Emboldened FTC boosts Biden’s efforts to tackle inflation

The independent federal agency has become one of the most trusted enforcers of President Biden’s efforts to fight inflation, at a time when the White House has few weapons of its own to quickly bring down stubbornly high prices for consumer staples like groceries.

The Federal Trade Commission filed a lawsuit Monday, joined by several state attorneys general, to challenge the merger of supermarket giants Kroger and Albertsons. The the agency’s explanation in many ways it echoed Mr. Biden’s renewed attempts to blame corporate greed for rising prices and shrinking grocery store portions.

“If allowed, this merger would significantly lessen competition, which would likely result in Americans paying millions of dollars more for food and other basic household necessities,” agency officials wrote in the legal complaint. Since food prices have risen significantly in recent years, they add, “the stakes for Americans are extremely high.”

This is true for consumers, and it is also true for the president. More Americans disapprove of his handling of the economy than approve of it. Consumer confidence, while improving in recent months, remains relatively weak for an economy with low unemployment and solid growth like the one presided over by Mr. Biden.

An internal analysis by White House economists suggests that no factor affects consumer sentiment more than grocery prices. Those costs jumped in 2022 and have not fallen, although their growth rate has slowed.

White House officials acknowledge that Mr. Biden can do little more unilaterally to lower grocery prices and even less chance of legislative help from Congress. That’s why Mr. Biden has resorted to the bully pulpit, calling on stores to cut prices and chastising snack makers for engaging in “downsizing” — reducing portions while raising or maintaining prices.

And that’s why the FTC’s action on Monday was so important to the president, at least politically. Administration officials suggest it shows the federal government has taken a major swing to prevent food prices from rising further.

The White House’s statement on Monday’s FTC complaint included an entire paragraph about the administration’s efforts to lower grocery prices. Officials declined to comment directly on the lawsuit. But Jon Donenberg, deputy director of the National Economic Council and director of policy for the Competition Council, said in a statement that “when large corporations are not controlled by healthy competition, they too often fail to pass savings on to consumers and exploit their own workers. ”

Kroger officials dispute the FTC’s reasoning. They say their previous acquisitions have brought corporate efficiencies that have resulted in lower prices. “Kroger has a proven track record of lowering prices so more customers benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choices for American consumers,” the company said in a statement Monday.

Mr. Biden and the FTC chairman, Lina Khan, greeted similar arguments about the merits of mergers with intense skepticism.

Early in his tenure, Mr. Biden appointed Ms. Khan, who steered the agency toward its most aggressive antitrust enforcement in decades. The president also provided the 2021 executive order, intended to promote competition in the economy, with directives for the FTC – including stricter scrutiny of certain types of mergers.

The agency reacted energetically. It has now taken action against about 40 mergers, including those of video game heavyweights, discount airlines, hospital chains and pharmaceutical companies. About half of those mergers have been abandoned, though the agency hasn’t always succeeded: A federal judge last year cleared the way for rival Microsoft’s acquisition of video game maker Activision Blizzard.

Those actions greatly delighted the school of progressive economists and economists who blame the increased concentration of companies for the increase in consumer prices and lower wages of workers.

Some new champions of aggressive antitrust enforcement, including some Republican senators, have called on the agency to go even further to crack down on big tech companies. A bipartisan group of lawmakers pushed to block it newly announced merger between credit card titans Capital One and Discover.

When Mr. When Biden issued his bidding order, less than six months into his presidency, he focused it on workers. When companies get too big, he argued, they gain the power to pay low.

Since then, Mr. Biden has seen his economic message erode the fastest rate hike America has experienced in four decades. By the end of his first year, Biden’s aides began to frame his competition efforts in the language of taming inflation.

FTC officials sided with the price argument. “Fair competition and checks on corporate monopoly power are driving down the cost of everything from prescription drugs and cars to everyday staples like milk, bread and eggs,” Douglas Farrar, a spokesman for the agency, said Monday.

Former Biden officials say the agency is now helping advance the president’s inflation efforts.

“Investigating, developing and litigating these cases takes time,” said Bharat Ramamurti, Mr. Biden’s former economic aide and the architect of his bid.

“I like to think this was all part of the plan.”

Leave a Comment