Biden administration focused on grocery prices as FTC weighs Albertsons/Kroger deal
The Biden administration is focused on supermarket prices and wants grocery retailers to lower their prices on household essentials.
“There are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation,” Predident Joe Biden said earlier this month in South Carolina.
The comments, according to aides to the president, appear to be a preview to pressure the Biden administration into trying to assert on supermarket operators and other companies that are keeping higher-than-usual profit margins, according to a New York Times report on Friday.
“Our message is a very clear one that the president has and will continue to lean into, which is, if you’re a company whose input prices have come down and you’re not passing those savings along to the consumer, he will call you out,” Jared Bernstein, the chair of Biden’s Council of Economic Advisers, said in a virtual meeting with reporters, according to a Reuters account of the event.
Bernstein didn’t identify any specific companies.
A White House review of Census data revealed food-and-beverage retailers’ revenue as a share of their costs has increased markedly from before the pandemic to a level not reached since the mid-2000s, Reuters reported. The margins have increased by about two percentage points since the eve of the pandemic, according to the New York Times.
The Biden administration’s fixation with supermarket prices comes as the Federal Trade Commission is trying to make a decision on Kroger’s (NYSE:KR) planned almost $25 billion purchase of Albertsons (NYSE:ACI), which some states and politicians argue will lead to higher prices for consumers.
“We agree with President Biden,” a Kroger spokesperson told Reuters. “Too many grocers in America have increased margins in contrast to Kroger.”
The spokesperson added that the merger would “lower prices for even more of America’s consumers by delivering at least half a billion in additional price investments at Albertsons stores.”
The merger faces stiff resistance from not only the FTC but also from state attorneys general, members of Congress, and even the Teamsters union which urged the FTC to block the deal amid concerns that the union of the two would stifle competition and lead to job cuts.
On Wednesday, FTC Commissioner Rebecca Kelly Slaughter said the antitrust regulator is “extremely focused” on blocking bad deals after Amazon (AMZN) terminated its planned $1.4 billion acquisition of iRobot (IRBT) on Monday.
Earlier this month, the Washington State Attorney General filed a lawsuit to block the merger of grocery chains Kroger (KR) and Albertsons (ACI). The suit argued that the $25 billion deal would raise prices and hurt consumers.
Kroger (KR) and Albertsons (ACI) received a second request from the FTC in December 2022. Kroger has been working to try to appease the FTC so the antitrust regulator can approve the deal, including a plan announced in September to sell 413 stores for $1.9 billion to C&S Wholesale Grocers.