Why This Red-State Democrat Is Backing A Corporate Merger That Has Unions Furious

Sen. Sherrod Brown has a well-deserved repute as an financial progressive and staunch union ally, whose concentrate on the “dignity of work” has helped him maintain his seat for 3 phrases within the more and more Republican state of Ohio.

But Brown, who’s up for reelection in a race that might be essential to Democrats retaining management of the Senate, broke from that repute when he endorsed Cincinnati-based Kroger’s acquisition of Albertsons — a merger that progressive teams have lined up towards and the Federal Trade Commission is difficult. Albertsons and Kroger are already the 2 largest grocery retailer chains within the nation, and if profitable, the $24.6 billion buy could be the largest grocery store merger in U.S. historical past.

Brown’s assist for the merger additionally places him at odds with the influential labor unions concerned, who oppose the deal due to anticipated layoffs. Antitrust consultants additionally insist that by decreasing choices in key markets, the merger would hammer customers.

“We’ve seen over and over that mergers of this size and scale are bad for consumers and bad for workers,” stated Lee Hepner, authorized counsel on the American Economic Liberties Project, an anti-monopoly suppose tank, which produced a paper analyzing the merger’s potential results.

“This merger in particular will create additional harms to independent grocers and food producers who either compete against Kroger and Albertsons, or negotiate with them for fair compensation.”

Brown has insisted the merger is critical to assist the 2 unionized chains compete with non-union big-box shops, and sees eradicating Albertsons from the management of personal fairness — which has an extended historical past of disassembling firms and displacing their staff — as a constructive.

“Senator Brown knows that a union card means higher wages, better benefits and working conditions, and more control over your schedule,” Brown spokesperson Kevin Donohoe advised HuffPost. “He’s focused on fighting for workers and ensuring that food is affordable for Ohioans.

“The Senator believes that if this merger is done correctly, and Kroger ensures that workers have a seat at the table, the company has the potential to become one of the largest union companies in an industry that is increasingly dominated by nonunion corporate giants,” Donohoe added. “It’s in the interest of both grocery shoppers and workers for unionized grocery chains to stay out of the hands of private equity and be able to compete with megastores like Walmart, Amazon and Target.”

How Brown sells his assist for the deal may assist make or break his run for reelection at a time when excessive grocery costs drive voter discontent with the economic system, at the same time as inflation has cooled considerably. Brown’s union ties are additionally one in all his largest promoting factors to the white working-class voters who dominate Ohio politics.

The FTC, now beneath the management of aggressive antitrust crusader Lina Khan, introduced in late February it was suing to dam Kroger’s acquisition of Albertsons on the grounds that it will “lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today.”

The FTC grievance notes that Kroger and Albertsons are themselves the merchandise of a long time of mergers, chargeable for making them the most important and second-largest grocery store chains within the nation, respectively. Kroger (or Kroger-owned manufacturers like Ralphs, Fred Meyer, King Soopers and Harris Teeter) compete towards Albertsons (or Albertsons-owned manufacturers like Safeway, Jewel-Osco, Vons and Acme) in additional than 100 metropolitan areas throughout 18 states and the District of Columbia. In these areas, a merger would scale back competitors sufficient to meaningfully enhance costs for customers, and thus violates antitrust legislation, Khan wrote within the grievance, which was backed by fellow FTC Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya.

Antimonopoly advocates are particularly mistrustful of the 2 grocery store giants as a result of each Kroger CEO W. Rodney McMullen and Albertsons CEO Vivek Sankaran have reportedly spoken positively to buyers concerning the impact of 3-4% inflation on their firms’ fortunes, since they’ll cross worth hikes alongside to customers. “A little bit of inflation is always good in our business,” McMullen stated in June 2021, in keeping with a CNN report on his and Sankaran’s remarks on earnings calls.

The prospect of fewer selections and better costs in numerous states has prompted opposition to the merger from sudden corners. For occasion, Republican Sens. Lisa Murkowski and Dan Sullivan of Alaska — a state the place Kroger and Albertsons compete — each referred to as for the FTC to dam the merger in September.

