– The Wall Street Journal (paywall) reported that the Federal Trade Commission (FTC) sued to block Kroger’s $25 bn bid for Albertsons, raising questions about one of the largest ever supermarket deals. The FTC in its lawsuit said the deal would result in higher food prices and lower wages for employees and asked a court to block the companies from closing their deal on antitrust grounds. The companies’ plan to address the government’s concerns by selling stores in Washington, Colorado and other states would not solve the problem, the FTC said.
‘This supermarket mega-merger comes as American consumers have seen the cost of groceries rise steadily over the past few years,’ said Henry Liu, director of the FTC’s bureau of competition. ‘Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today.’
The companies said they look forward to presenting their arguments in court. A Kroger spokesperson said the FTC’s decision makes it more likely that US consumers will see higher food prices and fewer grocery stores and that it will strengthen non-unionized retailers. An Albertsons spokesperson said the deal would lower prices for consumers, increase worker pay and allow the combined company to better compete with Amazon and Costco.
– According to Reuters (paywall), the US Supreme Court appeared torn over whether to allow a Republican-backed Florida law to take effect despite concerns that it limits the ability of social media platforms to curb content the companies deem objectionable. The justices completed arguments in the Florida case before turning to arguments over the legality of a similar Republican-backed law in Texas that the court previously blocked while litigation played out at a lower court.
At issue in the cases is whether the 2021 state laws regulating content-moderation practices by large social media companies – which grew out of Republican concerns about alleged bias against conservative voices – violate the free speech protections for the companies under the First Amendment. Lower courts split on the issue, blocking key provisions of Florida’s law while upholding the Texas measure. Many of the justices expressed concern that Florida’s law would undermine the platforms’ editorial judgments, but some also said it could legally apply to some non-expressive internet services, such as the provision of email, direct messaging or car sharing.
– Norfolk Southern is planning a board refresh as it seeks to fend off a shareholder activist group waging a proxy battle against it, the WSJ reported. The railroad company revealed a slate of 13 board nominees, including two new candidates: Richard Anderson, the former CEO of Amtrak and Delta Air Lines, and Heidi Heitkamp, a former US senator. An investor group led by Ancora Holdings recently revealed its slate of eight director candidates, which includes former governor of Ohio John Kasich. It also proposed a new management team. Norfolk Southern believes Ancora’s strategy is shortsighted and could threaten recent progress following a damaging train derailment last year.
A spokesperson for the Ancora-led investor group said it believes CEO Alan Shaw and the Norfolk board ‘have no credible plan and no viable record to run on.’
– Reuters reported that the US Court of Appeals for the DC Circuit rejected a Puerto Rico-based hospital’s effort to strike down a long-standing National Labor Relations Board (NLRB) rule requiring employers that acquire other companies to bargain with those companies’ workers’ unions. A unanimous three-judge panel said the so-called ‘successor bar’ doctrine was a reasonable way to protect workers’ rights to collectively bargain with their employers.
The rule says successor employers must recognize and bargain with existing unions for up to one year after acquiring a company, even if they believe a union lacks the support of a majority of workers. After that period, employers can petition to decertify a union.
The NLRB declined to comment. Lawyers for the hospital did not immediately respond to a request for comment.
– The Walt Disney Company appealed directly to shareholders in its proxy battle with activist investor Nelson Peltz, publishing a refutation of claims made by the head of Trian Fund Management on the company’s Vote Disney website, Reuters reported. Disney cited nine examples where it disputed claims made by Peltz, who is attempting to gain two board seats.
Disney, Peltz and another activist investor, Blackwells Capital, have roughly one month to persuade investors to back their director candidates. Each party is making its case in the hope of persuading shareholders. Among other things, Disney defended the performance of its global streaming services and disputed claims it had refused to engage with Peltz.
– According to Reuters, 32 media groups including Axel Springer and Schibsted have launched a €2.1 bn ($2.3 bn) lawsuit against Alphabet’s Google, alleging that they suffered losses due to the company’s practices in digital advertising. The group includes publishers in Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Finland, Hungary, Luxembourg, the Netherlands, Norway, Poland, Spain and Sweden.
