Business

(WASHINGTON) — The Federal Trade Commission on Monday sued to halt the Kroger and Albertsons merger, according to court documents filed in federal court. The merger would represent two of the largest grocery store chains in the United States combining forces.

Kroger announced that it intended to acquire Albertsons for $24.6 billion in October 2022, and that deal, according to the FTC, would lead to higher grocery prices for millions of Americans.

“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years. 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,” said Henry Liu, Director of the FTC’s Bureau of Competition. “Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”

Kroger stores are in 36 states and include companies like Fred Meyer, Fry’s, Harris Teeter, King Soopers, Kroger, and Quality Food Centers. Albertsons operates stores in 35 states under regional names including Albertsons, Haggen, Jewel-Osco, Pavilions, Safeway and Vons.

If the merger were completed, Kroger and Albertsons would operate more than 5,000 stores and approximately 4,000 retail pharmacies and would employ nearly 700,000 employees across 48 states, according to the FTC.

Kroger says the FTC lawsuit will “actually harm” Americans instead of helping them, according to a statement released after the lawsuit was filed.

“The FTC’s decision makes it more likely that America’s consumers will see higher food prices and fewer grocery stores at a time when communities across the country are already facing high inflation and food deserts,” the statement reads. “In fact, this decision only strengthens larger, non-unionized retailers like Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry.”

Kroger says customers would benefit from lower prices and more choices following the merger close. The company says it has committed to investing $500 million to begin lowering prices Day One post-close, and an additional $1.3 billion to improve Albertsons stores.

California Attorney General Bonta issued a statement calling the proposed merger “bad for workers.”

“This megamerger is bad for workers, for agricultural producers, and for California communities. In some markets in Southern California, Kroger-Albertsons is expected to be the only one-stop grocery option. Today, we are going to bat for a more just and competitive economy, one where companies need to compete for labor and where prices and service matter,” Bonta said in the statement.

Bonta and the attorneys general from Washington D.C., Illinois, Maryland, Nevada, New Mexico, Arizona, Oregon and Wyoming joined the lawsuit.

“Bottom line: this merger will benefit the shareholders of these companies, not regular Arizonans. I am proud to stand with the FTC and my fellow attorneys general in suing to block this anticompetitive, anti-consumer, and anti-worker merger,” Arizona Attorney General Kris Mayes said.

Sen. Dan Sullivan, R-Ark., applauded the FTC lawsuit.

“The FTC found that the merger would likely reduce competition and raise prices—putting further strain on working families in our state who are being crushed by the high inflation caused by the Biden administration’s policies. I appreciate and support the FTC’s thorough analysis and decision to take action to block this merger for the benefit of Alaskans,” Sullivan said.

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(WASHINGTON) — As the tax filing season gets underway, taxpayers in some states will have a new way to file online available to them in “the coming days,” the IRS said this week.

Direct File, the free site for filing federal tax returns directly through the IRS, will be open for new users in 12 states during unspecified windows of time, before becoming widely available to taxpayers in those states in mid-March, according to the IRS.

The IRS has already launched its filing site to some federal government workers in a testing phase.

With this pilot program, the IRS says it is trying to provide a free alternative to taxpayers so they can use the government website for online filing instead of paying to do so with a commercial company.

According to the IRS, the website explains tax concepts and has customer support representatives available via chat to answer basic tax law questions in English and Spanish.

The agency created the platform with funds from the 10-year 2022 Inflation Reduction Act that included $80 billion for IRS improvements.

Here’s how Direct File works and how taxpayers can use it:

Who is eligible?

Direct File will be available to taxpayers who in 2023 lived in these 12 states: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

Additionally, taxpayers in those states need to qualify depending on their income type and amount. For example, taxpayers with wages of more than $200,000 or independent contractors won’t be able to use the site. The type of health insurance the taxpayer purchased might also restrict them from using the platform.

When does it become available to taxpayers?

The platform will be available to the taxpayers in those 12 states in the coming days, IRS said in a news release.

There’s no specific date and time for when Direct File will be open to new users in those 12 states, instead it will be available for “short, unannounced windows of time.” The state of the platform will be displayed on top of the website. The platform will be available to the wider public in mid-March, according to the IRS.

