People usually warm up to each other before they get married, but companies aren’t supposed to act that way. Collusion before a merger is illegal. It’s fight, fight, fight right up to the wedding day.
On Feb. 14 — Valentine’s Day, no less — the State of Colorado accused two supermarket chains, Kroger and Albertsons, of behaving nicely toward each other before tying the knot. Whether that’s true or not, the mere accusation creates problems for the two chains, which were already struggling to keep the merger on track.
The Federal Trade Commission is looking at the merger proposal, announced in October 2022, and is “widely expected” to try to block it, The Times reported recently. The last thing the companies needed was a fresh accusation out of Colorado.
In Colorado’s complaint, Philip Weiser, the state attorney general, accused the companies of making a “no poach” agreement in January 2022, before the merger agreement, citing an email to that effect from the head of labor at Albertsons to his counterpart at Kroger. According to Weiser, the companies agreed that Albertsons would not hire any workers who were on strike at Kroger’s King Soopers stores.
He added that the merger could reduce competition and put upward pressure on prices.
Matt Stoller, a blogger who supports vigorous antitrust prosecution, wrote that “it’s always shocking to read stuff this blatant,” referring to the email. He noted that Weiser is seeking to fine the companies $1 million apiece, which may not be a lot of money to them but could open the door to more litigation if they are found liable for collusion.
One missing element in Colorado’s complaint is any evidence that the agreement was mutual — in other words, that Kroger likewise agreed not to poach workers from Albertsons.
Another issue is motivation. While Colorado says the agreement was “a naked restraint of trade,” Albertsons sent me a statement that the email “was simply reiterating its policy of not hiring workers who are on strike at another company, since those workers would only leave Albertsons and go back to their old employer when the strike was over.”
I have no idea if Weiser can win his case in court. But simply by raising the issue, he has hurt the prospects of the merger in the court of public opinion.