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Attorney General Lockyer Launches Antitrust Probe of Grocers in Labor Strike

Issues Subpoena for Revenue-Sharing And Other Cooperative Agreements
Monday, December 1, 2003
Contact: (415) 703-5837

(SACRAMENTO) – Attorney General Bill Lockyer today announced his office has launched an investigation into possible antitrust violations by grocery chains embroiled in a labor strike that has idled some 70,000 workers at more than 850 stores in Southern and Central California.

"The parent companies of the stores in this dispute combine for more than $100 billion in annual sales," said Lockyer. "But sales figures do not measure a company's true worth, or the quality of the life a family lives now and in the future. Those are the interests these striking workers have at stake as they struggle to meet their families' basic needs. This investigation will seek to determine whether the stores on the other side are playing fair and within the rules set by state and federal law."

The Attorney General's probe will focus on allegations that the grocery chains – Albertsons, Ralphs (owned by Kroger Co.), and Vons and Pavilions (owned by Safeway, Inc.) – entered a mutual aid agreement to divide and share costs, revenue, and profits or losses. Such an agreement could violate state and federal antitrust statutes, as well as California law prohibiting unfair business practices.

As part of the investigation, The Attorney General's Office today subpoenaed the grocers to produce the agreement, any other cooperative agreements they may have entered, and related communications such as emails. The office issued the subpoena after the grocers failed to respond to a request to produce the documents voluntarily.

The strike began Oct. 11, when Vons and Pavilions union workers walked off the job after contract talks reached an impasse over benefit and pension issues. Within hours, Ralphs and Albertsons locked out their union workers. Employees at all three chains are represented by the United Food and Commercial Workers' Union. The UFCW on Oct. 31 pulled picket lines from Ralphs.

The alleged mutual aid agreement, as described by some market analysts, in part requires Ralphs' parent company, Kroger, to share with the other two chains any windfall reaped by the absence of picket lines in front of Ralphs' stores. If such an agreement unduly restrains competition and keeps prices artificially high, it could run afoul of antitrust laws.

Store officials have acknowledged an agreement exists, but have refused to provide details or make it public.

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