The FTC Sues to Stop a Grocery Empire

The government stepped in to block a colossal merger in a victory for consumers and workers. Plus much more in our business round-up.

By Eric Gardner, More Perfect Union

In 2022, Kroger announced plans to expand its grocery empire by acquiring Albertsons for almost $25 billion. 

On Monday, the U.S. Federal Trade Commission (FTC) and a bipartisan coalition of eight states and a district sued to stop it from happening.

The proposed merger comes in the middle of an American food crisis. Despite inflation easing in many sectors, Americans spent 11.4 percent of their income last year on food, the highest amount in 30 years. In its complaint, the FTC argued that the merger would “substantially” lessen competition, resulting in higher grocery prices for American consumers. 

The Commission also argued the combined company, which would control around 15 percent of the American grocery market, would create worse wages and benefits for union workers. Kroger is currently one of America’s largest union employers. “This is absolutely the first time any federal agency has challenged a deal based on a theory of harm in a unionized labor market, specifically,” a law professor and former FTC Bureau of Competition official told Bloomberg Law.

Throughout the merger process, Kroger’s experience with unions was a key talking point for the company. Executives reassured regulators that the company would honor existing union contracts and negotiate in good faith, an argument that helped win the approval of some labor-friendly Democrats. But last week, Colorado’s attorney general accused both companies of colluding to blackball striking workers to diminish the bargaining power of the United Food and Commercial Workers Union (UFCW).  

The Teamsters, which represented 22,000 workers at the companies, and the UFCW, the largest grocery worker union, opposed the proposed deal. 

Kroger plans to appeal the decision.

We’ve been covering Kroger and this merger fight for years now. Our videos generated millions of views, and Kroger was so irritated with us that it launched an astroturf group called “Imperfect Union” to attack us. Here’s a graphic that helps explain all the brands we’re talking about:

For more, watch ‘The Kroger-Albertsons Merger Explained”:

Justice Department Opens Up UnitedHealth Antitrust Probe 

The Wall Street Journal reported Tuesday that the Department of Justice (DOJ) has opened an antitrust probe into UnitedHealth, the $371 billion healthcare conglomerate. According to the report, the investigation is centered on the company’s recent acquisitions through its Optum subsidiary.

The Minnesota-based health insurer founded Optum in 2011 to focus on pharmacy benefits, but the group evolved to dominate the healthcare industry. The division boasts over $226 billion in annual revenues through various services, including employing over 90,000 doctors and several healthcare technology companies.

One of those companies, NaviHealth, uses AI to prescribe patient treatment plans and has been accused of overriding prescribing physicians for profit. The ongoing scandal has generated Senate hearings and class action lawsuits.

In 2022, the DOJ unsuccessfully sued to block UnitedHealth/Optum’s $8 billion acquisition of Change Healthcare, a technology company that manages insurance reimbursement claims for healthcare providers. One criticism of large acquisitions is that the company becomes too large to manage. This month, a cyber-attack took Change Healthcare’s systems offline, leaving pharmacies and hospitals stuck in limbo. According to Ben Teicher, a spokesperson for the American Hospital Association, an industry trade group, the long-term impact isn’t clear, but the outage could have lasting impacts. “It can result in hospitals not being able to make payroll or patients still waiting for services to be approved,” he told the Associated Press. As of this newsletter, the systems are still offline, with UnitedHealth representatives suggesting it could take weeks to fix. 

Here’s our deep dive into UnitedHealth’s singularly sprawling healthcare empire:

Record Sales and a Contract Win for Workers at Anheuser-Busch

Anheuser-Busch InBev, the world’s largest brewer, and the Teamsters agreed to a tentative new contract that averts a strike at the company’s U.S. production facilities. The agreement delivers an immediate $4-an-hour raise to 5,000 members, doubling over the course of the five-year contract. Last year, the company behind Budweiser, Michelob, and Goose Island posted its highest revenue despite selling less beer after a conservative boycott of Bud Light cratered the company’s U.S. beer sales.

The full financial impact of the Bud Light boycott is still unclear, but analysts peg the cost at $1.4 billion in revenue. At the boycott’s peak, poor sales had retailers pulling the product off store shelves, helping Modelo replace Bud Light as the best-selling beer in America. The financial damage was real, but somewhat contained due to the company’s vast size. CEO Michel Doukeris summarized the firm’s market power in an investor call this week: “What we lost is on Bud Light we recovered across the portfolio with Michelob Ultra, Busch Light, Cutwater, Stella all gaining share of shelf.”

In 2023, U.S. revenue declined 9.5 percent leading to speculation that the company would close facilities and lay off workers. In addition to pay increases, the new tentative agreement includes “significant” job protections for all 5,000 members. “Teamsters at Anheuser-Busch will have big pay raises, better benefits, and job security under a strong agreement that benefits everyone,” Jeff Padellaro, a director at the Teamsters, said.

We spoke to Anheuser Busch workers who helped bring about this worker victory:

Streaming and Strikes Cost Paramount 

Paramount Global, the entertainment conglomerate behind CBS Network, Paramount Studios, and streaming service Paramount+, saw revenues drop after the transition to streaming and Hollywood strikes lost the company millions of dollars. The announcement comes less than a month after the company laid off 800 workers in what executives called a cost-cutting measure. 

Paramount has struggled to transition to a streaming entertainment landscape. Last year, the company grew advertisement sales for its streaming service by $260 million but saw $1.2 billion leave the television side. The $1 billion gap is central to the company’s core problem—a legacy company transitioning to a new economic model. This dynamic has made the company a likely acquisition target, with rumored buyers that include private equity.

Making matters worse is poor labor relations.

In 2023, a strike by writers and actors demanding better financial terms for streaming productions and protections against AI ended with the workers getting most of what they asked for. Writers Guild of America estimated that its agreement was triple the studios' initial proposal, but Hollywood studios dragged out the strike, holding out on a resolution for six months. During the strike, writers and actors refused to promote their work.

The impact of the strike was felt last year. Paramount’s film studio profits plummeted 72 percent to $24 million, alongside a 31 percent decline in revenue. 

The company attributed the poor results primarily to the strikes.