Grocers’ Profit Sharing Probed

California Atty. Gen. Bill Lockyer said Monday that he would investigate whether supermarket companies violated antitrust laws by agreeing to share profits and losses during the grocery workers’ strike.

His announcement came as the United Food and Commercial Workers union and the three companies prepared to return to the bargaining table and as the effects of a week-old Teamsters sympathy strike rippled through stores in Southern California.

Lockyer said he subpoenaed the companies for a copy of their mutual aid pact.

Albertsons Inc., Kroger Co.’s Ralphs chain and Safeway Inc., which owns Vons and Pavilions, have confirmed the pact exists but have declined to release details.

The chains maintain that because they are joined together in a collective bargaining agreement with the union, their mutual aid agreement is exempt from federal and state antitrust laws.

“Such agreements are not uncommon and are lawful under state and federal law,” said Stacia Levenfeld a spokeswoman for Albertsons.

Lockyer spokesman Tom Dresslar said there was no clear precedent.

“Our initial review of the legal landscape indicates that it is far from a closed question,” Dresslar said. “That’s why we want to get the agreements, so we can get a firm handle on the facts.”

Dresslar said the companies had until Dec. 22 to respond to the subpoena.

According to Wall Street analysts who follow the companies closely, the agreement says that if one of the three reaps added business during the strike, it will share some of that money.

The UFCW struck Vons and Pavilions on Oct. 11 after talks on a new contract broke down over health insurance, pay scales for new workers and other issues. Ralphs and Albertsons locked out their union workers the next day.

The mutual aid pact took on significance with the Oct. 31 decision by the UFCW to pull its pickets from Ralphs stores to focus pressure on the other two chains.

That has led to a sharp pickup in business for Ralphs -- which presumably is sharing the bounty with Safeway and Albertsons.

Union leaders cheered Lockyer’s action.

“The unions have contended all along that this is an illegal restraint of trade,” said UFCW spokeswoman Ellen Anreder. “This just goes to fortify our case, and may force a modification to their game plan.”

The union and the markets will start negotiating again today. Peter J. Hurtgen, director of the Federal Mediation and Conciliation Service, is trying to patch together an agreement and put 70,000 union members back to work.

Both sides have agreed not to discuss details of the negotiations.

Union members are hopeful that last week’s decision by the Teamsters union to honor picket lines at grocery distribution centers will strengthen their bargaining hand.

Since Nov. 24, more than 8,000 Teamster warehouse workers and drivers have refused to work at the distribution centers, forcing the chains to hire thousands of temporary workers unfamiliar with their inventory systems and trucks.

At a Ralphs distribution center in Compton on Monday, only a few loaded trucks left the grounds during an hourlong visit, and they appeared to be carrying light loads. About 20 UFCW pickets walked the driveway as 50 or so Teamsters watched and hooted their support from the sidelines.

Because the Teamsters are not on strike, they cannot legally join the picket lines.

Jeff Hiddleson, a Teamster member for 19 years who works in the perishables section of the warehouse, said the center was eight days behind in filling orders for stores. He said some operations, such as the certification of pasteurized dairy products, had basically stopped.

As he spoke, other Teamsters booed an incoming truck as it attempted to carry merchandise into the distribution center.

On Monday, the Teamsters’ support was apparent on store shelves.At a Ralphs on Lincoln Boulevard in Venice, the delicatessen and seafood sections were darkened and closed. There were gaps in the meat and dairy sections.

Other stores, such as the Ralphs on La Brea Avenue in mid-City, remained well-stocked.

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On February 12, 2004 the United Food and Commercial Workers Union, which had stated repeatedly that 70,000 workers were involved in the supermarket labor dispute in Central and Southern California, said that the number of people on strike or locked out was actually 59,000. A union spokeswoman, Barbara Maynard, said that 70,000 UFCW members were, in fact, covered by the labor contract with supermarkets that expired last year. But 11,000 of them worked for Stater Bros. Holdings Inc., Arden Group Inc.’s Gelson’s and other regional grocery companies and were still on the job. (See: “UFCW Revises Number of Workers in Labor Dispute,” Los Angeles Times, February 13, 2004, Business C-11)

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