Kroger wants to buy Albertsons and effectively become the second-largest grocery chain in the United States. This merger would result in less competition, rising grocery prices, and lower wages. Corporate greed has gotten us into this mess, but new federal anti-merger guidelines, and some tenacious Attorneys General, may just get us out. Returning guest Stacy Mitchell explains why mergers like this one are bad news for workers and shoppers alike.
Stacy Mitchell is Co-Executive Director of the Institute for Local Self-Reliance, a research and advocacy organization that challenges concentrated corporate power and works to build thriving, equitable communities.
Twitter: @stacyfmitchell
Institute for Local Self-Reliance: https://ilsr.org
Stacy Mitchell Responds to Kroger’s Bid to Buy Albertsons https://ilsr.org/statement-kroger-albertsons-merger
Report: How New Federal Anti-merger Guidelines Can Roll Back Corporate Concentration and Build Local Power https://ilsr.org/rolling-back-corporate-concentration-how-new-federal-anti-merger-guidelines-can-restore-competition-and-build-local-power
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
Paul Constant:
Kroger’s recently announced they are going to acquire Albertsons.
David Goldstein:
Another case where consolidation in industry is reducing consumer choice.
Stacy Mitchell:
It’s hard to see any upside to this merger for anybody other than top executives at these two companies and their investors.
Paul Constant:
Combined, Kroger and Albertsons would control more than 20% of grocery sales in the United States.
Speaker 4:
From the home offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer, the best place to get the truth about who gets what and why.
David Goldstein:
I’m David Goldstein, senior fellow at Civic Ventures.
Paul Constant:
I’m Paul Constant and I’m a writer at Civic Ventures.
David Goldstein:
We’ve worked together for how many years, Paul, minus a little one year gap in between?
Paul Constant:
I think almost 15… The better part of 15 years, anyway.
David Goldstein:
Right. And for most of those years we saw each other face to face just about every day.
Paul Constant:
It’s true.
David Goldstein:
Up until of course the pandemic. And as you know, Paul, you haven’t seen a lot of me because I’ve been one of the more careful people during the pandemic not wanting to catch COVID. Early in the pandemic it was particularly a problem for me because I had trouble getting groceries delivered, as did a lot of other people. And when I did manage to start getting groceries delivered a couple months in, I settled on Safeway and I did it because you know me. Bleeding heart liberal that I am, I was very uncomfortable about the way these drivers and delivery people were being treated, about whether they had proper protection, about whether these essential workers were being paid like essential workers.
And I learned that the Safeway drivers were unionized. They were teamsters. And if there’s one thing I know from following the labor union is that you don’t mess with teamsters. And so Safeway became my supermarket of choice because I felt like I could order from them and union drivers with union protection who were demanding personal protection equipment… They had masks on, they had gloves, and I knew they were making a union wage with union benefits and I felt like I wasn’t morally compromised having my groceries delivered that way.
Paul Constant:
No, that’s right. And you actually tipped me off to this very early on in the pandemic because I had done a couple of orders through Instacart and I felt terrible because these were drivers using their own cars, going into grocery stores. I was basically endangering someone else’s life for my own so that they could be paid probably less than minimum wage. And so I was relieved to have this option where I could get people with proper equipment just for delivering groceries… Refrigerated trucks. And know that I was helping to pay someone a real wage that recognized the danger of what they were doing at that time.
David Goldstein:
And unfortunately there’s some news recently where this option is likely going to disappear because Safeway, which is owned by Albertsons… Albertsons is essentially merging with Kroger, which owns the other two supermarket chains in the Seattle area. And QFC… Kroger never offered that option. They didn’t have unionized drivers. They used Instacart.
Paul Constant:
So yes, Kroger’s recently announced they are going to acquire Albertsons for 24.6 billion dollars. If the merger goes through, they’re going to become another mega grocery retailer like Walmart, which will still be the industry leader. But combined, Kroger and Albertsons would control more than 20% of grocery sales in the United States. And this will also affect different regions differently. Here in Seattle, as Goldie said, they’re pretty much the only two options outside of Whole Foods or a few luxury grocers. And also in California and pockets of the east coast.
