Janine Jackson interviewed journalist Freddy Brewster about the supermarket megamerger for the August 30, 2024, episode of CounterSpin. This is a lightly edited transcript.

 

Janine Jackson: In October of 2022, the largest supermarket chain in the US, Kroger, announced a plan to take over the second-largest supermarket chain in the country, Albertsons, in a merger that would create the country’s third-largest private-sector employer overall—after Walmart and Amazon—a conglomerate of some 5,000 stores and 710,000 employees. What could go wrong?

A lot of things, the Federal Trade Commission suggested, as they sued to block the merger this February, including less competition, lower quality products and weaker bargaining positions for workers. Legal proceedings began this week.

Our guest is helping make sense of this story. Writer and journalist Freddy Brewster’s latest piece on the proposed Kroger and Albertsons merger, and the maneuvering behind it, appears at LeverNews.com. He joins us now by phone from the Bay Area. Welcome to CounterSpin, Freddy Brewster.

Freddy Brewster: Hi, thanks for having me on. Appreciate it.

JJ: If we could first situate this in common sense and lived experience: Americans have been seeing the price of eggs and milk and other staples go way up, to the point where already-struggling people are pressed to the limit. Asking why this is happening, we’ve been told for years now, well, Covid, and related supply chain problems, and inflation. It’s out of companies’ control.

I have problems already with that, because the notion that companies have to maintain a certain profit margin, no matter what’s happening in the world, is a choice. Companies could always accept less profit, or pay managers less, if keeping prices down was their aim.

But, OK, Covid, supply chain, inflation: That’s no longer the reality, yet it’s still somehow the story. Did Kroger not just acknowledge in testimony that, oh yes, we did push prices higher than inflation just because we could, but still if you give us more market power, you should believe we won’t do that anymore? I want to ask you about specifics, but this whole baseline, to begin with, almost seems like a joke at the expense of people already struggling. Am I missing something there?

FB: No, no, you’re kind of right on it. And just add to that, in 2021, Kroger’s CEO, on a shareholder call, admitted that inflation is a good thing, because it’ll allow the company to raise prices, pass the cost on to consumers and keep prices high. In fact, I have a quote right here from Kroger CEO Rodney McMullen, from that shareholder call, and it says, “We view a little bit of inflation as always good in our business, and we would expect to be able to pass those costs through to consumers on things that are permanent in nature.” And so, right here, he is admitting that they can use inflation to raise prices, and then keep those prices high.

JJ: And that sounds like exactly what they’re saying they won’t be doing in this sort of PR talk about lower prices and better choices.

I went to look up this story, and I found a website called KrogerAlbertsons.com, which opens with this, I find, hilarious disclaimer, and I just want to read it:

Certain information included in this website is forward-looking, and involves risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements are based on the assumptions and beliefs of Kroger and Albertsons companies management in light of information currently available to them.

And it goes on:

Such statements are indicated by words or phrases such as “accelerate,” “create,” “committed,” “confident,” “continue,” “deliver,” “driving,” “expect,” “future,” “guidance,” “positioned,” “strategy,” “target,” “synergies,” “trends” and “will.”

Now companies call this skating where the puck’s going to be, right? You just act as though you’ve already gotten the thing that you’re demanding. And then if the deal doesn’t happen, you’re encouraging people to see it as nature’s path being interfered with, rather than public-protecting processes being followed.

FB: Yeah, that website is funny, and it’s almost like, if there’s any young people out there who are aspiring to work in PR, you can read that website. It is just like those words that they highlight themselves are rather interesting, and kind of like buzzwords, to be able to push a certain type of narrative that they find benefits them, or would be profitable to their narrative.

JJ: What information is the FTC working with when they set up to question or potentially block this merger? Why are they doing that?

FB: They want to block this merger because, like you had mentioned earlier on, this merger could result in poor-quality products, higher prices and worse employment options for employees, especially for employees who are trying to unionize or who want to threaten to be able to go work at the competitor.

Just to give you kind of a sense of Kroger’s market power, in an attempt to allay the concerns from the FTC about this merger, Kroger had promised to sell off 600 stores, slash prices by a billion dollars, and invest a billion dollars in wages if the merger is allowed to go through.

So what this kind of says and highlights is that Kroger is already buying Albertsons for $24.6 billion, and is willing to invest another $2 billion to bring down prices and to get more wages. That shows that they already have quite a bit of market power. They have $29 billion sitting around that they can use to buy another company and lower prices and give people better wages. Well, why aren’t they lowering prices and giving people better wages right now?

That statement itself just highlights the market power that Kroger has, and if this merger is allowed to go through, they’ll have even greater market power. And Kroger says that they want this merger to go through to be able to compete with Walmart and Amazon, which may be legitimate, but Walmart and Amazon, they operate in different spheres than what traditional grocery stores do.

