Grocers Face Antitrust Suit in California
Albertsons, Ralphs and Vons must face an antitrust lawsuit over a pact the three competitors signed in 2003 to share profits if any one of the three were singled out by the United Food and Commercial Workers (UFCW) union for a strike in California, according to Bloomberg News.
The U.S. Ninth District’s Court of Appeals overturned arguments by the three chains that the agreement wasn’t anticompetitive because it ultimately reduced labor costs and therefore the prices paid by consumers. The state of California had countered that prices actually increased for consumers during the 141-day lockout/strike in 2003 and 2004.
The state argued a bigger issue was at stake than claims and counterclaims about the prices paid by consumers "The central issue here is whether a profit sharing agreement that would ordinarily violate the antitrust laws is excused from compliance under the nonstatutory labor exemption because it constitutes an economic weapon used by the employers in their efforts to prevail in a labor dispute."
Judge Stephen Reinhardt, writing for the majority, concluded, "It is a primary object of our nation’s laws to protect the rights and interests of working persons, and to enable them to obtain a fair and decent wage through collective action. Reducing workers’ wages and benefits is hardly an objective that would justify a violation of our antitrust laws."
Representatives of the parent companies for Albertsons (Supervalu), Ralphs (Kroger) and Vons (Safeway) did not offer any comment on the verdict.
Discussion Question: Do you think Albertsons, Ralphs and Vons engaged in anticompetitive behavior by agreeing to share profits if one of the chains was singled out for a strike? What will this ruling, if upheld, mean for future labor negotiations?
- Ralphs, Albertson’s to Face California Antitrust Suit, Appeals Court Rules – Bloomberg News
- California Brown v. Safeway Inc., Nos. 08-55671, 08-55708 – FindLaw