A group of Democratic lawmakers is calling on President Joe Biden to investigate price-fixing at grocery store chains, saying in a letter sent Monday morning that the president has not allowed food prices to soar without support from Congress. It states that enforcement powers should be used to take additional coercive measures to address the issue.
The letter was shared exclusively with Time Magazine, and a Federal Trade Commission (FTC) report finds that major grocery chains took advantage of supply chain disruptions during the pandemic to hike prices to increase profits. It was announced after it was revealed. Sen. Elizabeth Warren, D-Mass., who led the letter and is one of its signatories, calls for more competition and stronger antitrust enforcement to lower grocery prices for households. His legislation has largely stalled. meeting.
She now expects Biden to use executive authority to launch a thorough investigation into allegations of price fixing at major grocery chains. “Big food companies want to keep these huge profits, so they hire a lot of lobbyists to block Congress from acting,” Warren told Time magazine in an interview. “Congress is stalling on what it can do to help lower costs for families…and the president has the tools to fight back.”
Sen. Richard Blumenthal (D-Conn.), Sen. Cory Booker (D.N.J.), Sen. Martin Heinrich (Mex.-D.N.), Sen. Bernie Sanders (Iconic State, Vt.) , Sen. Peter Welch (I-Vt.) also signed. Thirty-five House Democrats also joined the letter urging Biden to intervene. In the letter, the lawmakers asked Biden for everything from encouraging the FTC to issue guidance on potential violations of price discrimination laws to creating a joint task force to investigate food price manipulation throughout the supply chain. He outlined several proposals that the administration could adopt.
As Mr. Biden seeks re-election, he has struggled to construct a clear story about how his economic policies are impacting real Americans. He said the public remains highly dissatisfied with food prices, which have increased by 21% over the past three years, according to polling data. And a majority of voters still rank inflation at the top of the list of issues facing the country, with most voters concerned about inflation citing “the cost of food and groceries” as the main cause of their anxiety. ing.
Research shows that from January 2020 to January 2024, grocery spending for a family of four on a ‘frugal meal plan’ increased by 50%, with major supermarket conglomerates seeing revenue jump by up to 36% during this period. did. “Buying groceries is not a choice, it’s a necessity,” said Lindsey Owens, executive director of the left-leaning think tank Groundwork Collaborative. The group released a report in February on the main drivers of food inflation. “Congress and the Biden administration have a set of tools at their disposal to determine what they can do to lower food and grocery prices for Americans, because shopping at the grocery store cannot be avoided in modern America. I think there’s a legitimate focus on certain things, especially when food and grocery prices are kept artificially high through market manipulation, collusion, and price gouging. ”
This letter is a sign that many progressive Democrats and liberal economic thinkers believe that regulatory intervention is needed to level the playing field in the food and grocery sector and ensure fair competition and affordability for consumers across the country. It emphasizes what it considers to be an urgent need. Corporate profits account for more than 50% of current inflation, a study found, as many American households are hit by soaring grocery costs. In the food industry alone, his four retailers – Wal-Mart, Kroger, Costco and Albertsons – account for more than a third of national grocery sales, with leading retailers drawing more from their suppliers. You may be able to get favorable prices and terms.
The letter addresses several issues that dominant grocery companies may employ, including slot fees for product placement, category captain arrangements that distort market dynamics, and rebates that incentivize purchases from dominant companies. While highlighting exclusionary practices, lawmakers argue that all of these effectively lock out small suppliers and businesses. It will drive up spending for American families. They believe that such conduct could violate existing antitrust laws and regulations, such as the Sherman Act, Clayton Act, and Robinson-Patman Act, which prohibit monopolistic conduct, certain anticompetitive conduct, and price discrimination. It is claimed that there is.