JJ: Right. So the idea that all four of these companies… we as citizens are meant to be excited about a bigger behemoth getting into the fight with other behemoths.

FB: Yeah, exactly. And Kroger already owns a handful of common grocery stores that people know about. There’s Fred Meyer, there’s Harris Teeter, they own King Soopers and Ralphs. And then also Albertsons owns Safeway. They own…

JJ: Acme, I think….

FB: Shaw’s and Vons. Yeah, exactly. And so all of this would put it all under one roof.

And then also, if this merger’s allowed to go through, what puts it under that same roof, too, are also all those store-brand products. Like Kroger has Kroger brand salad dressing, for example, or different sauces or snacks or whatever. And Albertsons has the same thing. But then that puts it all under one roof, one house in one store, and that leaves less options for consumers.

And an expert I talked to highlighted about how when there’s less options, that these companies are focused on profits, and they often use emulsifiers and other things that really aren’t the best to be consuming for the average human, and that can affect health in different ways, weight in different ways.

JJ: Among other tactics, Kroger is declaring that the FTC’s whole case should be thrown out because it’s unconstitutional, because it involves Kroger’s “private rights.” What legal legs do they think they’re standing on there?

FB: So, historically, the courts have ruled in favor of these government agencies. The FTC, for example, and similar with the Securities and Exchange Commission, have these internal courts that rule on certain matters. So, for example, the FTC internal administrative court, they hear evidence, kind of like a standard court, and will issue initial decisions. And companies have sued in the past to try to say this is unconstitutional, and has to be fought in federal court. But the courts have largely ruled in favor of these government agencies.

Up until recently; that’s begun to change. Now the Supreme Court, earlier the summer, ruled that the in-house courts issuing civil penalties for securities fraud, for the Securities Exchange Commission, is unconstitutional. And then, also, there was a 2023 Supreme Court ruling that allowed companies facing an FTC enforcement action to challenge those actions that the companies deemed unconstitutional in federal court, before those actions are deliberated inside the internal FTC court. So it’s a little convoluted, but those are the two main cases that Kroger is relying on to say that the internal FTC court is unconstitutional.

JJ: Listeners will know that we’ve been instructed to see corporations as people since Citizens United, but if I’m in court and I’m deleting relevant text messages, I’m not sure that I could just say, “Oh, well, you know, stuff happens.” Tell us a little bit about some of the behind the scenes actions, if you will, that seem meaningful here to this case.

FB: So deleting text messages and internal chats has seemed to become the go-to tactic for business executives facing enforcement actions and regulations from the federal government. Jeff Bezos and Amazon executives were caught using Signal, which is an encrypted messaging app, but it also has the option for auto delete. And so a lot of these messages that they were exchanging between each other were automatically deleted.

Google executives were also caught deleting messages. So Google has this internal policy where it directs employees to use a feature that automatically deletes Google Chat messages after 24 hours. And Google received an order from regulators to preserve these messages, but a judge found that the executives did not properly notify employees to stop using the auto delete feature, and some messages were deleted.

And there’s also, in the case of Google, messages that have been preserved that show that some of these executives realized the fact that the auto delete function was not turned off. And so it’s preserved in court documents that show that they know that they were supposed to turn off this auto delete function, but they had left it on.

But then Albertsons, some of their executives were using auto-delete features on iPhone, and recent filings from the FTC, I’ll just quote right from it, it says: “Of the eight Albertsons executives set to testify at this evidentiary hearing, four exhibited a pervasive practice of deleting business-related text messages,” the FTC found. And these text messages allegedly included details on whether selling off certain stores will remedy the merger’s anticompetitive impacts, and FTC investigators urge the court to view the executive’s testimony with skepticism, meaning that they should view what they have to say in light of these guys deleting text messages talking about details about the merger.

JJ: Yeah. I’ll bring you back to that big regulatory picture in just a second, but let me just ask you about corporate media response. There’s been some coverage. I’ve seen some coverage.

It includes things like the Chicago Tribune’s editorial board, who weighed in saying that, yes, food prices in America are a real problem, but that it’s “only politicians who want to be seen as doing something about them” that “conveniently focus merely on retail operations, because those are price stickers most voters see.” Well, yeah, OK. But they go on to say:

In reality, supermarkets are a famously high-volume, low-margin business, and their price increases are downwind from wholesale price increases with those flowing from suppliers with increased costs. And the retail operations have their own costs dominated by the price of labor, which has seen hefty increases in recent years.

Now, I think listeners can likely parse that: It’s supply chains and it’s unions that are driving those high grocery prices—even as Kroger’s own senior director for pricing admits in testimony that, yeah, we’re actually price-gouging, but if you let us merge, well, we pinky promise to stop. What do you make of media response here?

