The U.S. Federal Trade Commission advised politicians Thursday to investigate grocery store earnings that have risen since the pandemic and consumer products manufacturer advertising. The FTC is also seeking to halt Kroger's (KR.N) acquisition of Albertsons, saying that it will raise costs for millions of Americans.
In 2021, the FTC ordered Walmart (WMT.N), Kroger, Procter & Gamble (PG.N), grocery wholesalers, and others to provide detailed information on the pandemic supply chain crisis, which caused double-digit price increases on household necessities.
On a conference call to discuss the study, FTC Chair Lina Khan said big box and chain retailers received limited resources, hurting small individual grocers. She said that this hurt communities dependent on smaller retailers and may have enhanced larger firms' market dominance.
"If we end up finding that these types of practices violated any of the antitrust laws including the (Robinson) Patman act, I'll be very interested in making sure we take swift action," she stated with no specifics. US antitrust legislation Robinson-Patman Act of 1936 prohibits large franchises and chains from pricing discriminating against small firms.
Several smaller grocery operators said they ran out of toilet paper, cleaning materials, and pet supplies during the pandemic because manufacturers prioritized their larger customers. "It was a true test of survival for a lot of our customers," said Piggly Wiggly Alabama Distributing Co. chief buyer Brian Patterson.
Walmart and Kroger have highlighted U.S. supermarket market share gains. Kroger's latest quarterly reports showed five consecutive quarters of volume share growth. Walmart claimed market share in "virtually every category," citing reduced prices. According to Coresight Research, Walmart and Kroger increased share somewhat from 2018 to 2022.
"A global pandemic caused supply chain stress, not the companies the study selectively targeted," said Sean Heather, senior vice president for International Regulatory Affairs and Antitrust at the U.S. Chamber of Commerce.
"It's no surprise that the Chamber prioritizes corporate profits over consumer spending," said FTC spokesman Douglas Farrar. The FTC said it will share the study with lawmakers "where there has been broad interest" from both parties. President Joe Biden has criticized grocery retailers this year. "Today’s FTC report shows grocery retailers increased profits during the pandemic and have maintained or increased those margins even as their own costs have come down," the White House emailed Reuters on Thursday.
follow for more updates