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After court loss, Albertsons and Kroger trade accusations over demise of mega-grocery-chain deal

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After court loss, Albertsons and Kroger trade accusations over demise of mega-grocery-chain deal

When Kroger and Albertsons announced plans in 2022 to team up on what would be the largest supermarket merger in U.S. history, the two grocery store chains highlighted their shared values.

Now their relationship has turned sour, with each side blaming the other for the demise of what would have been a landmark deal.

A day after a federal judge temporarily halted the merger, Albertsons said Wednesday that it’s scrapping the controversial pairing and suing Kroger, alleging that the chain failed to do enough to win over regulators.

Once partners, the grocery chains are now accusing each other of breaching the merger agreement and acting in their own interests.

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The fallout between Kroger and Albertsons and the failed merger raise fresh questions about the future of their businesses and the effect on people who shop at their stores. The companies, which have a big presence in California and nationwide, banked heavily on the benefits of joining forces to better compete with the likes of Walmart, Costco and Amazon.

“Anytime you get these two companies fighting with each other, that’s money that could be used for innovation and to better position themselves in the market,” said Christine Bartholomew, a law professor at the University at Buffalo.

The legal battle between the major grocery chains is the latest development in what has been a tumultuous two years for Albertsons and Kroger as they tried to win government approval for their megamerger. In February, the Federal Trade Commission sued to block Kroger’s proposed $24.6-billion acquisition of Albertsons because of concerns that it would eliminate competition, drive up food prices and harm workers.

If the merger had been approved, the two supermarket chains would have run more than 5,000 stores in 48 states, according to the FTC’s lawsuit. Albertsons owns the well-known brands Pavilions, Safeway and Vons. Ohio-based Kroger operates Ralphs, Food4Less, Fred Meyer, Fry’s, Quality Food Centers and other popular grocery stores.

The FTC’s lawsuit set the stage for a three-week trial that kicked off in a federal courtroom in Oregon over the summer. The trial featured testimony from the grocery store chains’ executives, FTC lawyers, union leaders and antitrust experts.

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To address concerns about reducing competition, Kroger and Albertsons said they would sell more than 570 stores to C&S Wholesale Grocers. That plan included offloading 63 California stores, including some in Los Angeles and Huntington Beach.

The fate of those stores is unclear. Albertsons didn’t respond to questions about whether they planned to keep or close the California stores. During the trial, Albertsons said it might have to lay off workers and shutter stores if the merger didn’t go through.

The grocery chains, though, failed to convince U.S. District Court Judge Adrienne Nelson, who on Tuesday issued a preliminary injunction blocking the merger, finding that it would quash competition and leave consumers in many parts of the country without meaningful choices when shopping for food. Kroger and Albertsons also faced legal battles in other states, including in Washington, where a judge also blocked the deal Tuesday because of competition concerns.

Noting that Kroger and Albertsons are rivals, the federal government contended that reducing competition between the two would drive up grocery prices.

Kroger and Albertsons vowed to invest in lowering grocery prices if the merger went through, but the judge said in her ruling that courts should be skeptical of promises that can’t be enforced and “business realities” might force the grocery chains to alter these plans.

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She also said in her ruling that the grocery chains might end up abandoning the merger because of the court order but it doesn’t force them to do so. “Any harms defendants experience as a result of the injunction do not overcome the strong public interest in the enforcement of antitrust law,” she said.

The judge’s decision to block the merger garnered praise from the FTC, the White House and United Food and Commercial Workers locals, which noted that Kroger and Albertsons have “wasted” billions of dollars on what is now a failed merger.

“Now is the time for Kroger and Albertsons executives to honor their promises to consumers and workers under oath during the trials by investing in lower prices, higher wages, and other investments to improve competitiveness,” UFCW local unions, which represent more than 100,000 workers at Albertsons- and Kroger-owned stores, said in a statement.

A variety of factors including competition and worker wages can affect food prices. Tuesday’s ruling, though, suggested that the judge, who cited economic analysis from the federal government’s expert in her 71-page decision, “didn’t really buy the arguments that Kroger and Albertsons were making, that this would be good for consumers,” Bartholomew said.

The legal blows made it more risky for Kroger and Albertsons to continue the merger plan.