When Brown introduced his certified assist for the merger in remarks to the Cincinnati Chamber of Commerce in June, he pointed to the 2 firms’ unionized workforces, saying the deal is a chance to enhance the fortunes of organized labor within the grocery store sector.

“This merger has the potential to be great for the region and great for workers,” Brown stated. “I’ve been in touch with Kroger CEO Rodney McMullen. He knows that companies like Kroger need to work collaboratively with their unions if they want to succeed in the future. This would make them one of the largest union employers in the country, if they do this right.”

Kroger options Brown’s feedback on a webpage selling the merger that additionally contains endorsements from Rep. Greg Landsman, a first-term reasonable Democrat representing Cincinnati; former Sen. Cory Gardner (R-Colo.), who’s now a board member at a Washington lobbying agency; and the Competitive Enterprise Institute, a libertarian suppose tank.

Federal lawmakers don’t have a direct say in whether or not the FTC decides to sue to cease a company merger. But firms nonetheless hunt down congressional assist for mergers and different actions topic to regulatory scrutiny, in order to boost the political worth of motion for the FTC or different federal businesses with oversight energy.

Following Brown’s feedback, he obtained a surge in donations from prime Kroger executives totaling $31,782 — nearly all in August — after receiving simply $6,000 from executives earlier in his time period over the course of 4 years. Donors who contributed $3,300 — the utmost particular person quantity per major or basic election cycle — included Kroger Vice President of Operations Mary Adcock, Chief Financial Officer Gary Millerchip, Chief Merchant and Marketing Officer Stuart Aitken, Chief Information Officer Yael Cosset and Chief People Officer Tim Massa.

McMullen, the Kroger CEO, and Corporate Affairs Vice President Keith Dailey additionally maxed out to Brown in August, however obtained partial refunds, since their contributions in 2022 meant that they had exceeded their limits for that cycle.

Kroger staff and executives, together with McMullen, have given to Brown over the course of his profession as a senator or Senate candidate. But firm staff’ complete contributions to Brown throughout his three earlier Senate runs, together with from low-level staff like deli clerks, totaled $24,377 over 18 years.

Brown additionally obtained $6,600 — the utmost allowable contribution for each the first and basic election cycles — from Albertsons’ Sankaran in August. Those donations had been the primary that Brown obtained from anybody employed by Albertsons throughout his profession within the Senate.

In addition to the donations from Kroger and Albertsons executives following Brown’s remarks, the 2 firms’ company PACs are main contributors this cycle. Kroger’s PAC gave Brown $7,500 this cycle — $2,500 in April 2022, and $5,000 in March 2023, shortly after the corporate employed Squire Patton Boggs to foyer on behalf of the merger in Congress. The Albertsons PAC, which had not beforehand given to Brown’s campaigns, contributed $5,000 towards Brown’s reelection in August.

During Brown’s three earlier Senate runs, Kroger’s PAC had given him $13,500, and a PAC for Safeway, which is now owned by Albertsons, had given Brown $3,500.

The more moderen donations from the Kroger and Albertsons executives and PACs are nonetheless a microscopic a part of Brown’s fundraising. He’s raised $22 million since 2023, together with $7.3 million from donors giving lower than $200. Donohoe declined to touch upon the donations from Kroger and Albertsons executives and the businesses’ PACs.

Craig Holman, an ethics knowledgeable and Capitol Hill lobbyist for the liberal group Public Citizen, takes Brown’s stance at face worth, however sees the contributions from Kroger and Albertsons as signs of a much bigger drawback.

“I have no doubt that Brown is sincere in his advocacy for labor interests in this merger,” he stated. “But the current system of campaign financing allows for many to question that sincerity.”

Like many firms attempting to keep away from falling afoul of antitrust legal guidelines, Kroger and Albertsons agreed in September to “spin off” — or promote — 413 of its 1000’s of shops to C&S Wholesale Grocers.

