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May 27, 2005

Grocers to Face Union Busting Antitrust Suit

For folks who remember the southern California grocery chain strike last year, a key to the grocers breaking the strike was a revenue sharing deal between the big chains-- thereby preventing the unions from easily reaching settlement with any of the firms individually.

Sounds a lot like corporate collusion that should be barred by antitrust law, doesn't it? And yesterday, a federal judge allowed a lawsuit by the California Attorney General alleging antitrust violations to move forward.

U.S. District Judge George H. King in Los Angeles wrote in his decision that the mutual-aid deal was "not protected from potential antitrust liability."...

"We are confident we will prevail on the merits," Lockyer said in a statement, adding that this was the first such ruling to hold that a "profit-sharing agreement like the grocers' is not immune from antitrust laws."...

The chains initially refused to disclose the pact's details and sought to have them sealed after Lockyer sued. But King unsealed the documents in February.

They showed that the companies used a formula based on their sales, before and during the dispute, and their regional market shares to figure out what Kroger should pay the others.

Kroger later revealed in securities filings that it paid a combined $148 million to Safeway and Albertsons, and Albertsons said it received $63 million of that. That would have left $85 million for Safeway.

This shows the big money companies are willing to pay each other to support union busting. Hopefully, a strong antitrust judgmenet against the companies will stop this particular employer tactic in other strikes.

Posted by Nathan at May 27, 2005 08:02 AM