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Shortly after the ruling, the grocery chains turned on each other.

“Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates and consumers,” Tom Moriarty, Albertsons’ general counsel and chief policy officer, said in a statement.

Erin Rolfes, a spokeswoman for Kroger, disputed Albertsons’ claims, calling them “baseless and without merit.”

“This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons’ multiple breaches of the agreement, and to seek payment of the merger’s break fee, to which they are not entitled,” she said in a statement.

Albertsons’ lawsuit filed in the Delaware Court of Chancery is temporarily under seal, according to a statement.

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The Boise, Idaho-based company is seeking a $600-million termination fee and billions of dollars in damages from Kroger as part of the lawsuit.

On Wednesday, Kroger’s stock closed up nearly 1% at $61.33, while Albertsons’ stock fell more than 1% to $18.23. Albertsons’ shares have dropped about 20% this year.

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U.S. Space Force awards $1.6 billion in contracts to South Bay satellite builders

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U.S. Space Force awards .6 billion in contracts to South Bay satellite builders

The U.S. Space Force announced Friday it has awarded satellite contracts with a combined value of about $1.6 billion to Rocket Lab in Long Beach and to the Redondo Beach Space Park campus of Northrop Grumman.

The contracts by the Space Development Agency will fund the construction by each company of 18 satellites for a network in development that will provide warning of advanced threats such as hypersonic missiles.

Northrop Grumman has been awarded contracts for prior phases of the Proliferated Warfighter Space Architecture, a planned network of missile defense and communications satellites in low Earth orbit.

The contract announced Friday is valued at $764 million, and the company is now set to deliver a total of 150 satellites for the network.

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The $805-million contract awarded to Rocket Lab is its largest to date. It had previously been awarded a $515 million contract to deliver 18 communications satellites for the network.

Founded in 2006 in New Zealand, the company builds satellites and provides small-satellite launch services for commercial and government customers with its Electron rocket. It moved to Long Beach in 2020 from Huntington Beach and is developing a larger rocket.

“This is more than just a contract. It’s a resounding affirmation of our evolution from simply a trusted launch provider to a leading vertically integrated space prime contractor,” said Rocket Labs founder and chief executive Peter Beck in online remarks.

The company said it could eventually earn up to $1 billion due to the contract by supplying components to other builders of the satellite network.

Also awarded contracts announced Friday were a Lockheed Martin group in Sunnyvalle, Calif., and L3Harris Technologies of Fort Wayne, Ind. Those contracts for 36 satellites were valued at nearly $2 billion.

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Gurpartap “GP” Sandhoo, acting director of the Space Development Agency, said the contracts awarded “will achieve near-continuous global coverage for missile warning and tracking” in addition to other capabilities.

Northrop Grumman said the missiles are being built to respond to the rise of hypersonic missiles, which maneuver in flight and require infrared tracking and speedy data transmission to protect U.S. troops.

Beck said that the contracts reflects Rocket Labs growth into an “industry disruptor” and growing space prime contractor.

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California-based company recalls thousands of cases of salad dressing over ‘foreign objects’

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California-based company recalls thousands of cases of salad dressing over ‘foreign objects’

A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”

The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.

Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.

None of the 42 locations where the product was sold were in California.

Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.

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“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”

The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.

The company recalled the following types of salad dressing:

  • Creamy Poblano Avocado Ranch Dressing and Dip
  • Ventura Caesar Dressing
  • Pepper Mill Regal Caesar Dressing
  • Pepper Mill Creamy Caesar Dressing
  • Caesar Dressing served at Costco Service Deli
  • Caesar Dressing served at Costco Food Court
  • Hidden Valley, Buttermilk Ranch
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They graduated from Stanford. Due to AI, they can’t find a job

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They graduated from Stanford. Due to AI, they can’t find a job

A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.

The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.

When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.

Top tech companies just don’t need as many fresh graduates.

“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”

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While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.

Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.

“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”

The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.

Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.

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“The industry for programmers is getting very oversaturated,” Akgul said.

The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.

Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.

It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.

In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.

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Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.

Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.

A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.

“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”

To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.

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Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.

Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.

Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.

As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.

“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”

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After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.

Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.

“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”

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