David Goldstein:
And we think about this. We’ve been trained over the past 40, 50 years to think about mergers and consolidation purely from the consumer’s point of view and purely from, “Will it raise or decrease prices for me?” And my God, they’re promising big savings for consumers, right, Paul?
Paul Constant:
Yeah. Giant coupon for sure.
David Goldstein:
Because of course that’s what CEOs do. Their main focus in life is reducing costs for their customers, not increasing profits for shareholders.
Paul Constant:
Yeah, they’re so selfless. So to learn more about why this merger would be bad for consumers and workers and just the grocery store environment and the United States in general, we talked to Stacy Mitchell. She works for the Institute for Local Self-Reliance and she recently released a statement that said Americans don’t need another mega grocer. We’re excited to talk to her about what else she has to say.
Stacy Mitchell:
I’m Stacy Mitchell. I’m the co-executive director of the Institute for Local Self-Reliance. You can find all our great work on anti monopoly on our website at ilsr.org.
David Goldstein:
Paul and I are here in Seattle where Kroger and Albertsons are the two largest supermarket chains and they announced a merger. Explain for our listeners what this means and why it might be a problem.
Stacy Mitchell:
It’s pretty shocking. I was pretty shocked when this merger was announced and I think a lot of people were, because Kroger is the second largest supermarket chain in the country after Walmart. Albertsons is the number four. We already have a grocery sector that is incredibly consolidated. There are just a handful of companies that dominate grocery sales nationally and these are two of them. And so the idea that they would merge together… Combined, they would have almost 20% of the market nationally and a much higher share in many local regions. As you noted in Washington state, certainly parts of California and other places around the country.
I think for a lot of shoppers you may not realize that Albertsons or Kroger runs your grocery store because actually each of these companies operates… I think each of them operates about two dozen different chains under different names. And so Kroger is Fred Meyer, Harris Teeter, Ralphs, King Soopers, and on and on and Albertsons, likewise… Safeway, Vons, Jewel-Osco, Acme, Shaw’s, Tom Thumb, and so on. And so each of these companies is already the product of a lot of mergers and now these two giants want to get together.
David Goldstein:
Apart from me and my comparison shopping, who are the losers and victims in this scenario? What’s at stake for not just consumers, but for workers?
Stacy Mitchell:
It’s hard to see any upside to this merger for anybody other than the top executives at these two companies and their investors. That’s really it. Consumers are going to see higher prices. We know that from past grocery store mergers and mergers in other sectors. We’ve already been experiencing steep inflation in grocery prices over the last couple of years and we know that grocery prices are in fact going up even faster than the wholesale prices that these chains are paying, meaning they’re paying more for food upstream and then tacking on an even bigger increase. That’s already happening. And these two companies put together would only cause prices to increase faster.
So we’re losers as consumers. We’re also losers as people who need to make a living. Retail workers… We know that a lot of mergers lead to layoffs. That’s certainly true in markets where you’ve got overlapping stores, where these companies are probably going to close stores because they already have different brands in the same region. Those merge together. We’re going to lay likely see layoffs. And that’s one reason that grocery store unions on the west coast have been outspoken about how bad this deal is.
In addition to the layoffs, workers are also likely to see potential stagnation in wages because there are fewer places to work. Those companies have more market power to actually hold down wages. Some of the other folks that are going to lose… Farmers and small companies that make food and people who work in food production. We know that when we see consolidation in retailing, that tends to squeeze incomes for farmers and squeeze incomes for people who work in slaughterhouses and various kinds of food processing. And lastly, independent grocers and the communities they serve are going to be really hit hard by this if it goes through because of the greater market power that Kroger Albertsons would have.
Paul Constant:
One of the more frustrating pieces of the press release announcing this merger to me was that they announced that they were going to provide the better part of a billion dollars in savings to customers in terms of price decreases. And I’ve seen that repeated by the press as though it were gospel. And I was wondering if you can maybe help tease out that number and explain why you say that you think the prices will go up?
