Democrats ask Biden to investigate supermarket price fixing

A group of Democratic lawmakers is calling on President Joe Biden to investigate grocery chains for price gouging, writing in a letter sent Monday morning that he should use executive authority to take additional coercive measures to address the surge. food prices without help from Congress.

The letter, shared exclusively with TIME, comes after a report of the Federal Trade Commission (FTC) found that major grocery chains took advantage of supply chain disruptions during the pandemic to raise prices and increase their profits. Senator Elizabeth Warren, a Massachusetts Democrat who led the letter and is one of its signatories, called for more competition and stronger enforcement of antitrust laws to lower food prices for families — but she proposed legislation on the topic is largely paralyzed in Congress.

She now hopes that Biden will leverage his executive authority to launch a full investigation into the alleged price-fixing practices of major grocery chains. “Big food companies want to keep these huge profits and they are hiring a lot of lobbyists to stop Congress from acting,” Warren told TIME in an interview. “Congress has stalled on the work it could do to help families reduce costs… and the President has the tools to fight back.”

Senators Richard Blumenthal (D-Conn.), Cory Booker (DN.J.), Martin Heinrich (DN. Mex.), Bernie Sanders (I-Vt.) and Peter Welch (I-Vt.) also signed the letter requesting Biden to intervene, along with 35 House Democrats. Lawmakers outlined in their letter several proposals that the Biden Administration could adopt — from encouraging the FTC to issue guidance on potential violations of price discrimination laws, to creating a joint working group to investigate food price gouging in the entire supply chain.

As Biden seeks re-election, he has been hard-pressed to craft an accessible story about how his economic policies are affecting real Americans. Voting data shows that the public remains deeply unhappy with the prices they pay for food, which have increased by 21% in the last three years. And most voters continue to rank inflation at the top of their list of issues facing the country, with most voters concerned about inflation pointing to “the cost of food and grocery stores” as the main source of their distress.

Research shows that from January 2020 to January 2024, grocery expenses for a family of four on a “thrifty eating plan” increased by 50%, while large supermarket conglomerates saw revenue spikes of up to 36% during this period. “Buying food isn’t a choice, it’s a necessity,” says Lindsay Owens, executive director of the Groundwork Collaborative, a left-leaning think tank that released a report in February on the main drivers of food inflation. “There is no way to avoid a trip to the grocery store in modern America, so I think Congress and the Biden administration are rightly focused on what they can do, the set of tools they have at their disposal to reduce food prices and food prices for consumers. Americans. , especially when food and grocery prices are kept artificially high due to market manipulation, collusion and price gouging.”

The letter underscores what many progressive Democrats and liberal economic minds consider an urgent need for regulatory intervention to level the playing field in the food and grocery sector, ensuring fair competition and affordable prices for consumers across the country. Studies have found that corporate profits represent more than 50% of current inflation, as many American families are being hit with higher shopping costs. Only in the food industry, four retailers—Walmart, Kroger, Costco and Albertsons—represent more than a third of national grocery sales, potentially allowing dominant retailers to extract more favorable prices and terms from suppliers.

The letter highlights several exclusionary practices that may be employed by dominant food companies, including distribution fees for product placement, category captain agreements that distort market dynamics, and discounts that incentivize purchasing from dominant companies – all of which , according to lawmakers, effectively exclude smaller suppliers and increase costs for American families. They assert that such practices may violate existing antitrust laws and regulations, including the Sherman Act, the Clayton Act and the Robinson-Patman Act – which together prohibit monopolistic behavior, certain anticompetitive practices and price discrimination.

To address these concerns, lawmakers propose that the Biden Administration encourage the FTC to promulgate a rule under Section 5 of the FTC Act designed to prohibit or reduce exclusionary contracting in the food industry. They also urge the Administration to work with the U.S. Department of Agriculture (USDA) to take similar action under the Packers & Stockyards Act, a law designed to ensure fair competition and prevent deceptive practices in the livestock and poultry industries.

“Our letter aims to highlight areas that exist in the law but have long been underutilized,” Warren says of the proposals sent to Biden’s desk. “Now is the perfect time to change.”

In their letter, the group of lawmakers proposed that the Biden administration also encourage the FTC 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 such violations when warranted. While the FTC already provides general guidance on antitrust laws and regulations, the proposal calls for more specific guidance for industry stakeholders and consumers on what constitutes violations, and for taking legal action against companies that engage in anticompetitive practices. or deceptive conduct.

Lawmakers also noted the importance of collaboration among regulatory bodies in addressing corporate practices that inflate consumer prices, proposing in the letter that Biden create a joint task force between the Commodity Futures Trading Commission (CFTC) and the FTC that aims to synergize their resources and tools to effectively address anti-competitive behavior.

Additionally, they urge Biden to direct the Department of Justice (DOJ) and the FTC to examine and potentially block mergers and acquisitions in the food and agriculture sectors, with the aim of preventing further consolidation, while encouraging the DOJ to prosecute the players in these sectors by price-fixing and other anti-competitive behavior.

The FTC has already taken these steps, blocking a merger between two major grocery chains, Kroger and Albertsons, under a Biden presidency. Critics of the merger argued that it would lessen competition and potentially lead to higher prices for consumers.

A White House spokesperson noted that the Administration does not play a role in or comment on enforcement actions, but pointed to another example of Biden’s DOJ blocking a merger This would have increased the prices of lettuce and packaged salads, and also processing to resolve fixing prices for chicken, pork and turkey meat.

The Biden administration has also taken other steps to reduce grocery costs, updating the Thrifty Food Plan to offer low-income individuals an extra $36 per month on SNAP, partnering with more than 30 state attorneys general to address behavior anti-competitive and price manipulation of food and agricultural markets and finalizing a rule to make meat and poultry markets more competitive for farmers and ranchers. During his State of the Union address, Biden complained about counterflation – the practice of companies reducing product or portion sizes while maintaining the same packaging prices – using smaller Snickers bars and fewer potato chips as examples. . “Many companies raise prices to increase profits, charging more and more for less and less,” Biden said. “Snack food companies think you won’t notice if they change the size of the bag and put a lot less – same size bag – put less chips in it.”

Warren emphasized that Biden is “fully committed to lowering costs for families” and “willing to take on giant corporations to do so.”

“This is who Joe Biden is and what he fights for,” she adds. “This effort to stop giant food companies from deceiving consumers is just another piece of Joe Biden’s effort to lower costs for American families.”

A White House spokesperson did not address whether the Administration will heed the letter’s calls and take additional action when requested by TIME, but noted that “the President supports fair and vigorous antitrust enforcement.”

Progressive Democrats, led by Warren, introduced federal legislation earlier this year that would make it “illegal for a person to sell or offer for sale a good or service at a grossly excessive price” during an “exceptional market shock.” But the anti-price gouging legislation is unlikely to become law due to Republican concerns that it would effectively allow the FTC to control prices and prolong shortages of many goods and services.

Warren and other Democrats who support cracking down on price gouging are now turning to Biden to use his executive authority to bypass Congress.

“The White House was responsible for collecting tools that had rusted for decades,” says Warren. “They are now using these tools to reduce costs for American families. Our letter highlights that there are even more tools available and reminds the White House that there will be a lot of support in Congress if the Administration chooses these tools and uses them.”