This is part of the testing phase to see how the site will work with a bigger volume of users, the IRS said.

The agency is supposed to start with a smaller testing group and the simplest characteristics, said Nina E. Olson, the executive director of the nonprofit Center for Taxpayer Rights. That’s how platforms in the private sector had started, too, she said.

Currently, 1200 government employees are using the site to file their taxes as part of the testing, according to the updates on the IRS website.

What kind of taxes is the site for?

Direct File can be used only for federal taxes. State taxes must be filed separately through a different platform. However, the site will guide the taxpayers living in Arizona, California, Massachusetts or New York to a state-supported platform and transfer their information to file the state returns. These states were selected because they chose to partner with the agency, according to the IRS website.

How to use it?

Direct File is a website, so taxpayers don’t need to install a special software or application.

To start with, taxpayers have to sign up with the IRS identity verification tool, ID.me, with which users say they have had issues.

According to Olson, the issues with ID.me are government wide and not specific to the IRS. The testing phase should also help identify why some taxpayers get turned away when trying to sign up, so that can be addressed later, she said.

If the taxpayer misses the window when Direct File is open, they can still sign up for ID.me and check the site for the next window.

The site has a step-by-step guide on how to track the progress of the return, the IRS said. Once they start the return, the taxpayers can come back to the platform anytime during the season and continue working on their returns — even if the site is closed for new users.

The agency’s Direct File is voluntary. The other paid or free alternatives are still available for taxpayers.

A similar site should have been created decades ago but this is a move in the right direction, Olson said.

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(NEW YORK) — A sluggish housing market for most of last year began to heat up as the calendar turned to 2024.

In recent weeks, however, the market has cooled once again.

A surge in mortgage rates accounts for the slowdown in the housing market, experts told ABC News, pointing to elevated home prices pushed out of reach for most consumers when combined with high borrowing costs.

The jump in mortgage rates is due to stubbornly high inflation that has delayed interest rate cuts at the Federal Reserve, experts said. Mortgage rates track yields on 10-year treasury bonds, which are highly sensitive to the Fed’s benchmark rate.

“High mortgage rates and high housing prices have led to an affordability problem of a dimension that we haven’t seen in decades,” Susan Wachter, a professor of real estate at University of Pennsylvania’s Wharton School of Business, told ABC News.

The average interest rate for a 30-year fixed mortgage has soared to 6.9%, rebounding after a steady decline at the end of last year, according to a report from Freddie Mac on Thursday.

Meanwhile, home sales have plummeted. Mortgage-purchase applications fell 10% from a week earlier, data from the Mortgage Bankers Association on Wednesday showed.

“Existing home sales have fallen off a cliff,” Lu Liu, also a professor at the Wharton School at the University of Pennsylvania, told ABC News.

The housing market dynamic traces back to a highly anticipated announcement in December, during which the central bank revealed expectations of interest rate cuts in 2024.

The signal elicited a boost of optimism among key market players, who foresaw the end of the Fed’s fight against inflation and the decline of interest rates from near-historic highs. In turn, yields fell on 10-year treasury bonds, and mortgage rates soon followed suit.

Inflation, however, has refused to cooperate. Stronger than expected economic performance and resilient consumer demand have helped buoy price increases, keeping them above the Fed’s target rate.

“The strengthening of the economy is a surprise,” Wachter said. “It does raise questions about the Fed’s next steps.”

Consumer prices rose 3.1% in January compared to a year ago, slowing markedly from the previous month but missing expectations of an even larger cooldown, a report from the Bureau of Labor Statistics earlier this month showed.

Inflation stands well below a peak of 9% last year but remains more than a percentage point above the Fed’s target rate of 2%.

“The inflation rate is reflected in the 10-year treasury rate, which pushes mortgages up,” Wachter said.

When the Fed initiated the rise of bond yields with its first rate hike of the current series in March 2022, the average 30-year fixed mortgage rate stood at just 4.45%. The average mortgage is now nearly 2.5 percentage points higher.

