yet,” she continues. “With that contract, we definitely were surprised when we heard that there was a majority [that] wanted to go back to work and accept the contract.”

Brittany says that she and her coworkers remain curious about the results, but that information is being kept secret by the company and union.

In any case, the strike demonstrated the power of solidarity between part-time and full-time workers. For what lessons she might have gleaned from the strike, Brittany says: “A lot of people actually [came] together and [showed] support for each other, and you know what, on our picket line everybody fought for everybody else.”

“You gotta be positive no matter what.”

The strike also showed the advantages of secondary picketing. Brittany observes that the secondary pickets in Newfoundland “definitely made an impact. It definitely opened a lot of people’s eyes of the community and staff that worked there.”

Secondary pickets are known for their disruptive power. It’s why they’re considered illegal in many provinces and subject to injunctions.

Another Dominion worker, Shannon*, had similar observations. “Sorry,” she says midway through the conversation, “I’m feisty. I was one that wanted to stay and fight.” Like Brittany, Shannon also finds herself frustrated about the results being kept secret. “We have a right to know,” she says. “But the union is not giving it to us.”

Other workers feel the same, she says—some even feel the desire for a recount, or to have the Labour Relations Board intervene and review the vote.

After the company made their final offer, Shannon felt they had hit a standstill. Union leadership offered no real plan forward, she says, noting that she and others felt like they had “gave up on us.”

“They said the company wasn’t budging and we couldn’t keep going to court.”

Talking about strategy, Shannon says, “I think we should’ve stayed on the secondary picket lines. But we were told we couldn’t keep going to court for injunctions.” Asked how she might respond to that argument, she says, “We pay enough in union dues for those costs and many more.” She also noted that some secondary picket lines, like the one at the Weston bakery, were not subject to injunctions.


Unifor Local 597 workers are joined by members of 15 and Fairness Newfoundland and Labrador during a demonstration at the Loblaw Distribution Centre, August 27, 2020. Photo by Unifor Local 597/Twitter.

Upping disruption: The power of secondary picketing

Shayne Fields, incoming president of Oshawa-based Unifor Local 222, worked at the Loblaw distribution centre in Ajax and helped organize one of the secondary pickets outside of Newfoundland. The centre employs just over a thousand unionized workers, with a total staff of 1,300. Most workers are young and work three shifts around the clock. The warehouse only shuts down on Christmas Day.

“We were fed up with Loblaws in general,” says Fields. He suggests that no matter where you live in Canada, “the Loblaws business model seems to be the same.” Their bargaining approach, he notes, is brutal and uncompromising. It takes a lot for the corporation to even take notice.

“You’re dealing with the same people, the same mindset,” says Fields. “I’ve done three sets of negotiations with them, and I know what the workers in Newfoundland were up against.”

When Unifor union leaders like Fields began discussing how to help the strikers, they knew they had to take action outside of Newfoundland and Labrador. Because the business done in the province is only a fraction of what is done in Ontario, the national union realized they had to “put pressure on other areas.” Disrupting business in Ontario could really hurt the corporation. They landed on a secondary picket as a tactic. Workers still went to work at the distribution centre that day, but no product left the premises.

Fields says bluntly: “We show the strength of the union when we withdraw our labour and we shut them down.”

In the near future, Fields thinks more battles in the grocery sector are possible. “More people are staying home,” he says. “The shopping bags are getting bigger. I don’t think the workers are gonna stand for it much longer. Nor should they.” As contracts begin expiring across the country in the next year, the likelihood of job actions elsewhere will likely increase.

But for grocery workers to win, it may not be enough anymore to just walk off the job. Secondary pickets and disruption of supply lines and production is a critical weapon.

As a result, most of these tactics are untried or used in a very limited, cautious way. For example, it was several weeks into the Dominion strike before secondary picket lines were set up. In any case, it will clearly take such actions and sacrifices to bring the corporations back to the bargaining table—and even more to extract concessions and dismantle the unacceptable status quo.

