A group of Democratic lawmakers are calling on President Joe Biden to investigate grocery store chains for price manipulation, writing in a letter sent Monday morning that he should use executive authority to take additional enforcement action to address rising food prices without the help of Congress.
The letter, shared exclusively with TIME, comes after a report from the Federal Trade Commission (FTC) found that major grocery chains took advantage of supply chain disruptions during the pandemic to hike up prices to increase their profits. Sen. Elizabeth Warren, a Massachusetts Democrat who led the letter and is one of its signatories, has called for more competition and stronger enforcement of antitrust laws to bring down grocery prices for families—but her proposed legislation on the topic has been largely stalled in Congress.
She’s now hoping that Biden will leverage his executive authority to initiate a thorough investigation into the alleged price-fixing practices of major grocery store chains. “Big food companies want to keep these huge profits and they're hiring plenty of lobbyists to keep Congress from acting,” Warren tells TIME in an interview. “Congress has stalled out on doing work that it could do to help families lower costs… and the President has the tools to fight back.”
Sens. Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Martin Heinrich (D-N. Mex.), Bernie Sanders (I-Vt.), and Peter Welch (I-Vt.) also signed on to the letter requesting Biden’s intervention, along with 35 House Democrats. The lawmakers outlined several proposals in their letter that the Biden Administration could take—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.
As Biden seeks re-election, he has been hard pressed to construct an accessible story about how his economic policies are affecting real Americans. Polling data shows that the public remains deeply displeased by the prices they pay for food, which have gone up 21% in the last three years. And the majority of voters continue to rank inflation at the top of their list of issues facing the country, with most voters concerned about inflation naming “the cost of food and groceries” as the main source of their angst.
Research shows that from January 2020 to January 2024, the grocery expenses for a family of four on a “thrifty food plan” increased by 50%, while major supermarket conglomerates saw revenue spikes of up to 36% during this timeframe. “Purchasing food isn't a choice, it's a necessity,” says Lindsay Owens, the executive director of the Groundwork Collaborative, a left-leaning think tank that released a report in February on the key drivers of grocery inflation. “There's no getting around 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, what suite of tools they have at their disposal for bringing down food and grocery prices for Americans, particularly when food and grocery prices are being kept artificially high because of market manipulation, collusion, and price gouging.”
The letter underscores what many progressive Democrats and liberal economic minds see as 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 nationwide. Studies have found that corporate profits account for more than 50% of current inflation as many American families are being hit with higher costs for groceries. In the food industry alone, four retailers—Walmart, Kroger, Costco, and Albertsons—account for over 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 grocery firms, including slotting fees for product placement, category captain arrangements that skew market dynamics, and rebates incentivizing purchasing from dominant firms—all of which the lawmakers say effectively shut out smaller suppliers and drive up costs for American families. They claim 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 anti-competitive practices, and price discrimination.
To address these concerns, the lawmakers propose that the Biden Administration encourage the FTC to promulgate a rule under Section 5 of the FTC Act, aimed at prohibiting or curbing 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 is about pointing out areas that exist in the law, but have long been underused,” Warren says of the proposals sent to Biden’s desk. “Now is the perfect moment to move.”
In their letter, the group of lawmakers proposed 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 within the food industry, and to investigate and enforce those violations where merited. While the FTC already does provide general guidance on antitrust laws and regulations, the proposal calls for more targeted guidance for industry stakeholders and consumers on what constitutes violations, and to take legal action against companies found to engage in anti-competitive practices or deceptive conduct.
The lawmakers also noted the importance of collaboration between 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 behaviors.
Additionally, they urge Biden to direct the Department of Justice (DOJ) and FTC to scrutinize and potentially block mergers and acquisitions in the food and agricultural sectors, aiming to prevent further consolidation, while also encouraging the DOJ to prosecute actors in these sectors for price-fixing and other anti-competitive behavior.
The FTC has already taken such steps, blocking a merger between two large grocery-store chains, Kroger and Albertsons, under Biden’s presidency. Critics of the merger argued that it would diminish competition and potentially lead to increased 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 that would have raised prices for lettuce and packaged salads, and also suing to address price-fixing of chicken, pork, and turkey meats.
The Biden Administration has also taken other steps to lower grocery costs, updating the Thrifty Food Plan to offer an extra $36 per month to low-income individuals on SNAP, partnering with over 30 state attorneys general to address anticompetitive behavior and price gouging in 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 shrinkflation—the practice of firms reducing product or portion sizes while keeping package prices the same—using smaller Snickers bars and less chips as an example. “Too many corporations raise prices to pad the profits, charging more and more for less and less,” Biden said. “The snack companies think you won't notice if they change the size of the bag and put a hell of a lot fewer—same size bag—put fewer chips in it.”
Warren stressed that Biden is “fully committed to lowering costs for families” and is “willing to take on giant corporations to do that.”
“That's who Joe Biden is and what he fights for,” she adds. “This effort around stopping giant food companies from cheating consumers is just one more piece of Joe Biden's effort to bring down costs for American families.”
A White House spokesperson did not address whether the Administration will heed the calls in the letter and take additional action when asked by TIME, but noted “the President supports fair and vigorous antitrust enforcement.”
Progressive Democrats, led by Warren, introduced federal legislation earlier this year that would make it “unlawful 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 concerns from Republicans that it would effectively allow the FTC to control prices and prolong shortages for many goods and services.
Warren and the 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 has been responsible for picking up tools that have been left to rust for decades,” Warren says. “They are now using those tools to lower costs for American families. Our letter points out there are even more tools available and reminds the White House that there will be plenty of support in Congress if the Administration will pick those tools up and use them.”
https://time.com/6977026/democrats-biden-executive-authority-grocery-prices/
