California's attorney general said Friday that he planned to sue the grocery chains involved in the state's supermarket strike and lockout, alleging that their controversial mutual-aid pact violates federal antitrust laws.
The pact, whereby the stores agreed to share an undisclosed amount of cash to help each of them during the dispute, "hurts consumers by discouraging competitive pricing" between the chains, Atty. Gen. Bill Lockyer said in a statement.
The companies involved in the bitter, 3 1/2-month-old dispute -- Safeway Inc., which owns Vons and Pavilions; Kroger Co., parent of Ralphs; and Albertsons Inc. -- issued a joint statement denying that the pact had "caused prices to rise and consumers to be harmed." The agreement is lawful, the statement said, "and we look forward to presenting our case in court."
The three employers are bargaining as a single unit with the United Food and Commercial Workers union. They formed the mutual-aid pact as part of their collective effort but have kept the agreement shrouded in secrecy.
The suit, which Lockyer plans to file Monday in U.S. District Court in Los Angeles, seeks an injunction to bar the stores from implementing their agreement.
Lockyer, who has shown personal support for the UFCW in the dispute, subpoenaed the stores to give him a copy of the pact last month. If he successfully blocks the grocers from sharing funds, it would remove one of the financial buffers that has helped the companies endure the strike and lockout.
Lockyer's office provided a copy of the lawsuit but not the pact. The stores have refused to release terms of the agreement but have made statements to indicate that at least tens of millions of dollars could be involved, although they've also said that no money would change hands until the labor dispute was over. So far, the chains have racked up an estimated $1 billion in combined lost sales due to the strike.
Analysts said it's unlikely that Lockyer's action would kick-start the stalled contract negotiations between the stores and the UFCW because the sides were so far apart on such major items as healthcare costs and wages for employees.
The parties haven't held formal talks in more than a month, and none were scheduled as of Friday.
"I don't see this being the key to unlock a settlement," said Norman Jenkins, a labor specialist at law firm Jenkens & Gilchrist in New York.
