An independent federal agency has emerged as one of the most reliable enforcers of President Biden’s attempts to combat inflation at a time when the White House has few weapons of its own to quickly drive down stubbornly high prices for consumer staples like food reduce.
The Federal Trade Commission filed a lawsuit Monday along with several state attorneys general challenging a merger between supermarket giants Kroger and Albertsons. The agency’s rationale in many ways reflected Mr. Biden’s renewed attempts to blame rising prices and shrinking portions at grocery stores on corporate greed.
“If approved, this merger would significantly reduce competition, likely resulting in Americans paying millions of dollars more for food and other essential household goods,” agency officials wrote in a lawsuit. With food prices rising significantly in recent years, “Americans have an extraordinary amount at stake.”
That’s true for consumers, and it’s true for the president too. More Americans disapprove of his handling of the economy than approve of him. While consumer confidence has improved in recent months, it remains relatively weak for a low-unemployment, solid-growth economy like the one Mr. Biden leads.
An internal analysis by White House economists suggests that no single factor weighs more heavily on consumer sentiment than food prices. These costs skyrocketed in 2022 and have not decreased, although their increase has slowed.
White House officials acknowledge that there is little more Mr. Biden can do unilaterally to lower food prices and even fewer chances of getting legislative help from Congress. That’s why Mr. Biden has resorted to the bully pulpit, urging stores to lower prices and punishing snack makers for engaging in “shrinkflation” — reducing portions while raising or maintaining prices.
This is also why the FTC’s action on Monday was so important for the president, at least politically. Government officials believe this shows that the federal government has made great efforts to prevent further increases in food prices.
A White House statement on the FTC complaint on Monday included an entire paragraph about administrative efforts to reduce food prices. Officials declined to comment directly on the lawsuit. But Jon Donenberg, deputy director of the National Economic Council and director of competition policy, said in the statement: “When large companies are not controlled by healthy competition, they too often fail to pass on cost savings to consumers and exploit their workforce.”
Kroger officials dispute the FTC’s reasoning. They say their previous acquisitions have resulted in corporate efficiencies that have translated into lower prices. “Kroger has a proven track record of lowering prices so more customers can benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choice for America’s consumers,” the company said in a statement Monday.
Mr. Biden and FTC Chairwoman Lina Khan have greeted similar arguments about the benefits of corporate mergers with great skepticism.
Early in his term, Mr. Biden appointed Ms. Khan, who led the agency toward its most aggressive antitrust enforcement in decades. The president also included guidelines for the FTC in a 2021 executive order designed to promote competition in the economy, including to increase scrutiny of certain types of mergers.
The agency responded forcefully. It has now taken action against around 40 mergers, including mergers of video game heavyweights, discount airlines, hospital chains and pharmaceutical companies. About half of those mergers have been abandoned, although the agency hasn’t always been successful: A federal judge last year cleared the way for rival Microsoft to take over video game maker Activision Blizzard.
These measures have largely pleased a school of progressive economists and economists who blame increasing corporate concentration for higher consumer prices and lower worker wages.
Some new advocates for aggressive antitrust enforcement, including some Republican senators, have called on the agency to go further and break up big tech companies. A bipartisan group of lawmakers has pushed to block the newly announced merger between credit card giants Capital One and Discover.
When Mr. Biden issued his antitrust regulation less than six months into his presidency, he focused on workers. When companies get too big, he argued, they gain the power to keep wages low.
Since then, Mr Biden has seen his economic message distorted by the fastest price increases America has seen in four decades. At the end of his first year, Mr. Biden’s advisers began framing his competitive efforts in the language of containing inflation.
FTC officials have weighed in on the pricing argument. “Fair competition and checks on corporate monopoly power lower the costs of everything from prescription drugs and cars to everyday foods like milk, bread and eggs,” Douglas Farrar, an agency spokesman, 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 Ramamurti, a former economic adviser to Mr. Biden and architect of his competition agenda.
“I like to think this was all part of the plan.”
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2024-02-27 10:04:05
www.nytimes.com
