REVISED UPDATE 3-Kroger, Albertsons unions, antitrust experts urge FTC to block merger letter

(Correction removes reference in paragraph 9 to FTC blocking Penguin Random House and Simon & Schuster transactions)

By Siddharth Cavale

NEW YORK, Nov 3 (Reuters) – Kroger Co’s takeover of Albertsons Companies Inc could widen income inequality due to job losses and falling wages at a time of high inflation, a group of the largest retail unions and legal experts said in a letter to us Reuters antitrust on Thursday.

“Competition in the grocery industry will cease in many markets across the country, likely leading to job losses and higher prices,” they wrote in a letter to Federal Trade Commission (FTC) Chairwoman Lina Khan, urging the agency to block the deal.

“The merger must be blocked because it would hurt workers, consumers and communities,” said United Food & Commercial Workers (UFCW) Local 400, which authored the letter.

Twenty-six organizations signed the message, including the American Economic Liberties Project, the Center for Economic and Policy Research, and seven local ZPPW chapters representing more than 100,000 Kroger and Albertsons employees.

“People living in poverty will suffer the most – not only from skyrocketing prices resulting from the loss of competition, but also from likely shop closures,” they added.

The letter, first seen by Reuters, also called on the FTC to immediately investigate Albertsons’ $4 billion “unusual” dividend awarded to shareholders on Nov. 7, which it said would leave the company “largely devoid of liquid assets ” and “unsustainable as an ongoing concern.”

Attorneys general from three states and the District of Columbia made similar claims this week, filing lawsuits seeking to block a dividend announced as part of Krogers’ $25 billion takeover of rival Albertsons last month.

The agreement has met resistance from several quarters, not just unionized workers themselves. U.S. senators are holding hearings, and a group of attorneys general are conducting their own investigations.

It’s unclear whether the FTC will take action against the deal, but the agency has previously filed suit to block smaller deals.

“The allegation that this dividend will in any way limit our ability to compete in the marketplace is without merit,” an Albertsons spokesman said in an emailed response to the letter.

As part of the deal, the combined companies said they will invest about $500 million to cut prices, $1.3 billion in Albertsons stores to improve customer service and $1 billion to continue raising employee wages and benefits in response to inflation.

On Thursday, Kroger said it expects continued growth in union jobs and that it looks forward to “continuing our active engagement with key UFCW leaders and 106 local officials” and “working constructively” with the FTC to complete the transaction.

The FTC had no immediate comment. (Reporting by Siddharth Cavale in New York; editing by Aurora Ellis)