The FTC’s Case against the Kroger/Albertsons Deal Puts Politics Before Economics

The Kroger supermarket headquarters in Cincinnati, Ohio, June 28, 2018 (Lisa Baertlein/Reuters)

The Biden campaign needs a scapegoat for high food prices, and Big Grocery — as absurd as that sounds — is it.

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Progressives need a scapegoat for food inflation.

R iddle me this: Why have increases in food prices been in line with inflation from the 1980s until the Biden administration took over?

Food prices increased by 11.4 percent in 2022, an astonishing jump that inflicted deep harm on the budgets of millions of families. In 2023, the rise in food prices was more than 5 percent, for a combined two-year increase of more than 17 percent in the price of groceries. These increases, however, follow a long period in which food prices increased at a stable 2.5 percent per year.

The Biden administration wants us to believe that the reason for this 17 percent jump in the price of food is “greedflation.” That’s the impetus behind the Federal Trade Commission’s antitrust lawsuit to block Kroger’s $25 billion bid for Albertsons.

The reason for this antitrust lawsuit is the need for Joe Biden to be re-elected. Blaming greedy companies for inflation provides a convenient scapegoat. But it beggars belief to imagine that a vast corporate conspiracy lurked like a wolf pack in the forest for 43 hungry years only to leap out now.

The real explanation for inflation is excessive federal borrowing combined with over-expansionary monetary policy. Interest on the debt is now $870 billion — a larger share of the federal budget than the Department of Defense. National interest payments are expected to grow to $1.6 trillion in 2034.

Now the progressive antitrusters are blaming greedy grocers for the consequences of politicians’ spendthrift economic policies. The demonization of “Big Grocery” was popularized, as so many bad ideas are, by Senator Elizabeth Warren.

“Large grocers are blaming high food costs on inflation, but it’s time to talk about how they’re using every opportunity to rake in profits, reward executives and big shareholders while driving up prices even more,” Warren said in 2021. “These companies made record profits during the pandemic and when faced with the choice to retain lower prices for consumers, and properly protect and compensate their workers, they greedily granted massive payouts to top executives and investors. They need to answer for these actions.”

Again, the question that isn’t answered is: Why now? If grocers are greedy, why did they wait decades until a notoriously anti-business administration arrived before they decided to sport their true colors? And how can corporate greed be the explanation for rising prices given that the grocery market is so competitive?

A cursory look at the largest metropolitan area in the state Warren represents, the Boston area, shows vigorous competition between Market Basket, Wegmans, Stop & Shop, Shaw’s, Walmart, Whole Foods, Costco, Trader Joes, and a host of other chains. In 2022, Walmart had an outsized 25 percent of the national grocery market, but the other 75 percent was taken by many players taking fractional and competitive shares of the market. And even Walmart’s “everyday low prices” have created what economists call “the Walmart effect,” which includes downward pressure on prices. (Conveniently, the FTC does not include Walmart in its definition of a grocery store.)

Don’t expect these facts or their underlying logic to prompt progressive regulators to give up their case against the Kroger/Albertsons deal. The FTC was unimpressed that these two chains have promised to spin off hundreds of their stores to C&S Wholesale Grocers, which is well positioned to build out new competition. No, the case must go on.

After all, the Biden campaign needs a scapegoat for high food prices, and Big Grocery — as absurd as that sounds — is it.

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