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An independent federal agency has become one of the most trusted executors of President Biden’s efforts to fight inflation, at a time when the White House has little of its own to quickly lower the sky-high prices of consumer staples like groceries. There are some weapons.
The Federal Trade Commission joined with several state attorneys general on Monday to file a lawsuit challenging the merger between supermarket giants Kroger and Albertsons. The agency’s reasoning in many ways matches Mr. Biden’s new efforts to blame corporate greed for rising prices and shrinking share at grocery stores.
“If allowed, this merger would substantially reduce competition, resulting in Americans paying millions of dollars more for food and other essential household goods,” agency officials wrote in a legal complaint. He added that because grocery prices have risen significantly in recent years, “the risk for Americans is exceptionally high.”
That’s true for consumers, and it’s true for the president, too. More Americans dislike his efforts to handle the economy than approve. Consumer confidence, though improving in recent months, remains relatively weak thanks to low unemployment and an economy with solid growth, such as the one Mr. Biden is presiding over.
An internal analysis by White House economists finds that no single factor is having a greater impact on consumer sentiment than grocery prices. Those costs rose in 2022 and have not fallen, although their growth rate has slowed.
White House officials believe there is little else Mr. Biden can do unilaterally to lower grocery prices and that legislative help from Congress is unlikely. That’s why Mr. Biden has resorted to the bully pulpit, calling on stores to lower prices and chastising snack makers for engaging in “squeezing inflation” — losing portions while raising or maintaining prices. To reduce.
That’s why the FTC’s action on Monday was so important to the president, at least politically. Administration officials suggest it shows the federal government has taken major action to prevent food prices from rising further.
A White House statement on the FTC’s complaint on Monday included an entire paragraph about administration efforts to lower grocery prices. Officials declined to comment directly on the lawsuit. But John Donenberg, deputy director of the National Economic Council and director of Competition Council policy, said in the statement that “When large corporations are not restrained by healthy competition, they often do not pass on cost savings to consumers and exploit their workers. Are. “
Kroger officials dispute the FTC argument. He says his previous acquisitions have yielded corporate efficiencies, which have led to lower prices. “Kroger has a proven track record of lowering prices so more customers benefit from fresh, affordable food, and what our proposed merger with Albertsons means for America’s consumers,” the company said in a statement Monday. There will be even lower prices and more choice.”
Mr. Biden and the FTC chair, Lina Khan, have greeted similar arguments about the benefits of corporate mergers with deep skepticism.
At the start of his term, Mr Biden appointed Ms Khan, who has led the agency to its most aggressive antitrust enforcement in decades. The president also took stock of a 2021 executive order aimed at promoting competition in the economy, which includes directives for the FTC — including to more strictly scrutinize certain types of mergers.
The agency has responded strongly. It has now taken action against about 40 mergers, including tie-ups between video game giants, discount airlines, hospital chains and pharmaceutical companies. About half of those mergers have been abandoned, though the agency has not always been successful: A federal judge last year cleared the way for the acquisition of video game maker Activision Blizzard by rival Microsoft.
Those actions have largely pleased progressive economists and a group of economists who blame increased corporate concentration for higher consumer prices and lower worker wages.
Some new champions of aggressive antitrust enforcement, including some Republican senators, have urged the agency to go even further to break up big tech companies. A bipartisan group of lawmakers is pushing to block the newly announced merger between credit card titans Capital One and Discover.
When Mr. Biden issued his competition order less than six months into his presidency, he focused it on workers. He argued that when companies become too large, they gain the power to keep wages low.
Since then, Mr Biden has seen his economic message incinerated by the steepest price rise the US has experienced in four decades. By the end of his first year, Mr. Biden’s aides were beginning to frame his competition efforts in the language of taming inflation.
FTC officials have joined the price argument. “Fair competition and checks on corporate monopoly power lower the costs of everything from prescription drugs and automobiles to everyday grocery items like milk, bread and eggs,” agency spokesman Douglas Farrar said Monday.
Former Biden officials say the agency is now helping advance the president’s inflation efforts.
“These cases take time to investigate, develop and litigate,” said Bharat Ramamurthy, a former economic aide to Mr. Biden and the architect of his competition agenda.
“I like to think it was all part of the plan.”