Each percentage point increase in a mortgage rate can add thousands of dollars, or even tens of thousands, in additional costs each year, depending on the price of the house, according to Rocket Mortgage.

The rising mortgage rates have put a freeze on the housing market in part because home prices remain high, Liu said. Potential homebuyers would rather stick with mortgages that have comparatively low rates rather than shift to higher rates that would compound the elevated home prices, she added.

“A lot of people are holding back from moving or selling,” Liu said.

Observers would expect home prices to fall amid low consumer demand, but the stubbornly high housing costs may be owed to that reluctance among prospective homebuyers to first put their own homes up for sale, Liu added.

“It’s a little bit of a puzzle why home prices have remained stable or even ticked up,” Liu said. “Home owners may be buying, but they’re not selling.”

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(NEW YORK) — A network disruption is affecting AT&T customers in the U.S. Thursday.

In a statement to ABC News, the company confirmed the outage and advised customers to make calls over Wi-Fi.

“Some of our customers are experiencing wireless service interruptions this morning. We are working urgently to restore service to them. We encourage the use of Wi-Fi calling until service is restored,” an AT&T spokesperson said.

Story developing…

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(NEW YORK) — The trendy oversized Stanley thermos that reached viral fame on social media and became a must-have item is facing new criticism from customers.

The parent company of the viral tumblers is facing two lawsuits after Stanley acknowledged that part of the insulation at the bottom of the bottle — which people do not come into contact with — contains some lead.

In one of the lawsuits filed last week, Mariana Franzetti alleges the company, Pacific Market International, “engaged in a campaign of deceiving customers by failing to disclose the presence of lead in its tumbler products.”

The lawsuit also claims the company “knew or reasonably should have known about this lead issue for years but chose to conceal it from the public presumably to avoid losing sales.”

The cups are still available for sale online.

Pacific Market International did not immediately respond to ABC News’ request for comment.

“When I discovered that lead was possibly in the Stanley cup, I was really upset,” Franzetti told ABC News. “I tried to treat my body as well as possible. I wouldn’t have bought any sort of product that had lead in it, to my knowledge. And I just thought, why is a company like this being so deceptive?”

Last month, several customers said they performed at-home tests on the cups — with some allegedly testing positive for lead.

Stanley released a statement in response saying the material used for the insulation seal at the bottom of the products does contain “some lead,” but that it is covered with stainless steel and “no lead is present on the surface of any Stanley product that comes into contact with the consumer nor the contents of the product.”

The company told USA Today in response to the lawsuits that it will “vigorously defend itself against meritless claims.”

“My trust has been shaken in the company, but I would like to see them not just with the Stanley cups currently, but with all their products, make a commitment to being lead-free,” Franzetti said.

Stanley cups have gained massive popularity in recent months. In January, videos across social media showed shoppers at Target clamoring for the brand’s limited edition “Galentine’s Day” red and pink tumblers.

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(NEW YORK) — Boeing has announced it is replacing the head of its 737 Max program as part of a reshuffling of the company in the wake of the much-publicized incident of a door plug blowing out of an Alaska Airlines flight last month.

Katie Ringgold will be replacing Ed Clark – an 18-year veteran of the company – as vice president and general manager of the 737 Max program and Renton site, Boeing said.

The company also announced other leadership changes.

Boeing Commercial Airplanes President Stan Deal said, “I am announcing several leadership changes as we continue driving BCA’s enhanced focus on ensuring that every airplane we deliver meets or exceeds all quality and safety requirements. Our customers demand, and deserve, nothing less.”

This is a developing story. Please check back for updates.

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(WASHINGTON) — The Biden administration will begin automatically relieving student debt for another 153,000 people on Wednesday, bringing the total number of Americans approved for debt relief to nearly 3.9 million.

President Joe Biden will tout the new debt relief in a speech from Los Angeles, and thousands of people will receive an email from the president informing them that they now qualify for relief.

“Congratulations — all or a portion of your federal student loans will be forgiven because you qualify for early loan forgiveness under my Administration’s SAVE Plan,” the email from the president will read.

