National Grocers Association: Congress Needs to Investigate the Unchecked Power of Big Box Stores and E-Commerce Giants
WASHINGTON, DC – The National Grocers Association (NGA), the trade association representing the independent supermarket industry, outlined today how big box stores and e-commerce giants have used their influence during the pandemic to further disadvantage independent grocery stores and the communities they serve through economic discrimination. NGA released a white paper that can be found here.
“Unfortunately, this is not a new reality in the grocery marketplace for dominant firms to use their buying power to take greater control of the market and demand special treatment from suppliers without an economic justification,” said NGA CEO and President, Greg Ferrara. “Independent grocers have been feeling the financial squeeze from these anti-competitive tactics for years, and the pandemic has brought these illegal tactics to the kitchen table of every American. As families struggle under the weight of the pandemic, the dominant food retailers are squeezing suppliers and as a result, forcing higher prices and fewer products on independent grocers and their customers. Congress has to stand up for local businesses and consumers to demand an end to these harmful tactics and restore a competitive marketplace that benefits the economy and grocery shoppers alike.”
NGA represents more than 1,600 independent grocery retailers who account for nearly 9,000 store fronts across the country, including at least one in every congressional district. These stores and their independent wholesalers play a crucial role in American communities. They compete to offer low prices, higher food quality, better service, more accessible and convenient locations, a greater variety of products, and good jobs.
But independent grocers have watched over the years as dominant chains ignore antitrust law and abuse their buyer power to demand suppliers provide lower prices and more favorable supply terms, special package offerings and product availability, leaving independent grocers to pay the price.
In light of the pandemic’s supply chain disruption, NGA members are feeling the heat more than ever. Walmart alone captures one out of every four dollars Americans spend on groceries. Meanwhile, independent grocers are unable to secure many of the must-have products and face supplier prices up to 53 percent higher than what their larger competitors are selling the product for at retail.
This isn’t just bad for independent grocers; it’s bad for their customers, who are often people of color and people living in rural areas who are forced to pay higher prices or travel farther distances to get the staples they need. From 2005 to 2015, the number of independent grocery stores available in rural and minority communities has increased, while access to big chain stores has decreased.
For example, prior to 2020, in Northern Tulsa, Oklahoma, where there is no full-service grocery store, families are forced to choose between driving to a far away grocery store or rely on the narrow selection of less healthy, processed foods at the nearby dollar store chains. During a pandemic, when money is tight and leaving the house is discouraged, customers are forced to face hard economic and health decisions just to provide for their families. A parent may be forced to drive a farther distance to reach the nearest grocery chain store if the nearby independent grocery is not able to stock its shelves with the products a family needs, meaning spending more on gas and taking multiple trips to complete a grocery list.
Dominant food retailers are also harming small and mid-sized farmers and ranchers, who are paid prices far below competitive levels. Demands for lower costs by large chains are forcing consolidation amongst food manufacturers. Farmers and ranchers then are forced to accept unfavorable economic terms, conditions, and prices imposed by the largest members of a consolidated supply chain. That means rural residents that rely on the agriculture economy face a double whammy – lower prices at the farmgate and higher prices in the grocery aisle.
Unless Congress and regulators act, illegal economic discrimination will continue to threaten independent businesses and American consumers and producers long after the pandemic is over. Specifically, NGA proposes:
- Investigations and Hearings. Through congressional investigations and hearings, Congress should shine a bright light on anticompetitive practices in the grocery sector—with a particular focus on the discriminatory impacts on rural and urban consumers, producers, and businesses.
- Congressional Oversight. Congress should use its inherent oversight and authorization powers to hold antitrust enforcers accountable if they continue to fail to take steps to check retail buyer power and its harmful effects.
- Legislation. The antitrust laws provide the tools enforcers need to curb discriminatory practices by dominant retail chains. However, if existing court decisions prove too high a bar to more vigorous enforcement, then Congress should step in to restore the original purposes of the antitrust laws.
- Enforcement and Agency Action. The FTC, DOJ, and state attorneys general should investigate the arrangements between grocery power buyers and suppliers to determine the extent to which dominant retailer bargaining leverage is imposing discriminatory prices, terms, and supply on independent grocers.
- The FTC should immediately use its authority under 6(b) of the Federal Trade Commission Act to study competition and concentration in the grocery supply chain and the impacts on independent grocers and producers, such as farmers and ranchers.
- In these and other inquiries, antitrust enforcement should look beyond price effects to consider other dimensions of competition, including impacts on quality, service, and convenience.
- Other federal agencies, including the Small Business Administration and the Department of Agriculture, can also address these issues by studying the benefits of small business to competition and the role of independent grocers and farmers and ranchers in ensuring broad access to healthy foods.
Click here to read the white paper.
NGA is the national trade association representing the retail and wholesale grocers that comprise the independent sector of the food distribution industry. An independent retailer is a privately owned or controlled food retail company operating a variety of formats. The independent grocery sector is accountable for close to one percent of the nation’s overall economy and is responsible for generating $131 billion in sales, 944,000 jobs, $30 billion in wages and $27 billion in taxes. NGA members include retail and wholesale grocers, state grocers associations, as well as manufacturers and service suppliers. For more information about NGA, visit www.nationalgrocers.org.