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The Economic Policy Institute (EPI) - which describes itself as "an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States" - is out with a study saying that if the Federal Trade Commission (FTC) allows the $24.6 billion acquisition of Albertsons by Kroger, it will "reduce the number of outside employment options available to workers, lowering grocery store workers’ annual wages by a total of $334 million—about a $450 loss in annual wages per worker."

Here's the rationale from the EPI report:

"Historically, antitrust concerns have focused on the damage to consumers caused by concentration in product markets that gives large firms pricing power. However, a recent wave of economic research has called attention to potential damages to workers’ bargaining power over wages stemming from concentration in labor markets. In this policy memo, we discuss these labor market implications of the proposed merger. We find that the merger of two of the largest supermarket chains in the country will increase employer concentration and reduce the wages of all grocery store workers in affected cities across the country.

"Workers’ ability to negotiate better pay and working conditions rests on their capacity to switch jobs. By decreasing the number of outside options available to workers, the merger will limit competition for hiring and retaining employees, and grocery store worker earnings will fall as a result. Crucially, the wage effects we identify are solely driven by this increase in labor market concentration. If the merger also leads to layoffs or hours cuts, this would add another dimension of damage to affected workers.

"Our analysis uses grocery store employment and earnings data and the specific locations of Kroger and Albertsons stores. We find that:

The merger will lower wages for 746,000 grocery store workers in over 50 metropolitan areas of the U.S. Increased concentration will suppress wages for all grocery store workers in affected cities—not only those workers currently employed by Kroger or Albertsons;

The total annual earnings of grocery store workers will fall by $334 million in affected metropolitan areas;

Because Kroger and Albertsons employ about one quarter of all grocery store employees, most of the wage losses caused by the merger will be a negative externality that falls on grocery store workers employed by other firms. On average, all grocery workers in affected markets will lose about $450 per year in wage income."

EPI concludes:

"The expected earnings losses are a pure windfall for the employers. In our analysis, wages fall solely because of a change in labor market power brought about by increased concentration. Quantitatively, this windfall represents a significant transfer of income from wages to profits: The decrease in wages is equivalent to 2% of Kroger and Albertsons’ profits or three times the companies’ CEO compensation."

You can read the entire report here.

KC's View:

The broader argument - here and elsewhere, including by Kroger and Albertsons - has been that the antitrust rationales of the past cannot be applied to the deals of the present that have to position companies to compete in the future.

I think that's entirely fair.  I'm no antitrust expert, not am I a lawyer, but I've been saying that here for years.

But if we're going to suggest that regulators in charge of making antitrust assessments need to take a broader and longer view of competitive realities, that means, I think, that they also have to be empowered to consider factors like those highlighted by EPI.

I don't doubt the veracity of statements like the one made by Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran in a recent Cincinnati Enquirer piece:

"We value and respect our associates and would never move forward with this combination if it could risk their careers. No frontline workers will be laid off as a result of the merger. The combined company will have one of the largest unionized workforces in the country. We are committed to protecting and expanding opportunities for union jobs."

But - and this is a big but - the EPI statement seems fairly reasonable.  Less competition among retailers could mean that businesses will be better able to hold the line on wages.  They'll be better able to take a hard line with unions.  While jobs may not be lost, the simple fact is that management personnel in these companies - including McMullen, Sankaran and their successors - are assessed and compensated based on the degree to which they can hold down expenses in a way that increases profits.

So even if jobs are not eliminated, it will be in their best interests (and the interests of company shareholders) to do exactly what EPI is suggesting will happen.

However, it seems to me that there is another possibility - that whether the merger is approved or not, a continuing lack of available employees could result in continued wage increases.  And so EPI could be wrong.

Is this enough for chairperson Lina Khan and the rest of the FTC to stop the deal?  I'm not sure.  But I do think that this kind of analysis will factor into their thinking.