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Is there a Grocery Gold Rush? US Regulators Urge Policymakers to Investigate Supermarket Profits

In the aftermath of FTC suing to block the merger between a large grocery chain Kroger’s (KR.N) and a smaller grocery chain rival, Albertson’s, the US regulators continue to urge Congress to look into grocery profits as the effect of such deal could become detrimental due to price hikes for millions of American consumers.

As a staunch guardian of the American citizen’s rights, the FTC Chair Lina Khan called attention to the report, recognizing that big box and chain stores would put small independent grocers at a disadvantage as they secure limited resources. She said that this would harm communities who rely heavily on these small independent retailers as the large grocery chains strengthens. Consumers would recall that during the pandemic, consumers faced dramatic shortages of supplies such as toilet paper, cleaning products and pet supplies as manufacturers prioritized these big grocery chains.

She added, “If we end up finding that these types of practices violated any of the antitrust laws including the (Robinson) Patman act, I’ll be very interested in making sure we take swift action.” The Robinson Patman Act of 1936 is a US a federal law intended to prevent price discrimination.

According to Coresight Research data reports Reuters, the big grocery chains such as Kroger and Walmart have shown an increase in the US grocery market shares from 2018 to 2022.

It is reported that President Joe Biden has taken aim at grocery stores this year, as he knows that grocery prices are still too high for hardworking families.

According to Reuters in its Thursday’s report, the FTC found that a measure of annual profits for food and beverage retailers “rose substantially and remains quite elevated.” The commission said revenues for grocery retailers were 6% over total costs in 2021, and 7% in the first nine months of 2023, higher than a peak of 5.6% in 2015. The FTC as a guardian against unfair business practices, reasons that the rising prices seen at grocery stores moves up in step as retailers’ costs increases thereby contributing to the increasing gains, justifying its call for further investigation by Congress. Further, the FTC added that the report does not make claims of illegality. “We’re shedding light on what we’re seeing in the market, which has broader relevance to policymakers beyond law enforcement.”

The increasing prices and diminishing supplies in local groceries are significant issues that are close to every hardworking American’s heart. It is indeed a relief to know that the government, especially President Joe Biden and the FTC remain vigilant and proactive in safeguarding their welfare.

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