Corporate Greed Is Costing You at the Grocery Store
MIA DIFELICE, Food & Water
Watch
“Too many corporations raise their prices
to pad their profits, charging you more and more for less and less,” he said.
We couldn’t agree more. In the days before
the State of the Union, we found that from 2020 to 2024, the cost to feed a
family of four grew 2.5 more than the rate of inflation.
Meanwhile, corporate profits rose five times faster than inflation from 2020 to 2022
— some to record highs. What’s more, a recent report from the Biden administration shows how big
companies benefited from worsening the supply chain problems that raised prices
during the pandemic.
This trend has been enabled by lax antitrust enforcement that has let corporate giants get bigger. And as they get bigger, their power grows, too. Luckily, we know just how to tackle this — and so does Biden.
How Corporate Consolidation Leads to Higher
Prices
First, let’s take a look at how corporate
consolidation works in the American economy. We say markets are “consolidated”
when a small handful of very big companies dominate an entire sector. They do
this by buying (acquisitions) or joining (mergers) with another company.
Consolidation gives these giant
corporations the ability to dictate what goes on in the market, from prices to
working conditions. As the president himself said, “Grocers in consolidated markets
charge you more because you have nowhere else to shop.” That’s market power.
And corporations are amassing it all across our food system. A few huge players have taken over
the markets for dairy, packaged foods, seeds, grocery stores, and more.
Previous governments have failed to stop
this trend. Decades ago, the U.S. took consolidation seriously, but
more recent administrations have sided with corporations over families. They
failed to stop mergers and acquisitions or the unfair practices that big
corporations use to cement their reign. As a result, food prices are soaring,
while CEOs and shareholders pocket unprecedented profits.
Consolidation Means Big Wins for
Corporations, Big Losses for Everyone Else
Consolidation in our food system affects
more than just prices. It also damages whole local economies. For example, big
grocery stores can adopt cost-cutting measures that make it impossible for smaller
stores to compete. Small businesses shutter. Then, because the big stores are
the only option in town, they can raise prices again — and that’s exactly what they do.
Growing consolidation and market power also gives corporations more leverage to pay lower wages, while those at the top hoard profits for themselves. For instance, Walmart is the biggest grocery chain in the country, and it paid its CEO $25 million in 2023.
That’s 933 times the median
associate’s wages, which are also below the poverty line for a family of four.
At the same time, the grocery juggernaut saw a $163 million increase in profits from 2022 to 2023, for a
total of over $13.6 billion.
Moreover, market power enables corporations
to get away with harmful, cost-cutting practices, like the poor manure management on factory farms that pollutes
communities with waste. Such practices directly harm our climate, environment,
and public health.
Market power also helps companies get away
with shady tactics, like charging us the same for less product. This “shrinkflation” is inflating how much we spend on household
essentials like food, soap, and toilet paper.
The bigger and more powerful a corporation
is, the more it can duck accountability for its actions — and the more it can
influence policymakers by spending millions on
lobbying to sway policy in their favor.
Biden Is Fighting High Grocery Prices at
the Root
We have antitrust agencies designed to rein
in corporate consolidation. For example, the Federal Trade Commission (FTC) and
the Antitrust Division of the Justice Department (DOJ) are supposed to assess
proposed mergers and step in if they pose a threat to markets. We also have
antitrust laws like the Packers and Stockyards Act, which is supposed to ensure
fair and competitive markets in the meat industry.
Yet, antitrust enforcement has fallen —
that is, until Biden came into office. The president has taken the kind of
action to tackle market power that we haven’t seen for decades.
His 2021 executive order began tackling monopolies in all corners
of the economy, especially in food and agriculture. It included 70 actions to
foster more competition, including directing the USDA to create rules to
breathe new life into the Packers and Stockyards Act. Two of those rules have
been finalized so far.
This executive order also urged the FTC and
DOJ to revise merger guidelines. These detail how these agencies
evaluate the risks of mergers and decide whether they’ll challenge them. (Food & Water
Watch submitted comments with recommendations to strengthen the
guidelines against harmful mergers.)
And, in December of last year, the Biden
administration set a record for merger challenges. The FTC and DOJ issued
the highest number of challenges since the U.S. began requiring antitrust
reviews before mergers almost five decades ago.
Now, in March, the president announced a new strike force to tackle “unfair and
illegal corporate pricing.” These are exactly the kinds of actions we need to
stand up to corporations and put American families first.
The Next Big Fight: A Grocery Mega-Merger
from Hell
Yet more grocery consolidation looms on the
horizon. In 2022, grocery giant Kroger announced it planned to buy its competitor, Albertsons — these two are the second and fourth-largest grocery stores in the country,
respectively.
This $24.6 billion deal would be a gold mine for the
companies’ CEOs and owners, and it would cement Kroger’s place near the peak of
the grocery store food chain.
However, thanks to the work of
organizations including Food & Water Watch, Biden’s FTC has recognized how
harmful this merger will be. In February, it announced a suit to block the acquisition, which is
scheduled for trial in August. This is a welcome step in preventing this
disastrous megamerger — and we need more action like it to curb growing market
power.
Biden can and must finalize the third rule
strengthening the Packers and Stockyards Act. He also must continue opposing
mergers in the ag and food sectors, like Kroger-Albertsons.
At the same time, Food & Water Watch
will keep working to expose the truth behind rising prices and all the other
failures of our food system. We’re debunking corporations’ lies and excuses, and we’re shining light on their tactics for
profiting at everyone else’s expense. We’re fighting for the fair food system
we need to ensure healthy, safe, and affordable food for everyone.
© 2021 Food & Water Watch
MIA DIFELICE is a Digital Copywriter at Food & Water
Watch
