NGA Applauds FTC Report on Grocery Supply Chain Disruptions
Report confirms NGA’s assertions that dominant grocers leveraged buyer power during Covid disruptions to cement their dominance and undercut the competition
Washington, D.C., March 21, 2024 (GLOBE NEWSWIRE) — The National Grocers Association (NGA) today applauds the Federal Trade Commission’s (FTC) release of the exhaustive and long-awaited 6(b) study on the causes behind supply chain disruptions in the grocery sector and anticompetitive practices that have negatively impact U.S. consumers.
The investigation found that large players in the US grocery sector took advantage of Covid-era supply chain disruptions to cement their dominance in the grocery marketplace in a way that worsened shortages for consumers and inflated grocery prices.
“This study confirms what independent grocers and their customers experience firsthand: dominant national chains or so-called “power buyers” are abusing their immense economic power to the detriment of competition and American consumers. In communities nationwide, independent grocers strive to compete on price, quality, service, convenience, and product range. However, decades of lax antitrust enforcement enable grocery power buyers to coercively squeeze suppliers to comply with their trade demands, unfairly disadvantaging smaller competitors,” said NGA President and CEO Greg Ferrara. “The result – confirmed by the FTC’s study – is a less efficient consumer supply chain where buyer power dictates priority distribution of high-demand products and special pricing arrangements.”
The FTC investigated nine major retailers, including Walmart Inc. and Amazon Inc., in late 2021 under the authority of Section 6(b) of the FTC Act to determine whether anticompetitive practices were causing disruptions that burdened consumers and strained the U.S. economy.
The FTC report concluded “limited competition can lead to bottlenecks that increase the impact of supply chain shocks on different businesses and consumers while simultaneously creating opportunities for further entrenchment…As supply chains normalize, some of these symptoms may subside, but the underlying issues remain.”
Independent grocers have been arguing for years that the nation’s biggest chains are getting bigger and more powerful because they are using their size to pressure suppliers, and taking advantage of arbitrary market segment loopholes to negotiate special pricing and package sizing of consumer goods that are denied to smaller competitors. NGA’s 2021 White Paper recommended the FTC take the important first step of using its 6(b) power to study economic discrimination in the grocery marketplace to determine what antitrust interventions are needed to restore a fairer and more equitable marketplace for consumers.
“Covid-era disruptions and food price inflation have made the grocery supply chain literally a kitchen table issue for millions of Americans,” said Chris Jones, NGA chief government relations officer and counsel. “This report highlights the urgent need for the Federal Trade Commission and Department of Justice to enforce existing laws like the Robinson-Patman Act, and for Congress to pass new laws that would level the playing field for grocery competitors for the benefit of the American consumer.”
CONTACT: Laura Strange National Grocers Association 703-516-8808 [email protected]