Stacy Mitchell:
Well, this is the standard playbook with a merger. Companies decide they want to merge and they put out a press release and they say, “Oh, we’re going to create all these efficiencies and that’s going to help us save money and we’re going to pass those savings on to consumers.” That is the story that we’ve been told by merging companies over and over and over again, and yet we have detailed analysis and work that has been done looking at big mergers after the fact. And what that analysis has found is that in the vast majority of cases, those mergers lead to price increases.
The deal here is, yeah, maybe they find some ways to cut costs, but that’s mostly because they’re cutting jobs, pushing down wages, squeezing farmers. It’s not actual efficiencies. It’s more about using your muscle to squeeze other people who don’t have as much market power. And then you take that money and you put it in your pocket. You don’t pass it on to consumers. That’s the name of the game. So what their press release says and reality are two really different things. And it’s unfortunate that… I think the way that often media works on autopilot in terms of quoting those things as though that’s anything other than just a made up story… It’s too bad.
David Goldstein:
Yeah. Well, I understand why the media falls down on this, having been a part of it and having covered the media for years. I’m curious about the courts and about antitrust regulators. Of course when there’s a merger like this, they promise it will be good for consumers because that’s basically how we have judged mergers over the past 40 years. If you could speak a little bit about the federal guidelines on antitrust policy and how that changed in the 1970s and what that has meant for the massive concentration of market power we’ve seen over the past few decades?
Stacy Mitchell:
This merger comes at a really interesting moment because there is a sea change underway in antitrust policy and I think the high likelihood is that this merger is going to be challenged, that the Federal Trade Commission, the antitrust agency that reviews mergers in the supermarket sector, that they are very likely to challenge this merger, which is great news for all of the reasons we were just talking about.
For a long time, the last 40 years, as you mentioned, beginning in the seventies and eighties, there began to be this ideology that took over our antitrust enforcement. For decades before that, all through the 20th century we had very strong anti monopoly laws and the government took a very, very skeptical view of mergers and very often said no, and indeed so much so that companies didn’t propose them, certainly not at this scale.
Just to give you a sense of what the environment was like prior to the 1980s, in the mid 1960s, there was a significant antitrust case that went all the way to the Supreme Court in which the antitrust agencies blocked a grocery merger that would’ve given one company a 7% market share in one metro area. And they won. The agencies blocked that merger and they won the Supreme Court level. The idea that one company would control 7% in the Los Angeles metro area was enough to be like, “Nope, that’s too much.” And now we live in a world where Walmart has one out of every $4 that people spend on groceries nationally and has more than 50% of the market in lots of metro areas. And Kroger is right there behind it. And then you throw in Albertsons. I mean, an incredible level of consolidation.
And that is because of this huge shift that began to happen in the eighties essentially led by folks like Robert Bork and other legal and economics scholars. There became this idea that large corporations were inherently better, that they were more efficient, that they delivered more benefits to society and lowered prices and so on, and that generally we should embrace consolidation rather than try to limit it. That was their thinking.
And one of the ways in which they codified that into policy is that in 1982… So Reagan gets into the White House and he appoints folks to the antitrust division at the Department of Justice and they rewrite the merger guidelines. And the merger guidelines are like a policy statement that says, “Here are the conditions in which the agencies will generally challenge a merger. Here are the conditions in which we think a merger is illegal under existing law.” And the friends of Robert Bork who were put into office under Reagan rewrote those guidelines in a way that they just have nothing to do with what the statute says as passed by Congress. They’re just a totally radical departure from what the law passed by Congress actually says, and the merger guidelines says, “Oh, we really mergers,” essentially. I’m obviously simplifying, but that’s the general gist of it. And so ever since then we have had merger after merger after merger approved and that has just really contributed to the consolidation we see now.
David Goldstein:
And to be clear, this was not an act of Congress. Congress didn’t debate over this. It was rule making within the Reagan administration that entirely overturned the previous 75 year regime of antitrust regulation.
Stacy Mitchell:
That’s absolutely right. I’ve referred to it as a coup because that’s the closest word I can come up with for what happened. I was surprised that… The antitrust agencies now are in the process of actually reviewing the merger guidelines and they’re going to write new ones, which is one of the more exciting things that’s happening right now and really I feel very optimistic and happy about. And so we submitted public comments and you can read them on our website if you’re interested in understanding more about the details of this.
