FTC declares mergers to be union-busting

In a classic case of regulatory creep, the Federal Trade Commission (FTC) has recently asserted jurisdiction over labor unions and collective bargaining. The agency is opposing grocery chain company Kroger’s acquisition of rival chain Albertson’s in part because this could be bad for the union representing Kroger’s workers.

“A combined Kroger/Albertsons, however, would gain increased leverage over workers and their unions—to the detriment of workers… The combined Kroger and Albertsons would have more leverage to impose subpar terms on union grocery workers,” the FTC alleged this week.

The FTC has traditionally focused on harm to consumers and competition among businesses, but has lately decided to expand its reach to labor policy. The commission last month announced it would begin pursuing cases alleging “misclassification” of workers, i.e., denying them overtime and minimum wage protections. Never mind that there are already federal agencies tasked with pursuing those cases and workplace policy in general, namely the Labor Department and the National Labor Relations Board (NLRB).

Even if it were true that the merger left the union worse off, how is that an issue for the FTC to weigh in on? The Federal Trade Commission Act says the agency’s mission is to prevent “Unfair methods of competition in or affecting commerce” with no reference to union activity.

The word “consumer” is used 67 times in the Act. The word “union” appears 21 times, but in each case it is in reference to “federal credit unions,” not groups representing workers. The phrase “collective bargaining” appears nowhere in the act.

If the United Food and Commercial Workers (UFCW), the union representing the grocery store workers in this case, thinks the merger creates an unfair situation for them or breaks their existing contract with Kroger’s or Albertson’s in some way, then they can make a formal complaint to the NLRB. The FTC should stay out of it.

The FTC commissioners appear to be taking the view, often repeated by President Biden, among others, that it is the federal government’s duty to not merely protect the right of collective bargaining, but to encourage workers to join unions and otherwise engage in union activity. The FTC press release opposing the merger warns that “Union grocery workers (sic) ability to leverage the threat of a boycott or strike to negotiate better CBA terms would also be weakened.”

However, as CEI has pointed out previously, the intention behind the National Labor Relations Act (NLRA) was, merely to secure the right to collective bargaining, but not to promote unions. Joining or not joining one was strictly the workers’ decision. It’s no business of the FTC’s what happens

The FTC’s argument in the Kroger/Albertson’s merger is weak in any event. Whatever the issues for consumers might arise from the merger, it is not clear that this leaves the workers significantly worse off, as the FTC alleges.

Just because the union may have used a strategy of playing one grocery chain off against another that does not mean that a merger renders the union incapable of effectively bargaining with the resulting new company. The UFCW would still have all of a union’s usual tools at its disposal – slowdowns, strikes, sickouts, public PR campaigns, etc. – to force concessions from the company.

Companies merging is a natural part of the business cycle that can even benefit workers. In a competitive marketplace with no mergers, when businesses fail they simply close down and all of the workers lose their jobs. Mergers create a new, larger company, minimizing the loss of employment and the disruption to workers. The FTC would apparently rather the workers become unemployed than unrepresented.