Lawmakers Urge FTC to Take Action on Grocery Profits
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The U.S. Federal Trade Commission should enforce a rarely used antitrust law after finding that large retailers, such as Amazon.com Inc. and Walmart Inc., increased profits during the COVID-19 pandemic and have kept prices high since, a group of lawmakers urged the agency.
In a letter to FTC Chair Lina Khan March 28, the mostly Democratic members of Congress pushed the agency to bring cases under the Robinson-Patman Act, a price discrimination law passed during Franklin Delano Roosevelt’s presidency that was last enforced in the 1980s. Under the law, suppliers can discount large orders, but they must extend the same offer to all retailers instead of selectively offering preferential terms, such as lower prices or access to scarce inventory.
The FTC concluded in a study this month that the largest grocery stores gained a competitive advantage over smaller rivals during the pandemic’s supply chain crunch, in part by threatening to fine suppliers if they didn’t deliver items on time. The study, based on confidential data provided by retailers and suppliers, such as Procter & Gamble Co., Tyson Foods Inc. and Kraft Heinz Co., also found food and beverage retailer revenues increased in 2021 to more than 6% over total costs, topping a previous peak of 5.6% in 2015.
Robinson-Patman “is still law,” the lawmakers wrote. “The FTC should use the RPA to combat price discrimination and concentration. Congress enacted the RPA to address these exact problems in the food and retail industry.”
The letter was spearheaded by Massachusetts Democratic Sen. Elizabeth Warren and signed by four other senators and 11 House members, including New York Rep. Alexandria Ocasio-Cortez.
The Federal Trade Commission (FTC) last week issued a harsh condemnation of the U.S. food industry’s performance during the COVID-19 pandemic saying... #internationaltrade | #imports | #exportshttps://t.co/lJGtsAFwZC pic.twitter.com/unt35pR157 — American Journal of Transportation, AJOT (@AJOT) March 28, 2024
While antitrust enforcers have stopped bringing cases under the law, Khan has said she intends to resume enforcing Robinson-Patman. The agency has already opened a preliminary probe into how Coca-Cola Co. and PepsiCo Inc. price their products and is examining other sectors, such as pharmaceuticals.
The Biden administration has made stepped-up antitrust enforcement a key part of its economic policy and has recently zeroed in on food prices. The FTC has challenged Kroger Co.’s proposed acquisition of supermarket rival Albertsons Cos., a deal that would be the biggest U.S. grocery merger in history. A trial in the case is scheduled for August.
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Earlier March 28, Dole Plc said it was terminating plans to sell its fresh vegetables unit to Fresh Express Inc., owned by Chiquita Holdings Ltd., after the Justice Department threatened to sue over antitrust concerns.
“This merger would have reduced the number of competitors from three to two and raised grocery prices for food products that are purchased by 85% of American households,” Assistant Attorney General for Antitrust Jonathan Kanter said in a statement.
Walmart Inc. ranks No. 2 on the Transport Topics Top 100 list of the largest private carriers in North America. Amazon.com Inc. is No. 9, The Kroger Co. No. 38 and Albertsons Cos. No. 40.
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