So we went back and read the primary statute that Congress passed that governs mergers. It was passed in 1950 and it’s called the Anti Merger Act. It’s an act designed to stop mergers. It says it right there in the title. And you read that and it’s like you’re reading a law from another planet. It’s very strong about how mergers are a threat to the wellbeing of people, to the economy, to independent businesses, to workers, and to democracy. That is all embedded in the congressional debate of that period and in the actual text of the statute. It says that we should stop mergers that may, may lead to too much concentration or guaranteed to. But may. It’s really quite striking. And then you line that up against the merger guidelines that were adopted in 1982. They’ve been altered and refined in various ways since 1982, but the basic structure of what they did in 1982 has remained through both Republican and democratic administrations. And you go read those guidelines against what the 1950 law says and they have no relationship to one another. So yeah, it was a coup.
David Goldstein:
And it’s fascinating because our current merger guidelines are so antithetical to what they had historically been, and yet both eras there’s been a bipartisan consensus. That 1950 act I think was passed by a Republican house or at least was crafted in a… I’m trying to remember the exact date of passage, but there was broad support for the old antitrust regime in both parties. This was not a Democrat… In fact, antitrust was a big Republican program early in the previous century. And there’s been, up until recently, bipartisan support for the current guidelines. Democratic administrations had an opportunity to change this and Clinton and Obama never lifted a finger.
Stacy Mitchell:
It’s striking. You’re right. The 1950 anti merger law passed with really wide margins of support in both houses. And so there were lots of both Democrats and Republicans. There was very high level of support in both parties for that law. And likewise, this more recent period has been embraced by Bill Clinton and Barack Obama as much as by the Republicans. And it really speaks, I think, to the fact that we often talk about these differences in the parties and obviously there are wide differences and that’s been true all along. But there are also these underlying agreements or these underlying ways of understanding political economy that have transcended the parties.
And there was an understanding for many decades in the 20th century that concentrated power was a threat. If you wanted to have a democracy, you not only had to make sure you checked the various branches of government from getting out of hand, but you also had to check concentrations of private power because that would threaten democracy too. And that was all lost in the seventies and eighties and Democrats played an equal hand really in bringing that about. The good news is that Biden has very much repudiated that legacy. He gave an incredible speech in 2021 in which he called out that whole line of thinking, the so-called consumer welfare standard. And he said… I’m paraphrasing, but he said, “This has been a 40 year experiment and it has failed completely.”
Paul Constant:
Back to the Kroger Albertsons specifically, I know the contours of every merger are different, but in this case, state attorneys general are leading a charge against this particular merger. Our state AG Bob Ferguson is leading the AGs with a temporary restraining order. And I was wondering if you could talk a little bit about that and whether you think it’s a useful charge against this particular merger.
Stacy Mitchell:
One of the really weird and disturbing aspects of this merger is Albertsons… Its primary owners are a set of private equity firms. And those folks decided in conjunction with this proposed merger that they would pay themselves, they would pay shareholders of Albertsons, a four billion dollar dividend that was supposed to happen first week of November. And if you look at Albertsons financials, that’s essentially all the cash that the company has on hand and then some. So what seemed to be going on is that the owners of Albertsons were like, “Hey, let’s loot the company of all its cash and we’ll put this proposed merger on the table and Albertsons will be so weakened that it will be very hard for antitrust regulators to say no to this merger because it’s unclear that Albertsons could stand on its own two feet after we’ve taken all the cash out of the company.”
Really shocking, but that’s what this seems to be really about. And the AG of Washington state, along with the Washington DC Attorney General and supported by a few other state AGs, have gone to court in separate actions to say this payout cannot happen, that this is really a violation of antitrust law because it seems to be a step towards undermining competition by effectively creating a situation in which this merger has to go through. And that’s playing out in the courts right now. It seems like the Washington State AG case there is being brought under state law… Has succeeded in getting an injunction, but there’s going to be more wrangling around what happens with that proposed four billion dollar payout to investors.