But Khan and her fellow FTC complainants famous that it isn’t clear how well-equipped C&S is to scale up its retail enterprise. The New Hampshire-based firm was initially a wholesaler and at the moment solely operates 23 supermarkets and one retail pharmacy, elevating questions concerning the sturdiness of the sale, the FTC commissioners cost.

“C&S will face multiple significant obstacles stitching together a viable business—let alone a successful competitor—from the assortment of divested stores, and any operational shortcoming would imperil competition in many local markets,” Khan, Slaughter, and Bedoya write.

What’s extra, generally a divestiture geared toward serving to large mergers adjust to antitrust legislation fails in such a manner that the large firm spinning them off finally recoups a few of them afterward, because the American Economic Liberties Project factors out within the paper on the merger it launched in November.

For instance, the small grocery store chain Haggen struggled to soak up the 146 Albertsons shops it bought in a by-product when Albertsons acquired Safeway in 2014. After Haggen filed for chapter in 2015, Albertsons ended up shopping for again at a reduction 33 former Albertsons shops that it had offered to Haggen.

The Kroger-Albertsons merger’s destructive influence on staff is likewise poised to be substantial, since it will cut back the variety of employers individually competing for staff. And whereas Brown celebrates the prospect of an enormous, 700,000-employee firm with a robust union presence, the FTC commissioners wrote that they foresee a state of affairs during which the corporate would have higher energy over the union by eliminating the unions’ capability to use the 2 grocery store chains’ competitors with each other.

“The proposed acquisition would eliminate that competition, likely leading to lower wages and reduced benefits, opportunities, and quality of workplace conditions and protections for thousands of Respondents’ employees,” Khan, Slaughter, and Bedoya write within the grievance.

That’s on prime of the near-term influence of retailer closures and layoffs prone to outcome from the Kroger-Albertsons merger. As when any large firm acquires a competitor, Kroger is anticipated to wring revenue from its buy by shuttering shops in markets the place an Albertsons location exists and shedding a minimum of a number of the unionized grocery clerks, warehouse staff and truck drivers employed at these areas.

Concerns about layoffs prompted each the United Food and Commercial Workers, which represents retailer clerks, and the International Brotherhood of Teamsters, which represents truck drivers and warehouse staff, to return out towards the merger.

In their statements of opposition, the unions cited the businesses’ failure to speak concerning the potential influence on staff, with UFCW lamenting the “lack of transparency” and Teamsters panning the businesses’ “vague promises about [their workers’] future.” Those feedback stand in stark distinction with the good-faith negotiations that Brown hoped Kroger and Albertsons would conduct with the unions.

The mega-merger isn’t fully bereft of labor assist although. UFCW Local 555 within the Pacific Northwest area broke with the worldwide UFCW to endorse the deal in late February, after the Local’s president had an encouraging assembly with an official from C&S.

Brown faces what’s prone to be his hardest reelection battle but. He is ready to sq. off towards the winner of the state’s March 19 Republican major, the place self-funded businessman Bernie Moreno is main because of the backing of former President Donald Trump.

The sting of the inflation spike in 2021 and 2022 may nonetheless be a key situation in battleground races like Brown’s. And his assist for the merger would possibly make that extra of a legal responsibility for him particularly.

None of the three main Republican contenders ― Moreno, state Sen. Matt Dolan and Secretary of State Frank LaRose ― have weighed in on the merger, nonetheless. HuffPost reached out to spokespeople for all three candidates and didn’t obtain responses.

Other Democrats have come out swinging towards the deal. In Nevada, a state the FTC says could be affected by the merger, Sen. Jacky Rosen, a Democrat up for reelection, is successfully campaigning on her opposition to it.

Her workplace promoted numerous native information segments protecting the FTC lawsuit and Rosen’s approving response to it. Rosen had written a letter pushing the company to cease the deal in December.

“Am I gonna take big corporations at their word when they say they want to merge and they’re gonna make it better for the consumer, when they’re gonna give you less choice and less competition?” Rosen stated in a KTVN Reno interview on Feb. 28. “I say it doesn’t take an expert to think maybe we shouldn’t take them at their word. That’s why the FTC is suing to block this merger.”