To address these concerns, lawmakers are proposing that the Biden administration encourage the FTC to promulgate regulations under Section 5 of the FTC Act aimed at prohibiting or suppressing exclusive agreements in the food industry. ing. They also work with the United States Department of Agriculture (USDA) to comply with the Packers and Stockyards Act, a law designed to ensure fair competition and prevent fraud in the livestock and poultry industry. We are calling on the government to take similar measures.
“Our letter points to an area of the law that has existed but has long been underutilized,” Warren said of the proposal sent to Biden’s desk. “Now is the perfect time to make a move.”
In a letter, the group of lawmakers urges the Biden administration to issue guidance on potential violations of the Robinson-Patman Act and Section 5 of the FTC Act in the food industry, and to investigate and enforce violations as appropriate. He also suggested encouraging the FTC. While the FTC already provides general guidance on antitrust laws and regulations, this proposal would require more targeted guidance for industry participants and consumers about what constitutes a violation and It calls for legal action against companies found to have engaged in competitive or deceptive practices.
Lawmakers also noted the importance of cooperation among regulators in combating corporate practices that inflate consumer prices, with Biden in his letter recommending that the Commodity Futures Trading Commission (CFTC) and the F.T.C. The two companies proposed creating a joint working group to aim for synergies between the two companies’ resources. Tools to effectively deal with anti-competitive behavior.
Additionally, we urge Biden to direct the Department of Justice (DOJ) and FTC to scrutinize and, in some cases, block mergers and acquisitions in the food and agriculture sector with the goal of preventing further consolidation; and to prosecute actors in these sectors for price purposes. -Match-fixing and other anti-competitive conduct.
The FTC has already taken such action, blocking the merger of two major grocery store chains, Kroger and Albertsons, under President Biden. Critics of the merger argued that it could reduce competition and lead to higher prices for consumers.
A White House spokesperson said the government would not be involved in or comment on enforcement actions, but Biden’s Justice Department will block mergers that would raise the price of lettuce and packaged salads and address salad price fixing. He pointed to another example where a lawsuit was filed for the sake of the government. Chicken, pork and turkey meat.
The Biden administration is also taking other steps to reduce grocery costs, updating the “Thrifty Food Plan” to provide an extra $36 per month for low-income people who use SNAP and partners with more than 30 state attorneys general to combat anti-competitive conduct and price gouging. Finalize rules to strengthen agricultural markets and make meat and poultry markets more competitive for farmers and ranchers. In his State of the Union address, Biden reduced the size of Snickers bars, reduced the amount of potato chips, and complained about shrinkflation (the practice of companies reducing products and portion sizes while maintaining package prices), for example. said. “Too many companies are raising prices to inflate profits, charging more and more for lower and lower prices,” Biden said. “Snack companies think they can change the size of their bags and dramatically reduce the number of chips in the same size bag and go unnoticed.”
Warren said Biden is “committed to lowering costs for families” and is “ready to take on huge corporations to do that.”
“That’s Joe Biden and what he’s fighting for,” she added. “This effort to stop big food companies from defrauding consumers is just another in Joe Biden’s efforts to lower costs for American families.”
In response to a question from TIME, a White House spokesperson declined to say whether the administration would heed the letter’s calls and take additional action, but said, “The president is committed to fair and vigorous antitrust enforcement.” I support it.”
Warren’s Progressive Democratic Party introduced federal legislation earlier this year that would make it illegal for “individuals to sell or offer for sale goods or services at grossly exorbitant prices” during “unusual market shocks.” However, it is unlikely that the price gouging prevention bill will be enacted. This is due to Republican concerns that the FTC would effectively control prices and lead to prolonged shortages of many goods and services.
Warren and other Democrats who support cracking down on price gouging are now turning to Biden to use the president’s executive power to bypass Congress.
“The White House has a responsibility to recover tools that have been left to rust for decades,” Warren said. “They are now leveraging these tools to reduce costs for American families. Our letter points out that there are many more tools available and that the administration will take those tools into hand. We’re reminding the White House that it will have a lot of support in Congress if it’s used.”