David Goldstein:
You said it right the first time. You said it was a payout to the private equity firm, and then you corrected yourself and said shareholders. They are the shareholders for the most part. They announce it as a dividend to shareholders, but really it’s a dividend to themselves.
Stacy Mitchell:
That’s exactly right. And there are a few other shareholders and so to be strictly accurate I used the word shareholders, but basically they are paying themselves. And looting is also I think the appropriate word that we need to use here.
David Goldstein:
I would agree.
Stacy Mitchell:
And I’m glad you said that because I feel like a lot of times with corporate behavior, we round out our language. We don’t actually use the right words. It’s like, “No, this is bullying. This is stealing. This is looting.” Let’s use the right words.
David Goldstein:
Well, we don’t want to offend these corporations because as Mitt Romney told us, they are people.
Stacy Mitchell:
Right. Right, exactly.
Paul Constant:
So we’ve talked about federal and state actions, but is there anything that people listening right now can do to help stop mergers like this one?
Stacy Mitchell:
Yeah. I think one of the things that I would really encourage people to do is to keep an eye out for the Federal Trade Commission and the Department of Justice. The other… Through the antitrust division of the Department of Justice. Are going to be releasing I think fairly soon here… Sometime in the next few months at least. A draft of their new proposed merger guidelines. And I know that this seems very technical. It seems like, “Oh, this is in the weeds and it’s not that big of a deal.” It really is pretty momentous because this policy statement will change not only how the agencies look at mergers, but it will also influence the courts and it will help judges develop a better understanding of the implications of mergers and how merger law as written by Congress ought to be interpreted. So it’s a much bigger deal than it sounds like when I say merger guidelines.
So they’re going to be looking for public comment and I think the kinds of comments… You don’t have to be into the weeds of what these policies are. I think the kinds of comments that can be helpful is just hearing from people about general concerns about consolidation. If there are particular kinds of mergers or consolidation that you’ve experienced or noticed an impact from, you certainly can reference those. But it can also just be a general statement of support for taking a stronger stance against this kind of consolidation.
And I mentioned that because certainly these big companies… They’re going to be trying to use congressional oversight and other ways of attacking what the antitrust agencies are doing. And so people can do their part to really stand up for that change and make clear that this is what Americans want to see happen.
One of the things that really didn’t come up when we were talking about the harms of this merger is how much power this would give Kroger and Albertsons over suppliers. These companies already have a lot of leverage over suppliers. If you’re Kroger, you are a major buyer of groceries. And so when you say to a supplier, “Give me a preferential deal and raise prices to my smaller competitors,” which we know that Kroger has done and Walmart has done, suppliers are really… These are their biggest customers. They feel like they have to say yes. And so we’ve seen this waterbed effect where the big chains use their power to squeeze the suppliers and the suppliers comply. They say, “Okay, we’ll give you a discount. We’ll give you access to special supplies. We’ll give you all of this preferential treatment. And meanwhile we need to make up our margins, so we’re going to raise prices to independent grocers.” And that’s part of what’s really undermined independent grocery stores.
Local grocers are really important parts of their community and we should have an economy in which independent businesses can compete. This is especially important because independent grocers disproportionately serve communities of color and rural areas and black and latino neighborhoods are disproportionately served by independent grocers. And so to the extent that this deal allows these big supermarket chains to flex a lot of power over the supply chain and to drive more independent grocers out of business, there are going to be a lot of communities that are hurt by that and it’s going to be particularly communities that have already been marginalized by structural racism, globalization, corporate consolidation, all the things that have been creating these incredible disparities in our economy.
David Goldstein:
Great. I’m glad you raised that because it gets to a heart of a major misconception about the efficiency argument that these companies make, the economies of scale, how they’re going to save all this money and pass it on to consumers. A lot of the economy’s scale comes from that concentration of power. And when they squeeze a supplier, it’s like squeezing a water balloon. They may get lower prices, but the costs remain the same. It’s not like suddenly it’s cheaper to grow apples because Kroger and Albertsons have merged. And so that needs to be made up someplace else. So really when a Walmart or a merged Albertsons Kroger squeezes prices from suppliers, they’re raising prices for other people. It’s great for the private equity folks that own Albertsons but not so great for almost everybody else in the economy.