‘The media companies involved have incurred losses due to a less competitive market, which is a direct result of Google’s misconduct,’ a statement issued by their lawyers said. ‘Without Google’s abuse of its dominant position, the media companies would have received significantly higher revenues from advertising and paid lower fees for ad tech services. Crucially, these funds could have been reinvested into strengthening the European media landscape.’
In a statement, a spokesperson for Google said the company opposes the lawsuit, adding that it is ‘speculative and opportunistic’. The spokesperson added: ‘Google works constructively with publishers across Europe... [Our advertising tools] adapt and evolve in partnership with those same publishers.’
– New York Attorney General Letitia James filed a lawsuit accusing JBS, the world’s largest meatpacker, of lying about its impact on the environment to attract climate-conscious customers, the WSJ reported. James sued the Brazilian company’s US division, saying that JBS misled consumers with its climate goals, including its plan to reach net-zero carbon emissions by 2040, to boost sales.
‘JBS USA’s environmental greenwashing exploits the pocketbooks of everyday Americans and the promise of a healthy planet for future generations,’ she said in a statement.
The lawsuit filed on Wednesday alleges that JBS’ net-zero commitment isn’t attainable because of the amount of carbon emissions that come from beef production, including methane produced by the animals. The agriculture industry has come under increased environmental scrutiny in recent years for the greenhouse gas emissions that come from producing crops and livestock.
A JBS spokesperson said the company takes its commitment to a sustainable future for agriculture seriously and disagrees with the New York attorney general’s office. ‘JBS will continue to partner with farmers, ranchers and our food system partners around the world to help feed a growing population while using fewer resources and reducing agriculture’s environmental impact,’ she said.
– According to Reuters, a new venture by a legal technology entrepreneur and a former Kirkland & Ellis partner says it can use AI to help lawyers understand how individual judges think, allowing them to tailor their arguments and improve their courtroom results. Bench IQ was founded by Jimoh Ovbiagele, co-founder of now-shuttered legal research company ROSS Intelligence, with former ROSS senior software engineer Maxim Isakov and former Kirkland bankruptcy partner Jeffrey Gettleman.
Bench IQ said it uses large language model-based AI technology to offer ‘comprehensive insights into the decision-making patterns of judges, covering 100 percent of their rulings’ – not just their written opinions.
– The WSJ reported that the SEC is examining internal communications by OpenAI CEO Sam Altman as part of an investigation into whether the company’s investors were misled. The agency has been seeking internal records from current and former OpenAI officials and directors, and sent a subpoena to OpenAI in December, according to people familiar with the matter. That followed the OpenAI board’s decision in November to fire Altman as CEO and remove him from the board. At the time, directors said Altman hadn’t been ‘consistently candid in his communications’ but didn’t elaborate. Altman returned as CEO as part of a deal that also entailed a reconstituted board, which he hasn’t joined.
The SEC enforces laws that forbid people from misleading investors, regardless of whether fund-raisers seek capital in public or private markets. The agency often closes investigations without making formal accusations of wrongdoing. Some of the people familiar with the investigation described it as a predictable response to the former OpenAI board’s claim in its November statement. One of the people said the SEC hasn’t pointed to any specific statement or communication by Altman that it has deemed misleading.
– The WSJ reported that Elon Musk sued OpenAI and its CEO Sam Altman, alleging that they broke the AI company’s founding agreement by giving priority to profit over the benefits to humanity. Musk, who helped found the ChatGPT maker in 2015, claims OpenAI’s close relationship with Microsoft conflicts with the company’s original commitment to public, open-source AI. Musk is bringing claims including breach of contract, breach of fiduciary duty and unfair business practices.
OpenAI didn’t immediately respond to a request for comment.
– According to Reuters, SilverBow Resources said top shareholder Kimmeridge Energy Management has nominated three candidates to its board. SilverBow said Kimmeridge made an all-cash takeover offer last February to take the company private but its proposal fell through as the investor was unable to secure funding for the deal. The company’s board will review the nominations, it said in a regulatory filing. SilverBow said it had engaged with Kimmeridge several times over a possible deal but had not received any ‘actionable proposal.’
Kimmeridge declined to comment on SilverBow’s disclosure.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
