by An independent federal agency has become one of the most trusted enforcers of President Biden’s attempts to combat inflation, at a time when the White House has few weapons of its own to quickly reduce stubbornly high prices for consumer staples such as the edibles.
The Federal Trade Commission filed a lawsuit Monday, joined by several state attorneys general, challenging a merger between supermarket giants Kroger and Albertsons. The agency’s reasoning in many ways echoed Biden’s renewed attempts to blame corporate greed for rising prices and shrinking portions in supermarket aisles.
“If permitted, this merger would substantially reduce competition, likely resulting in Americans paying millions of dollars more for food and other essential household items,” agency officials wrote in a legal complaint. Because grocery prices have risen significantly in recent years, they added, “the stakes are high for Americans.”
That’s true for consumers and it’s true for the president. More Americans disapprove of his handling of the economy than approve. Consumer confidence, while improving in recent months, remains relatively weak for an economy with low unemployment and solid growth like the one presided over by Biden.
An internal analysis by White House economists suggests that no factor weighs more on consumer confidence than grocery prices. Those costs skyrocketed in 2022 and have not decreased, although their pace of increase has slowed.
White House officials admit there is little more Biden can do unilaterally to reduce grocery prices and even less chance of getting legislative help from Congress. That’s why Biden has taken to the bully pulpit, calling on stores to lower prices and punishing snack makers for engaging in “counterinflation”: reducing portions while raising or maintaining prices.
That’s also why Monday’s FTC action was so important to the president, at least politically. Administration officials suggest this shows the federal government has taken a big step to prevent food prices from rising further.
A White House statement on the FTC complaint on Monday included an entire paragraph about the administration’s efforts to reduce grocery prices. Officials declined to comment directly on the lawsuit. But Jon Donenberg, deputy director of the National Economic Council and director of policy at the competition council, said in the statement that “when large corporations are not controlled by healthy competition, they too often fail to pass on cost savings to consumers and exploit To their workers. “
Kroger officials question FTC’s rationale. They say their past acquisitions have generated corporate efficiencies that have translated into lower prices. “Kroger has a proven track record of lowering prices so more customers benefit from fresh, affordable foods, and our proposed merger with Albertsons will mean even lower prices and more choice for American consumers,” the company said in a statement Monday.
Similar arguments about the benefits of corporate mergers have been met with intense skepticism by Biden and FTC Chair Lina Khan.
Early in his term, Biden appointed Khan, who has led the agency toward its most aggressive antitrust enforcement in decades. The president also prepared a 2021 executive order, aimed at promoting competition in the economy, with directives for the FTC, including stricter scrutiny of certain types of mergers.
The agency (and the Justice Department, which has also stepped up its antitrust efforts) have responded forcefully. The FTC has taken action against about 40 mergers, including mergers of video game heavyweights, hospital chains and pharmaceutical companies. About half of those mergers have been abandoned, although the agency has not always been successful: A federal judge last year cleared the way for rival Microsoft’s acquisition of video game maker Activision Blizzard.
Those actions have greatly delighted a school of progressive economists and economists who blame increased corporate concentration for higher consumer prices and lower worker wages. Some new advocates of aggressive antitrust enforcement, including some Republican senators, have urged the agency to go even further, breaking up big tech companies.
When Biden issued his competency order, less than six months into his presidency, he focused it on workers. When companies get too big, he argued, they gain the power to keep wages low.
Since then, Biden has seen his economic message consumed by the fastest price increases the United States has experienced in four decades. By the end of his first year, Biden’s advisers were beginning to frame his competition efforts in the language of controlling inflation.
FTC officials have leaned toward the price argument. “Fair competition and reining in corporate monopoly power reduces the costs of everything from prescription drugs and cars to everyday grocery items like milk, bread and eggs,” agency spokesman Douglas Farrar said Monday.
Former Biden officials say the agency is now helping fuel the president’s inflation efforts.
“Investigating, developing and litigating these cases takes time,” said Bharat Ramamurti, Biden’s former economic aide and architect of his competition agenda.
“I like to think this was all part of the plan.”