FB: Yeah, so I haven’t read that Chicago Tribune article, but I’d imagine that they don’t take in consideration the billions of dollars that Kroger has spent in stock buybacks over recent years. And so it’s not like they’re hurt or cash-strapped in a way that they’re having to pinch pennies to get by. They pay their executives handsomely. They’re paid well, and they have billions of dollars in leftover money to buy back stocks to juice shareholder value. I don’t really see that mentioned too often in corporate media, but that is a key context to consider when it comes to these issues and food prices.

JJ: Yeah, consumers and workers and competition, those terms get thrown around a lot in stories like this. But the Consumer Federation of America opposes the merger, the Food Workers Union opposes the merger, state attorney generals who are interested in competition oppose the merger. So there’s this gap between media and political rhetoric, and what folks on the ground actually see and have seen happening, it seems like.

FB: Exactly. Exactly. Yeah, and folks on the ground know really what’s affecting them, and what’s affecting them largely, as of late, has been high prices at the grocery store. And we know from Kroger’s own internal conversations that they see these price hikes as a good thing.

JJ: While it is hard, understandably, for many of us to see past the price of eggs, which is alarming, but there is also, as you write about, a long game here that has to do with hobbling government’s ability to protect consumers, or to regulate businesses, period. I think Kroger seems to see, and other businesses seem to see, a longer-term gain here by undermining the whole system.

FB: Imagine Kroger’s case against the FTC. This is a bit of a prediction from me. I’d imagine it’ll make its way to the Supreme Court, because if the federal court in Cincinnati, where Kroger sued, if they rule in favor of Kroger, then that says the FTC control of courts is unconstitutional, and I imagine the FTC would challenge that or appeal that. And if Kroger loses, I’d imagine they would appeal as well, because they want to be able to fight this in federal courts, which have largely been stocked with corporate-friendly judges over the past few decades.

JJ: We try to always say, notice those down-ballot elections. Notice those electoral judge positions. All of this is so integral to the rules and policies that govern our lives, but we don’t always see it highlighted as those races or those positions as important as they absolutely are.

Well, corporate America hate them some Lina Khan, don’t they? I mean, we have seen this, in terms of the FTC. It’s almost like there’s something wrong with a person in a government agency just straight up saying, “I’m looking to protect the public interest here.” It’s almost as though we’re being told to see regulatory agencies as just kind of refereeing the game between big corporations, and we, the public, are just not in it.

FB: And a lot of these executives, they get brought onto CBS, NBC, MSNBC, CNN, and they praise Vice President Harris, and are happy she’s running, but they also pressure her to fire Lina Khan and other regulators. And the news anchors there failed to mention the cases that those business executives or those billionaires have in front of the FTC, or have in front of the Justice Department’s Antitrust Division. Or some of the motivations on why they would want to get rid of regulators who have a strong anti-monopoly type of mindset, and a very pro-consumer mindset. That doesn’t really get mentioned too often on some of these corporate media outlets.

JJ: What do you think happens now? You’ve indicated it a little bit, but we’re still very much in the midst of this case. What do you think is likely to happen, and what would you look for journalists to be keeping an eye on?

FB: Yeah, so it’s hard to determine what’s going to happen. I think it’s really going to be interesting on the federal case out of Cincinnati, Ohio, where Kroger sued, challenging FTC’s internal court being constitutional. The current case that’s playing out right now, that’s a temporary halt to the merger. That’ll have some ramifications for sure, but the big one to pay attention to is the Kroger v. FTC federal case out of Cincinnati, and what the ramifications of that will be, because that could also have, if that rules in Kroger’s favor, then that case could be cited to challenge other regulators, their internal administrative courts as well.

JJ: I won’t put words in your mouth, but I’m guessing that you think that independent journalism has a role to play here, in terms of informing the public about these sorts of things?

FB: Absolutely, absolutely. Independent journalists have been ones that have been spearheading some of the pro–consumer protection type stuff. This stems back all the way from a consumer protection advocate, Ralph Nader, back in the ’70s, all the way to our current system now. Independent media is very important in our current age.

And if you are interested about the corporate takeover of America and America’s courts, we have a really good podcast out right now called Master Plan that tracks the beginnings, the origins of how money in politics came to be. Like all good political conspiracies, it goes back to Watergate, in the Nixon administration, that involves the milk lobby, that involves Lewis Powell and the infamous Powell Memo, and then goes all the way to Citizens United and the billions of dollars that are being spent on our current election. So if listeners are interested in that, then they can check out Master Plan.

JJ: All right, then. We’ve been speaking with writer and journalist Freddy Brewster. The piece we’re talking about, on the Kroger/Albertsons merger, can be found at LeverNews.com. Thank you so much, Freddy Brewster, for joining us this week on CounterSpin.

FB: Thank you so much for having me on.

 

This post was originally published on FAIR.