Independent Grocers Demand Congress Investigate Big Grocery

The National Grocers Association (NGA) blasted the business practices of the nation’s largest food retailers today and called on Congress and federal regulators to begin investigations into what it views as illegal and anticompetitive business practices. 

NGA offered a stinging rebuke and numerous examples of what it maintains are major retailers’ abuses in a 24-page document released on March 16, titled, “Buyer Power and Economic Discrimination in the Grocery Aisle: Kitchen Table Issues for American Consumers.” NGA, which represents independent grocers, contends the actions of large retailers, especially during the pandemic, threaten the existence of a healthy grocery ecosystem and argue that congressional action and investigations by the Department of Justice and the Federal Trade Commission are needed.

“Many consumers have lost access to products at their local grocers. Moreover, rural areas and urban centers that are served by independent grocers have suffered a disproportionate impact, with consumers being force to travel longer distances to find products they need at more crowded large chain retailers,” according to NGA.

The report gets into details about competition and the concept of fair markets with most criticism leveled against Walmart as a serial abuser of buyer power. Other retailers mentioned included Amazon, Dollar General, Target and Costco, retailers whose employees are not unionized. Not mentioned in the report are major retailers such as Kroger, Albertsons and Ahold Delhaize whose employees are represented by unions.

“Big box stores have been rigging the rules in their favor, forcing independent grocers to pay higher prices for fewer product offerings,” according to the NGA report. “That leaves consumers with worse choices of food and supplies. Like it did for most injustices, the pandemic made this one worse: it further imbalanced the un-level playing field between big and small businesses, especially hurting urban and rural communities that rely on independent grocers.”

The remedy, according to NGA, is for regulators to enforce laws that are already on the books that were enacted to prevent exactly the type of behavior it maintains is now pervasive among the largest food retailers.

“Economic discrimination hurts customers and communities — and it’s already illegal. The antitrust laws written to prevent this conduct can no longer be ignored and must be enforced to protect local stores, consumers’ choices, and Americans’ health,” according to NGA.

The solution, according to NGA, requires the following actions:

• Conduct congressional investigations and hearings “to shine a bright light on the anticompetitive practices in the food marketing/grocer sector with a particular focus on the discriminatory impacts on rural and urban consumers, producers and businesses.
• Hold antitrust enforcers accountable if they continue their lax enforcement to check retailer buyer power and its effects.
• Restore the original purposes and vigor of the antitrust laws when directed at striking economic discrimination in all sectors of the economy.

This last point is notable because NGA contends lax enforcement of antitrust laws has led courts to bar private actions to enforce antitrust prohibitions found in The Sherman Act, The Clayton Act and the Robinson-Patman Act.

NGA’s demands could find a receptive ear in Washington, D.C., now that a Democratic administration is in power and lawmakers appear eager to take action on matters related to equity and social justice. For example, among NGA’s demands is that the FTC, DOJ and state attorneys general investigate the arrangements between grocery power buyers and suppliers to determine whether dominant retailer bargaining leverage is imposing discriminatory prices, terms and supply on independent grocers.

“FTC should immediately use its authority under 6(b) of the Federal Trade Commission Act to study competition and concentration in the grocery supply chain, including private label, and the impacts on independent grocers and producers, such as farmers and ranchers,” according to NGA.