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Welcome to You’re Probably Getting Screwed, a weekly newsletter and video series from J.D. Scholten and Justin Stofferahn about the Second Gilded Age and the ways economic concentration is putting politics and profits over working people.
The trip to your local grocery store has gotten pretty painful over the last couple of years with grocery prices rising nearly 25% since prior to the pandemic.
While working families are feeling the pinch of these high prices, farmers have seen their share of the food dollar fall [ [link removed] ] to record lows. The monopolies in the middle meanwhile are doing great! Take for example Cargill which is the largest private company in the world and is a vertically integrated behemoth that dominates our food system. Prior to 2020 the Cargill family had eight billionaire heirs, but after massive profits (including a record $6.68 billion in 2022) in recent years that tally has increased to 12 [ [link removed] ].
In addition to middlemen like Cargill, America’s grocery landscape has also become highly consolidated. The US has one-third fewer grocery stores [ [link removed] ] than it did 25 years ago while Walmart has grown to control nearly a third of the grocery market nationwide. Zooming in locally, the proposed merger between Kroger and Albertsons combined with Walmart would give the two companies control of more than 70% of the grocery market in 167 different cities [ [link removed] ] across the country. Kroger has already admitted on earnings calls it has the power to easily hike prices on consumers and a mega-merger would give it even more.
The Federal Trade Commission has moved to block the Kroger-Albertsons merger, but now FTC Chair Lina Khan is pushing to do more to reign in grocery consolidation and anticompetitive conduct. Last week at the first meeting of President Biden’s Strike Force on Unfair and Illegal Pricing [ [link removed] ], Khan announced she will ask the FTC to launch an inquiry into high grocery prices.
While a study might not sound meaningful, for the FTC an inquiry like this is an important first step for the agency before it takes enforcement action. Probing the tactics grocery chains are using to hike prices on Americans will help determine the type of response the FTC should pursue. That could include taking action under the Robinson Patman Act [ [link removed] ] which was passed by Congress to create a level playing field for retailers by ensuring that both small and large firms pay the same price for comparable products. The FTC could also investigate the use of slotting fees [ [link removed] ] that producers and suppliers pay retailers to secure shelf space for their products.
Investigations themselves can also be a powerful tool if monopolists know that enforcers are committed to cracking down on illegal behavior. During the New Deal, Assistant Attorney General for Antitrust Thurman Arnold acted aggressively to tame the monopolies of that era. His aggressiveness helped tame inflation as the act of launching an investigation into an industry caused prices to drop 18-33% [ [link removed] ] which helped lift the country out of recession and reduce income inequality.
The Biden Administration is following a similar playbook, which the strike force meeting helped underscore. In addition to the FTC’s actions to root out anticompetitive tactics by grocery chains, agencies like the Department of Justice and United States Department of Agriculture discussed steps they are taking to address monopoly power in other parts of the food system. With four or fewer companies controlling at least 50% of the market for most categories [ [link removed] ] of groceries, a comprehensive approach will be needed to reign in profiteering. Vice President Kamala Harris said in a rally yesterday that reigning in illegal price-fixing will be a day one priority of a Harris-Walz Administration.
States can also play a role. Senate Democrats in Connecticut called on the state’s attorney general [ [link removed] ] to collect pricing information from major chains in the state. California has a price gouging law for the oil industry that requires important disclosures to the attorney general’s office [ [link removed] ] that could be replicated for grocery. Minnesota has allocated funding [ [link removed] ] to build more regional meat processing capacity to reduce reliance on the giant packers while Illinois has set aside funding [ [link removed] ] to start up new grocery stores in the state. Legislation in Pennsylvania would strengthen price-fixing prohibitions [ [link removed] ] and most state attorneys general have existing price-fixing statutes they can seek to enforce.
Plenty of policy options exist, we just need to push leaders to use them otherwise our wallets will continued to get screwed by food monopolists.
YOU’RE PROBABLY (ALSO) GETTING SCREWED BY:
Broligarchs
Brooke Harrington, a sociologist who studies the ultrarich, wrote a piece for The Atlantic about the ultrarich’s desire for power without accountability [ [link removed] ].
Elon
Elon Musk told advertisers to “Go F— Yourself [ [link removed] ].” The advertisers listened and now Elon is suing them over alleged ‘massive advertiser boycott’ after Twitter takeover [ [link removed] ].
Price Gouging
There’s no doubt that American consumers have faced price-gouging. Bilal Baydoun, the director of policy and research at Groundwork Collaborative, wrote about ways the government can protect the public from price-gouging and information advantages over the consumer [ [link removed] ] in the American Prospect.
John Deere
As Farm Action reports “In a 25-year period, John Deere consolidated more than 50% of its dealerships. This move eliminated competition and has made it so that farmers may have to travel hundreds of miles to repair their equipment. Meanwhile, John Deere is seeing booming returns.”
This is from their ag concentration data [ [link removed] ].
SOME GOOD NEWS
DOJ Wins Lawsuit Over Google
Judge Mehta wrote “Google is a monopolist, and it has acted as one to maintain its monopoly. [ [link removed] ]”
For an in depth analysis, check out Matt Stoller’s BIG post on the decision [ [link removed] ].
BEFORE YOU GO
Before you go, I need two things from you: 1) if you like something, please share it on social media or the next time you have coffee with a friend. 2) Ideas, if you have any ideas for future newsletter content please comment below. Thank you.
Break ‘Em Up, 
Justin Stofferahn
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