Stacy Mitchell:
That’s absolutely right. And it’s a way in which Walmart and Kroger and Albertsons can knock their smaller competitors out of the market, not by having to outcompete them. They don’t have to be better grocers. They can just say, “Hey, we’re huge. We’ve got all this money and we’re going to squeeze you and you can’t say no to us because we are such a big part of your business.” If Walmart or Kroger stopped buying from these major grocery brands, those companies would collapse. They can’t say no to what the chains want.
And this has nothing to do with efficiency. This is purely about power. It has nothing to do without competing. It’s purely about power. And it brings us right back to the need to resurrect our antitrust laws because it is illegal for Walmart and Kroger and other big retailers to squeeze suppliers in order to gain an anti-competitive advantage in the marketplace. That’s outlawed under a 1936 law that the antitrust agencies unilaterally, without consulting Congress, decided in the 1970s to just stop enforcing. They just said, “We’re not going to enforce that law anymore.” It’s called the Robinson-Patman Act. And we’ve been calling for bringing it back. And indeed there are a growing number of voices in Congress and also at the Federal Trade Commission who are saying, “You know what? We need to dust off this law,” because it is a major reason that Walmart, Amazon, these giant retailers dominate our economy and that so many of our communities are now devoid of basic goods and services of local businesses that meet local needs. It’s because we haven’t been enforcing that law.
David Goldstein:
Matt Stoller pretty much wrote a whole book about that law. And if you’re listening and you’re interested, you can find an interview with Matt in our archives. Paul, should I give you the honor of asking the final question?
Paul Constant:
Well, yeah. We ask all of our guests, as you know because you were on our show last year… We ask all our guests why you do this work. I’m curious if you feel differently about why you do this work and the work you’ve achieved in the last year.
Stacy Mitchell:
I don’t actually remember what I said a year ago, so I should go back and look and it’d be funny to see if my answer is different, but I actually think that this is a really exciting time to be doing this work because I feel like we are very much on a cusp of a major shift in how we think about and govern the economy and how we think about concentrated power. And so a lot of the research and ideas and issues that I’ve been working on for more than 20 years now are actually at the fore and on the cusp of real change. And so it’s been pretty great to see.
And my entry point into doing this work more than 20 years ago was studying what was happening to communities when Walmart and other big retailers came in and ran the local businesses out of business. What were the consequences of that? And I remember at that time stumbling across the Robinson-Patman Act and thinking, “Wow, we have a law that actually addresses this and somehow it has gone dormant.” And so that’s been part of what I’ve been thinking about and working on for a lot of years. And so to be at a place where there is a real live discussion about bringing that law back and other antitrust laws back is pretty exciting.
Paul Constant:
Thank you. That was wonderful. Yeah, we really appreciate you taking the time to talk about this and I really appreciate all the work you’re doing, so thank you.
Stacy Mitchell:
All right. Thanks so much. This was a great conversation. I appreciate you having me on the show.
Paul Constant:
So Goldie, what do you think about that conversation?
David Goldstein:
The thing that jumped out at me… And I think this is really important for people to wrap their minds around. Was the conversation about the federal anti merger guidelines. And the word that Stacy used to describe what happened in 1982 and the Reagan administration… She called it a coup. And people need to understand it was a coup. We are living in Reagan’s world right now. He’s like the pinochle of American politics where the things that were set out in the Reagan administration have basically constrained us for the past 40 years.
And it’s not just anti merger guidelines. We’ve talked about it a lot on this podcast. We talk about it a lot in our office. We’ve written about it a lot. Stock buybacks. Stock buybacks were illegal. They had always been the illegal for decades except under very unique circumstances where you had to go to the SEC and get permission to do stock buybacks. And the reason why they were illegal was because it’s stock price manipulation. That’s basically what it is. You’re manipulating the price of your own stock. And it was illegal until 1982. Remember that year? Oh my God. 1982 when there was a rule change within the SEC from Reagan appointees that said, “You know what? It’s not illegal anymore. Go ahead, do all the stock buybacks you want.”
