FTC finds large grocers used size to stock shelves during pandemic

livemint.com:

Federal regulators said large grocery chains used their size and scale to keep shelves stocked during the pandemic, edging out smaller rivals when most stores struggled with product shortages and distribution bottlenecks. The Federal Trade Commission said in a report released Thursday on the impact of Covid-19 supply-chain disruptions that large retailers used their size to pressure suppliers of food and household goods, the agency said, including putting stricter delivery requirements into place and fining vendors that didn’t comply.

The report said the demands led many suppliers to route more goods toward those retailers to avoid the fines. “Dominant firms used this moment to come out ahead at the expense of their competitors and the communities they serve," said FTC Chair Lina Khan.

The agency said revenue growth at grocers outpaced the cost increases many of them faced from suppliers, suggesting that higher profits “warrant further inquiry by the commission and policymakers." The FTC noted it didn’t investigate whether specific companies increased their prices by more than their costs. The report comes as consumers say they are still coping with high prices for everyday items at grocery stores even as inflation has receded from the rapid growth seen in 2021 and 2022.

The Biden administration is arguing more forcefully that companies are keeping prices high to feed profits. President Biden in his State of the Union address earlier this month criticized “shrinkflation," where companies shrink their products but not the price, calling it a “rip-off" of consumers.

The FTC last month sued to block the $25 billion bid by Kroger to buy rival Albertsons, putting the future of the deal into question. Kroger and Albertsons are