The people receiving debt relief beginning Wednesday are those who enrolled in the newest student loan payment plan, called the SAVE Plan, which the Department of Education calls the most affordable plan for the majority of borrowers.

Anyone enrolled in the SAVE Plan who took out less than $12,000 in initial loans and has been paying them down for the past 10 years or more will have them forgiven.

“This plan reflects our unapologetic commitment to deliver as much relief as possible to as many borrowers as possible, as quickly as possible,” Education Secretary Miguel Cardona said on a call with reporters on Tuesday.

Roughly 7.5 million Americans are enrolled in the SAVE Plan, which just launched this past summer.

The 153,000 who are getting automatic relief starting Wednesday are the first tranche of borrowers to benefit from this aspect of the plan. Moving forward, anyone else who enrolls in the plan and meets this criteria will also get debt relief.

As of Wednesday, there are many Americans who could actually qualify for this debt relief but aren’t enrolled in the SAVE Plan, something the Biden administration says it’s working to improve outreach on as an estimated 27 million Americans are currently in repayment for student loans.

Who are the other 3.7 million people who have been approved for debt relief under Biden?

At least 513,000 borrowers have, so far, been approved for debt relief after filing for a total and permanent disability, while 1.3 million borrowers have been approved for debt relief because it has been deemed their college defrauded them.

Some of the most well-known debt relief programs under Biden, however, have been the fixes to the program for people working in public service and to income-driven repayment plans.

The Biden administration has now processed relief for more than 793,000 borrowers through fixes to the Public Service Loan Forgiveness program (PSLF), which allows for debt relief for people in jobs like firefighting, nursing and teaching after 10 years of continuous payment.

The other large tranche of borrowers to receive relief are those enrolled in income-driven repayment plans, which allow people to pay a certain percentage of their income towards their loans for 20 or 25 years before their debts are forgiven.

Around 930,500 borrowers have been identified as paying for their allotted time, but not getting relief. They have now had their debts approved for relief.

The PSLF and income-driven repayment fixes are considered minor fixes to an already-broken system in the student loan apparatus that the Biden administration has now addressed.

They are not debt relief to the tune of $10,000 to 20,000 in blanket forgiveness for anyone who makes below a certain income, as Biden hoped to do last year before the Supreme Court determined his plan was unlawful.

Still, the Biden administration continues to push efforts on debt relief while on the campaign trail, something Biden himself will do on Wednesday in Los Angeles.

“These actions have allowed nearly 4 million people to afford other expenses in their lives — buy homes, start businesses, pursue dreams that they had to put on hold because of their student loans,” Natalie Quillian, White House Deputy Chief of Staff, said on a call with reporters Tuesday.

“Now, because of the president and the Biden Harris administration, millions of borrowers and their families are no longer weighed down by the burden of student debt,” she said.

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(NEW YORK) — Capital One’s decision to acquire Discover could establish a new megafirm that shakes up the credit card industry.

The move may hold long-term implications for credit card holders, regardless of whether they bank with Capital One or shop with Discover, experts told ABC News.

If approved by shareholders and regulators, the merger would leave Capital One in a stronger market position, potentially allowing the company to offer more attractive bonuses and perks, some experts said. The potential challenge to industry juggernauts Visa and Mastercard, meanwhile, could elicit innovations and fresh offerings for consumers industrywide, they said.

The deal, however, could also have an adverse effect for consumers, leaving the industry with fewer competitors overall and easing pressure on companies to attract customers with favorable terms, some experts and consumer advocates said.

“It could be a little from column A and a little from column B,” Sara Rather, a credit card expert at NerdWallet, told ABC News, noting that the move may improve conditions for consumers in some ways and damage them in others.

“On the one hand, it means less competition and on the other hand it’ll potentially propel Capital One into a bigger entity that has even more innovation and product offerings. And the other companies are paying close attention,” Rather added.

Capital One did not immediately respond to ABC News’ request for comment. Neither did Discover.

The deal arrives at a precarious moment for credit card holders. Credit card debt stands at a new record high $1.13 trillion, according to data released earlier this month by the Federal Reserve Bank of New York.

