In 1997, Americans bought 20 percent of all groceries from the top four retailers. By 2019, the top four retailers claimed 43 percent of all sales. The consolidation of the United States’ food retail industry is an issue that has been snowballing in size for decades—an issue that threatens the welfare of our communities and of democracy itself.
The growing power of a handful of major grocery retailers, commonly referred to as power buyers, creates an uneven playing field that stifles independent grocers, exploits suppliers and farmers, and preys on consumers. The current merger between Kroger and Albertsons is only a symptom of the expansive issue of corporate America.
The American food system has been corrupted by monopolies on every level. We can look anywhere from the four firms who control a large majority of all crop seed and agricultural chemical sales, to the four firms who make up nearly three quarters of the meat and poultry industry. However, the most personally relevant agricultural industry for most Americans is food retail.
Today, a handful of powerful companies control the majority market share of almost 80% of most grocery items bought by Americans. The costs of this corporate consolidation are higher prices, reduced access to fresh food, economic strain on local farmers, and health disparities resulting from food deserts.
All of these costs stem from the direct negative impact that monopolies have on community grocery stores. The current state of affairs places independent grocers at a distinct disadvantage, leaving them unable to compete freely and fairly. Big retailers leverage their influence to dictate terms of trade, securing lower prices, exclusive offerings, and priority access to high-demand products. Power buyers achieve these favorable terms because they have the power to make or break their suppliers. Therefore, the suppliers must make up for losses by raising prices on independents and eliminating competition for big retailers.
This domination not only hampers the ability of independent grocers to survive but also perpetuates a cycle of discrimination against vulnerable communities, such as lower income communities and communities of color, particularly those in inner-city and rural areas. This is why America’s food desert and food apartheid epidemic can be directly linked to the monopolization of the grocery marketplace.
“America’s food desert and food apartheid epidemic can be directly linked to the monopolization of the grocery marketplace.”
This merger between Kroger and Albertsons would combine the nation’s two largest supermarket retailers. This will be the biggest U.S. supermarket merger in history with an ownership of nearly 5,000 stores. Grocery giants have long since described this consolidation of the market as creating better efficiency to lower prices and improve worker wages, however workers and labor unions such as UFCW have expressed the untruthfulness of these assurances from past experience. A more accurate picture of what’s to come would be higher store prices due to the end of all competition between top two grocery chains, as well as decreased worker welfare. In a joint statement, several UFCW branches aligned with the Stop the Merger campaign to explain that pitting Kroger and Albertsons against each other at the bargaining table has been the leverage that workers had to obtain wage raises. Without the competition between the two chains, the power of the workers is greatly diminished.
This merger currently awaits the decision of the Federal Trade Commission to allow its clearance. This $24.6 billion transaction faces opposition from unions, consumer groups, and state officials who call for an end to monopolistic power. The National Grocers Association (NGA) released a statement from their President and CEO stating that this merger would negatively impact suppliers and independent grocers. Simultaneously, the United Food and Commercial Workers International Union (UFCW) expressed concern for the transaction, commenting that it threatens American workers and our communities.
How did we get to this point? There are several antitrust laws on the books for the purpose of preventing this very issue. For example, the landmark 1936 Robinson-Patman Act prohibits price discrimination and exclusionary conduct to deter the rise of monopoly powers. Unfortunately, antitrust laws such as Robinson-Patman have been largely neglected by regulators, allowing dominant firms to manipulate the market without facing consequences. The burden of proof required for private parties to bring cases in court is nearly insurmountable, leaving independent grocers without a fair chance to challenge the status quo.
Since the 1970s, U.S. courts have significantly decreased their enforcement of anticompetitive laws, aligning more closely with the interests of large profit driven firms. In 1999, the Supreme Court undermined Robinson-Patman stating that “low prices benefit consumers regardless of how those prices are set,” showcasing the ideology that antitrust laws are not relevant if prices are kept low. Inevitably, however, the corporate promise of keeping prices low is short-lived once all competition is driven away. Without monopoly regulation, there is a stark lack of incentives to keep prices low or to provide quality goods, while there is an abundance of opportunity for exploitative practices.
The imbalance of buyer power is glaringly evident when comparing prices on fresh produce between independent grocers and corporate giants. While studies show that independent grocers can offer competitive or even lower prices on fresh produce, their packaged goods tend to be more expensive. This discrepancy is a direct result of the negotiation power wielded by large retailers, who can secure price concessions from manufacturers.
To address these systemic issues, antitrust laws must be rigorously enforced and updated. Regulatory agencies need adequate funding to investigate and deter anticompetitive conduct, and Congress must revisit existing laws to reflect modern needs and gaps in the grocery industry. Clarity in antitrust laws are essential to ensure compliance and prevent discriminatory loopholes that enable abuses of market power. We must prioritize investment in our independent grocers and cooperative models, especially those in high need areas to help them compete with power buyers. We must also incentivize and promote local sourcing to ensure support for local farmers and producers, in turn fostering regional economic growth. Importantly, community members need to be involved in the decision-making processes to truly address the needs of local populations.
A free and fair food retail marketplace holds the promise of providing consumers with greater access to fresh, affordable products. Competitive markets would drive prices down, increase product diversity, and empower entrepreneurs to invest in communities that desperately need grocery stores. Antitrust policy should go beyond addressing price competition, considering other consumer priorities like convenience, quality, product diversity, and customer satisfaction.
While the Robinson-Patman Act is a necessary step in the right direction, it is not a complete solution to the buyer power problem. Its limitations, such as not covering international suppliers and placing the burden of compliance on suppliers instead of the large retailers themselves, underscore the need for comprehensive reforms. The neglect of antitrust laws has allowed Kroger and Albertsons, as well as corporate giants like Amazon and Walmart, to flourish.
To be clear, while government interventions to spur competition are necessary policies, they do not address the widespread issues of our inequitable food system and economic system overall. Ultimately, advocating for increased competition serves only as a band-aid solution to late stage capitalism. However, band-aids can be administered simultaneously alongside the “surgical procedure” that is the abolition of our capitalist system in favor of a more equitable model.
Therefore, during this systemic shift, we must be vigilant in reducing as much harm as possible. The urgency of antitrust advocacy in the food retail sector cannot be overstated. The proposed merger between Kroger and Albertsons is a stark reminder of the ever-rising threat to consumer welfare. As consumers, we must demand regulatory bodies and lawmakers to step up, enforce existing laws, and adapt them to address the needs of struggling farmers, independent grocers, workers, and consumers. The economic and social welfare of our communities depend on it.
Author’s Note: During the publishing of this blog, there has been a major update in the Kroger-Albertsons merger as the FTC has decided to challenge this acquisition with a lawsuit after all. This UFCW has stated its fervent support of this decision, as it shines a glimmer of hope for the potential turning of the tides in federal antitrust regulation.
Ava Kargosha is a Master of Public Policy student (’24) in the Goldman School of Public Policy at UC Berkeley.
The views expressed in this article do not necessarily represent those of the Berkeley Public Policy Journal, the Goldman School of Public Policy, or UC Berkeley.