Grocery store monopolies are bad news for shoppers

Rebecca Wolf, Tribune News Service

American families are heading into the end-of-year holidays facing sticker shock in the grocery aisles. Prices have jumped 13% over the past year, with even larger increases for staples like eggs, chicken and pork. Although inflation decreased slightly in October, it remains a top concern in public opinion polls for a reason: High prices are hurting people, and they need help.

Meanwhile, second- and fourth-largest grocers in the country have hatched a plan that would actually make things worse for consumers. Kroger and Albertsons — which together already own chains like Ralphs, Food 4 Less, Fred Meyer, Safeway, Acme, Pick ‘N Save and Vons — announced plans to merge, potentially creating an industry behemoth second only to Walmart.

We know the pattern well: Big companies keep getting bigger, their competitors disappear and prices keep going up. Recent research from Food & Water Watch found that in 2019, just four companies took in nearly 70% of all grocery sales in the country. And while the power and profit of the grocery giants has grown, the number of stores has shrunk by roughly 30% between 1994 and 2019. This has hit some communities very hard; according to the Department of Agriculture, 17% of Americans now live in low-income areas with reduced food access.

To hear the grocery goliaths tell it, bigger is better: They save money by controlling more of the market, and those savings are passed on to you and me. But evidence shows that when they have the power to jack up prices, they do.

In 2011, an Agriculture Department economist found that prices tend to rise as concentration increases; the following year, a Federal Trade Commission paper noted that “those mergers generating the largest price increases [for consumers] take place in the most concentrated markets.” As inflation hammers family budgets, grocery chain CEOs — including Kroger boss Rodney McMullen — occasionally admit that this is the perfect environment to raise prices and rake in record profits. After all, everyone needs to eat.

A new mega-merger would negatively impact everything from food safety and farming practices to wages for grocery workers. Farmers face pressures from both processors and retailers; the highly-consolidated processing industry sets the prices for products like meat, poultry, milk and eggs. In the end, farmers earn only about 14 cents for every dollar spent at the grocery store.

Similarly, workers often struggle to make ends meet. More Perfect Union reports that an internal company presentation acknowledged that at least one in five Kroger employees received government assistance — which is sadly typical across the industry.

Merger mania in this industry is nothing new. Kroger and Albertsons have been buying up competition and bullying consumers for decades. These deals have been given the thumbs-up by federal regulators that no longer use antitrust laws to challenge corporate consolidation. Instead of focusing on consumer choice and competition, agencies now favor “efficiency.” This suits the profit-margin needs of mega corporations and Wall Street, at the expense of the rest of us.

But when it comes to challenging corporate power, there may be hope: The Department of Justice and Federal Trade Commission have pushed to block several big mergers this year, a sign that regulators may be ready to upend the corporate-friendly status quo. Several lawmakers wrote a letter to Federal Trade Commission chair Lina Khan saying that this deal “could exacerbate existing antitrust, labor, and price-gouging issues in the grocery sector.” And Sens. Cory Booker, D-N.J., and Jon Tester, D-Mont., and Rep. Mark Pocan, D-Wisc., have introduced legislation to stop these kinds of mega mergers.