An independent federal agency has become one of the most reliable enforcers of President Biden’s attempts to fight inflation, at a time when the White House has few weapons of its own to quickly bring down stubbornly high goods prices basic consumption items such as groceries.
The Federal Trade Commission filed a lawsuit Monday, joined by several state attorneys general, to challenge a merger between supermarket giants Kroger and Albertsons. THE agency justification In many ways, it echoed Mr. Biden’s renewed attempts to blame corporate greed for rising prices and shrinking portions in grocery store aisles.
“If allowed, this merger would significantly reduce competition, likely causing Americans to pay millions of dollars more for food and other essential household items,” agency officials wrote in a complaint judicial. Because food prices have risen significantly in recent years, they added, “the stakes for Americans are exceptionally high.”
This is true for consumers, but also for the president. More Americans disapprove of his management of the economy than approve of it. Consumer confidence, while improved in recent months, remains relatively weak for an economy with low unemployment and solid growth like the one Mr. Biden is presiding over.
An internal analysis by White House economists suggests that no factor weighs more heavily on consumer confidence than food prices. These costs skyrocketed in 2022 and have not declined, although their rate of increase has slowed.
White House officials concede that there is little more Mr. Biden can do unilaterally to reduce food prices, much less likely to get legislative help from Congress. That’s why Mr. Biden has resorted to the bully pulpit, calling on stores to cut prices and chastising snack makers for engaging in “shrinkflation” — reducing portions while increasing or maintaining the costs.
That’s also why the FTC’s action Monday was so important to the president, at least politically. Administration officials suggest this demonstrates that the federal government has made an important decision to prevent food prices from rising further.
A White House statement on the FTC complaint Monday included an entire paragraph about administrative efforts to lower food prices. Officials declined to comment directly on the lawsuit. But Jon Donenberg, deputy director of the National Economic Council and policy director of the Competition Council, said in a statement that “when large companies are not controlled by healthy competition, they too often do not pass on the savings of costs on consumers and do not exploit their workers. »
Kroger officials dispute the FTC’s reasoning. They say their past acquisitions have generated efficiencies that have translated into lower prices. “Kroger has a proven track record of lowering prices so more customers enjoy fresh, affordable food, and our proposed merger with Albertsons will result in even lower prices and more choices for American consumers,” the company said in a statement Monday.
Mr. Biden and FTC Chair Lina Khan have greeted similar arguments about the benefits of corporate mergers with intense 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 introduced a 2021 executive order, intended to promote competition in the economy, with guidelines for the FTC – including to more strictly review certain types of mergers.
The agency responded vigorously. It has now taken action against around 40 mergers, including consolidations of video game heavyweights, low-cost airlines, hospital chains and pharmaceutical companies. About half of these mergers have been abandoned, although the agency has not always succeeded: a federal judge last year allowed the takeover of video game maker Activision Blizzard by its rival Microsoft.
These actions have largely delighted a school of progressive economists and economists who attribute rising consumer prices and falling worker wages to increased corporate concentration.
Some new champions of aggressive antitrust enforcement, including some Republican senators, have urged the agency to go even further, breaking up big tech companies. A bipartisan group of lawmakers pushed him to block the recently 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 said when companies get too big, they gain the power to keep wages low.
Since then, Mr. Biden has seen his economic message undermined by the fastest price increases America has seen 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 controlling inflation.
FTC officials weighed in on the price argument. “Fair competition and checks on corporate monopoly power lower the costs of everything from prescription drugs and automobiles to everyday groceries like milk, bread and eggs,” said Monday Douglas Farrar, spokesperson for the agency.
Former Biden officials say the agency is now helping advance the president’s inflation efforts.
“Investigating, developing and litigating these cases takes time,” said Bharat Ramamurti, Mr. Biden’s former economic aide and architect of his competition agenda.
“I like to think it was all part of the plan.”