Credit card balances increased by $50 billion in the fourth quarter of 2023 alone, a 4.6% jump from the previous quarter, the report said.

Experts who spoke to ABC News said the merger would not carry short-term impacts for customers at Capital One or Discover, or those at rival firms, since the two companies at issue may take over a year to finalize the agreement.

“This isn’t going to have any effect on consumers in the short term,” Matt Schulz, chief credit analyst at LendingTree, told ABC News. “These sorts of mergers tend to move glacially.”

“There’s nothing that Capital One or Discover customers need to really do or worry about today,” Schulz added.

Customers will likely receive communication from Capital One and Discover if the deal results in changes to their services, said Rather.

If the deal closes, it may ultimately influence consumer terms across the credit card industry, though it remains unclear whether that effect would be positive or negative, experts said.

As of Tuesday, the combined value of the two companies stands at approximately $83 billion. By comparison, the value of Mastercard and Visa are about $422 billion and $564 billion, respectively.

The potential arrival of a company made up of Capital One and Discover could heighten the competition faced by Mastercard and Visa, pushing them to improve the credit card terms available to customers, Mark Hamrick, senior economic analyst at Bankrate, told ABC News.

“Certainly when you get more vibrant competition the existing enterprises in that space would obviously be concerned about facing greater competition,” Hamrick said.

But further concentration at the top of the industry may serve to loosen competition and harm consumers. “It’s a hard question to answer,” he added.

Some consumer advocates echoed the concern about possible damage to consumers.

Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition, a consumer advocacy group, said in a statement that the move risks undercutting competition and harming offerings.

The merger “poses massive antitrust concerns, given the vertical integration of Capital One’s credit card lending with Discover’s credit card network,” Van Tol said.

Despite the success of a few giant companies, the credit card industry remains highly competitive, said Schulz. That fight for customers will limit any adverse impact after the merger, he added.

“The credit card marketplace is still so competitive that I think any worries about this having a negative effect on things like rewards is probably a little overstated,” Schulz said.

Regardless of where experts stand, they agreed that the deal may not gain approval from regulators.

“I wouldn’t count my credit card chickens before they hatch,” Hamrick said.

ABC News’ Elizabeth Schulze contributed reporting.

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(NEW YORK) — A sunbathed Dalmatian tiptoes across a windowsill, a Chinese New Year parade engulfs a city street, an archeologist digs up a chair from desert sand.

Videos posted online display these events, but none of them happened. They make up the first publicly available work created by OpenAI’s newly unveiled video-generation tool Sora.

Sora composes videos, lasting up to one-minute long, based on user prompts, just as ChatGPT responds to input with written responses and Dall-E offers up images.

The video-generator is currently in use by a group of product testers but is not available to the public, OpenAI said in a statement on Thursday.

These products carry the potential to improve and ease video storytelling, but they could also supercharge internet misinformation and enhance government propaganda, blurring the already-faint line between real and fake content online, experts told ABC News.

AI-generated videos, meanwhile, threaten to reinforce hateful or biased perspectives picked up from the underlying training materials that make their creation possible, they added.

“The clarity of truth we thought we had with recorded photography and video is gone,” Kristian Hammond, a professor of computer science at Northwestern University who studies AI, told ABC News. “We’ve inadvertently built a world of propaganda engines.”

In response to ABC News’ request for comment, OpenAI pointed to a webpage that outlines measures taken by the company to prevent abuse of Sora.

“We’ll be taking several important safety steps ahead of making Sora available in OpenAI’s products,” the company website says. “We are working with red teamers  —  domain experts in areas like misinformation, hateful content, and bias  — who will be adversarially testing the model.”

The company plans to use some safety features already in palace for its image generator Dall-E, the website says, including a tool that polices text prompts to ensure they do not violate rules against “extreme violence, sexual content, hateful imagery, celebrity likeness, or the IP of others.”

Experts who spoke to ABC News emphasized the difficulty of evaluating a demo product that has yet to be released to the general public. They sounded alarm, however, over the opportunities for misuse of the video generator and the challenges of implementing fully effective safeguards.

