Sunday, February 01, 2004

Antitrust: California's Corruption

America can liberate Iraq from Saddam Hussein, yet as a people we seem powerless to stop the tyranny of our own elected leaders. Case in point:
LOS ANGELES - The California attorney general's office plans to sue supermarket chains involved in a labor dispute with grocery workers, alleging the companies hurt consumers by forming a financial mutual aid pact.

Attorney General Bill Lockyer contends the companies' arrangement, which they made several weeks before entering collective bargaining with some 70,000 Southern California grocery employees, violates federal antitrust laws, particularly the Sherman Act.

"This action is about protecting shoppers against unlawful, anticompetitive conduct that keeps prices artificially high," Lockyer said in a statement Friday in advance of the suit's filing Monday.

"The grocers' agreement to share costs and revenue hurts consumers by discouraging competitive pricing. The antitrust law exists to prevent that, and I intend to enforce the law."

The federal suit is aimed at Albertsons Inc.; Safeway Inc., which owns the Vons and Pavilions chains; and two chains run by Kroger Co. — Ralphs Grocery Co. and Food 4 Less Food Co. All the chains are in the pact, but Food 4 Less workers are not involved in the labor dispute.

The suit seeks an court order barring the companies from profit-sharing and declaring the arrangement illegal.

Kroger, Albertsons and Safeway issued a joint statement late Friday defending their financial pact and saying the lawsuit was without merit.

"Courts have held that similar agreements are proper under federal labor policy and not subject to claims of antitrust violations," the statement said.

The companies have compared the pact to agreements made in the past among airlines and auto manufacturers to fend off individual targeting by workers during a strike.

The grocery clerks went on strike or were locked out on Oct. 11 at Ralphs, Albertsons and Safeway's Vons and Pavilions stores. Food 4 Less is not involved in the current dispute.

The United Food and Commercial Workers union was "gratified that the attorney general agrees with what we believe is clearly an illegal scheme," spokeswoman Ellen Anreder said.

The chains are seeking to reduce health care and other benefits while holding down wages.

The companies have lost millions of dollars in sales because of picketing but have been able to keep stores open with replacement workers.
Let’s make one thing clear: Bill Lockyer is not protecting the public from the illegal acts of grocery store chains. He’s trying to buy the support of labor unions for his expected run for the governorship in 2006. This is political corruption, pure and simple. But because it’s cloaked in the smoke-and-mirrors of antitrust, Lockyer’s nonsensical case will be taken seriously by the courts, the media, and the public. If this were really about protecting consumers from higher prices—something that is not, and never will be, a valid function of government—than why do the unions get a free pass? The objective of their strike, after all, was to raise consumer prices by compelling their employers to raise wages and maintain benefits. But of course, all union activity is exempt from the antitrust laws. That makes the antitrust laws intellectually and morally contradictory, but what else is new?

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