Competitive Intelligence

Supermarkets, Antitrust & Union Busting: Can Anything Save Grocery Stores from Wal-Mart?

Even as major supermarket chains in California have been trying to get health care insurance concessions from labor as they desperately try to compete with the likes of Wal-Mart, California's attorney general is investigating whether three supermarket chains involved in the labor dispute with 70,000 Southern California grocery clerks have broken antitrust laws by forming a financial pact.

The three supermarket operators - Safeway Inc., Kroger Co. and Albertsons Inc. - were issued subpoenas Monday by Attorney General Bill Lockyer's office, demanding they reveal the details of a mutual-aid pact, which the companies reportedly made to share revenue so they could reduce losses in the event of a labor strike. The chains have declined to give specifics on the arrangement, which has become a factor in the weeks since the United Food and Commercial Workers' union decided to pull picket lines from Kroger's 249 Ralphs' stores on October 31st. Ralphs has seen a surge in customers ever since.

Meanwhile, talks have broken down in the grocery strike this week:

Labor negotiations between grocery companies and picketing Southern California grocery workers have broken off and no new talks are scheduled, officials said. About 70,000 grocery clerks went on strike or were locked out Oct. 11 at nearly 860 Ralphs, Albertsons, Vons and Pavilions stores from San Diego to San Luis Obispo. Negotiations with a federal mediator had resumed Dec. 2 between the companies and representatives of the United Food and Commercial Workers union. The talks broke off Sunday evening without a comprehensive offer put forth by the union, said Stacia Levenfeld, a spokeswoman for Albertsons.

The dispute centers on a demand by the supermarket chains that workers shoulder a larger portion of their health care insurance costs. With the strike and lockout entering its ninth week, UFCW International President Doug Dority said he is calling major UFCW local unions from the United States and Canada to a "summit" in Southern California. Union officials said they will mobilize the 1.4 million members of the union to increase strike activity.

The grocery companies in a joint statement said they "are no longer willing to absorb all costs related to maintaining health care benefits" and want to introduce a "modest level of cost sharing."

The companies also are offering a reduced wage and benefit program for workers hired on or after Oct. 6, 2003 to help them "face the enormous challenge of the changing competitive landscape." The national supermarket companies that run the chains — Albertsons Inc., Kroger Co. and Safeway Inc. — say they face pressure from Wal-Mart, Costco and other so-called big box supermarket operators who can sell goods at lower prices because they don't pay as much for their employees' health benefits.

Fact is, labor and managment are in this together. The survival of supermarkets as a business is in question when faced with the stiffness of competitive pressure from Wal-Mart and the sooner labor figures this out, the better chance they'll have a job to return to.

- Arik