“Realistic images of events play into people’s assumptions about what’s going on in the real world and can be used to deceive people,” Sam Gregory, executive director of Witness, an advocacy group that aims to ensure the use of video to protect human rights, told ABC News.

The risks posed by AI-generated content have stoked wide concern in recent weeks.

Fake, sexually explicit AI-generated images of pop star Taylor Swift went viral on social media in late January, garnering millions of views. A fake robocall impersonating President Joe Biden’s voice discouraged individuals from voting in the New Hampshire primary last month.

Experts commended the steps taken by OpenAI to prohibit abuses of Sora along these lines. They warned though of the product’s likely capability to create deep fakes and the difficulty of preventing such videos.

“They can probably put in a filter that says, ‘Don’t generate any videos with Taylor Swift,’ but people will find ways around it,” Gary Marcus, an emeritus professor at New York University and author of the book ”Rebooting AI,” told ABC News.

Sora, like other generative AI products, is trained on troves of online data, leaving it susceptible to widely reproduced biases, such as racial and gender stereotypes.

“There are biases in society and those biases will be reflected in these systems,” Hammond said.

In addition to moderating video prompts and the resulting content, OpenAI plans to implement a “detection classifier” that can identify when a video has been produced by Sora, the online statement said. The company said it will also include a popular recognized digital tag, which essentially amounts to a digital watermark.

Such precautions drew applause from experts, though they warned that videos could potentially be reproduced or altered as means of removing the labels.

“People will be trying to get around the guardrails put in place,” Hammond said. “It’s an arms race.”

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(NEW YORK) — The number of striking workers in the U.S. more than doubled last year due to massive work stoppages carried out by autoworkers, nurses and Hollywood writers and actors, according to a study released by Cornell University on Thursday.

The total number of striking workers climbed 141% in 2023, amounting to nearly 540,000 workers who walked off the job, the report found.

“This rise in strike action after many years of diminished activity indicates a union resurgence that is shifting the balance of power back toward labor,” Alexander Colvin, dean of Cornell University’s School of Industrial and Labor Relations, told ABC News in a statement.

Four large strikes accounted for more than half of the workers involved in work stoppages last year, the report said, pointing to multi-state campaigns among actors, autoworkers, healthcare employees, as well as an action carried out by school staff in Los Angeles.

SAG-AFTRA, a union representing roughly 160,000 actors, went out on strike for nearly 120 days, culminating in a 3-year contract that raised wages by roughly 14%.

The United Auto Workers, a union representing 150,000 employees at major car markers, ended a weekslong strike after a set of agreements that delivered a roughly 25% raise over a 4-year period.

Roughly 75,000 healthcare workers at Kaiser Permanente won major wage gains after a work stoppage, as did thousands of TV writers.

The total number of work stoppages ticked up by 9% in 2023 compared to the previous year, due to the sizable share of workers who participated in large strikes, the report said.

The sharp escalation in worker protests arose from widespread dissatisfaction with sluggish wage gains, which in many cases had failed to keep up with rapid price hikes, experts previously told ABC News.

Over a four-decade period beginning in the late-1970s, wages largely flattened, increasing 0.2% per year on an inflation-adjusted basis for a typical worker, a Harvard Business Review analysis found.

The cumulative effects of sluggish wage growth collided with sky-high inflation in recent years, leaving workers frustrated over diminished spending power, Johnnie Kallas, project director of Cornell University’s Labor Action Tracker, previously told ABC News.

Despite the surge in work stoppages last year, union membership stagnated. In 2023, the unionization rate among private sector employees stood at 6%, little changed from the previous year, according to data released by the Bureau of Labor Statistics in January.

The private sector unionization rate has generally trended down over four decades since the U.S. began collecting data, in 1983, when the rate stood at about 17%, the BLS said.

Still, last year brought a surge in strikes in the private sector, in contrast with the burst of labor militancy five years ago mostly among public school teachers, Johnnie Kallas, an assistant professor at the University of Illinois, who founded Cornell University’s Labor Action Tracker, told ABC News in a statement.

“Large strikes were much more dispersed this past year throughout numerous private sector industries,” Kallas said.

 

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