And so we get a trillion dollars a year of stock buybacks, which is just sucking money out of the economy, money that’s no longer going to reinvesting, in expanding companies, and building factories and creating jobs. Instead goes straight into shareholders’ pockets and CEO salaries. It’s one of the reasons why CEO pay exploded over the past 40 years.
And you see that throughout the regulatory regime. Over and over and over again, ideological decisions that were made in the Reagan administration have carried on through this day. These aren’t things that Congress voted on. It’s not something that the American public voted on. It’s something that highly partisan ideologues in the Reagan administration either did or set into motion.
The reason why that jumped out at me, Paul, is because there’s a silver lining to this story when it comes to antitrust and stock buybacks and overtime pay and a host of other regulatory and rule making issues. And that is if Reagan could do it, so can Biden. And I think that’s one of the things that… When Stacy talked about being excited by what’s changing right now in the way we think and talk and regulate about antitrust is that we have a president who finally seems willing to go back and change these rules.
Paul Constant:
Yeah. And I think that one of the things that’s so interesting about this Kroger Albertsons potential merger is that it combines a lot of our sweet spots. You’ve got workers’ rights. You’ve got buybacks. And in this case in particular, you have a buyback being used to weaken one of the companies enough that it makes the merger a requirement.
David Goldstein:
It’s a poison pill, obviously.
Paul Constant:
It’s a poison pill, or I almost think of it as the equivalent of somebody trying to burn down their store and get the insurance money for it.
David Goldstein:
You know what? It’s more like the scene in Blazing Saddles where the sheriff is holding the gun to his own head.
Paul Constant:
And so we are lucky that here in Washington State, our Attorney General Bob Ferguson is taking action against this merger and he filed a restraining order to block Albertsons from paying shareholders four billion dollars in buybacks, which would then trigger this merger. A judge granted the order, but it’s only temporary and there’s a long way to go before this buyback does or does not happen and this merger does or does not happen, and there are going to be a lot of fronts in this battle.
David Goldstein:
As we talked about with Stacy, this used to be a bipartisan issue. The Anti Merger Act was bipartisan. It had broad support from both parties and had long been supported. And that’s because both parties understood that this type of market concentration, this type of market power, is bad for democracy. It doesn’t just create economic power. It creates political power and it undermines democracy. And that’s why both parties opposed this type of economic power, this concentration of power. But what’s happened since then is that one of the parties no longer supports democracy. I’m not going to be nuanced about it. There are two parties in the United States, the Democratic Party and the anti-Democratic party. The Republicans don’t believe in democracy because their base wants minority rule. And so of course they support outsized market power because that money gets spent helping elect Republicans.
Paul Constant:
I’m glad you could tie all this together to the end of democracy, Goldie, as you always do. We’ve let the tape run long enough for you to get there. But I do want to point out that among the American people, this is still a very bipartisan issue, that the American public is against mergers in general. I bet they’re against this merger in particular. I don’t know if there’s been any polling on it, but I would bet a significant amount of money that the American people think this is a bad idea. So it’s just a matter of the representatives obeying the will of the people and reflecting the will of their constituents, which is admittedly an issue in the year of our Lord 2022.
David Goldstein:
Also, there’s a lot of great stuff from the Institute for Local Self-Reliance that we’re going to link to in the show notes. You can go there, read it all, participate.
Paul Constant:
You can sign up for their newsletter, which will also send you to places to comment and things that Stacy was talking about public comment is important in certain cases more than others, and this is one of those cases where it’s going to be really important to build a ground swell of support against mergers, against monopolies, and this sort of thing. They will be paying close attention to what people have to say and how many people have to say it. So I would definitely advise you to follow my lead and subscribe to their newsletter so that you’ll know when it’s time to take action and how the best way for you to take action will be.
Speaker 4:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate, and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer. Follow our writing on Medium at Civic Skunk Works and peek behind the podcast scenes on Instagram @pitchforkeconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.