Thinking long-term about young workers

Despite how the Dominion strike ended, the grocery sector remains an enormous source of potential for the labour movement beyond the pandemic. Figuring out how to make certain potential advantages real is a challenge for grocery workers and their unions. An important consideration, which the Dominion strike foregrounded, is the role of young workers.

Like many retail settings, grocery stores are populated by workers in their teens, twenties and those well into their thirties. As Fields points out, this is the case with distribution centres, too. In stores, young workers are sometimes full-time, but more often they are part-time. Many often work what are essentially full-time hours across multiple jobs. In big urban centres, many young workers are racialized. Most are very aware of how difficult it is to make a living on the wages and hours the employers choose to provide.

However, unlike other retail workplaces, young grocery workers experience remarkably high levels of union representation. The big players in the industry are widely unionized. This means the potential for training and organizing young workers is more readily available than in the other industries dominated by young people—such as clothing retail, restaurants and fast food, and service centres.

Young workers may be in the union, but they are hugely overrepresented in part-time positions, meaning they are often paid less for the same work as full-timers, and are often neglected at the bargaining table. They often experience the all-too-familiar grift of being scheduled (as was the case at Brittany’s store) over 30 hours a week but still classified as part-time. Two-tier wages and contracts, as well as these conniving classification tactics, divide the workplace and damage unity.

Just as the grocery cartel executed a long-term strategy of part-timing jobs and ramming through two-tier contracts to drive down labour costs, the future for the labour movement in grocery requires a long-term strategy of combating two-tier contracts with a struggle for equal pay.

Engaging young workers, bringing workers into the fold and building worker power across age, gender, and racial lines. This necessitates building bridges between part-timers and full-timers. The Dominion strike showed unity is possible when there’s a common cause.
Historic attacks and an historic strike

The Dominion strike is the latest in the grocery industry’s 30-year offensive against workers. Not even during a global pandemic—when grocery workers were downright essential to the functioning of Canadian society—could the hugely profitable grocery corporations stomach pandemic pay for more than three months.

Beneath their cruel decision to rescind pandemic pay, there’s a core reality to be understood: the big grocers have had it on their own terms, and have had it very good, for a long time. Their billionaire owners have built palatial homes abroad with their head-turning profits, and can count on federal and provincial support on a whim.

Pandemic pay was just scratching the surface, but the Dominion grocery workers struck at the heart of the problem. The fight for an alternative to the decades-long corporate assault is long overdue. Achieving this is naturally a complicated question. At a minimum, we know it will require an ambitious program of organizing the sector’s workforce and solidarity actions from the broader labour movement. And it will require drive and sacrifice—which Newfoundland’s grocery workers showed in spades.

Winning will also likely require the use of disruptive tactics. Grocers like Loblaw don’t fight fair, and, as demonstrated in the first part of this series, grocery workers and their unions stand to lose when the fight minimizes this reality, falling back on the same tactics or embracing concessionary bargaining. This time around, Unifor members in Newfoundland and on secondary picket lines did begin to break out of these practices. Building on that ingenuity in the future might change the course for workers.

There is much more that can be said about the important and strategic location of grocery workers in the overall architecture of the economy. On a basic level, the pandemic proved how critical grocery workers are in keeping society going. But if one takes the analysis further, it’s obvious how much leverage they truly have: through coordinated action, workers could grind the country to a halt. It’s important to remember that this commonly unionized sector is also represented—overwhelmingly so—by the United Food and Commercial Workers (UFCW), whose members in grocery are waging the same battles.

Connecting struggles, and showing up for each other’s fights, is a clear way to flex collective strength and win a better deal for all grocery workers. But this realization of workers’ power also means union members across the country getting organized and taking action in their own workplaces, too, fighting whatever new business models bosses try to impose.

Names has been changed to protect the anonymity of the interviewees.

Dan Darrah is a writer and editor living in Toronto.

Doug Nesbitt is a historian, union organizer and researcher. He is co-founder and editor of Rankandfile.ca, and lives in Kingston, Ontario