Grocery Greedflation Is on the November Ballot

Kroger-Albertson Merger An Echo of Past Disasters

The impact of inflation on grocery prices is a hot topic for the general election. As the person who does the shopping for my household, I can attest to what feels like an outrageous increase in my weekly grocery bill. Today I look at why this is and how can it be fixed.

Kroger and Albertsons, who dominate the local market with a constellation of brands (Ralphs, Vons, Safeway, etc) are just a judicial decision (early October) away from what amounts to a $25 billion buyout/merger. And if you think things are bad now, just wait a few months.

The Federal Trade Commission is suing to block the deal, arguing that less competition will lead to higher prices. Au contraire, says Kroger, we’re going to put $1 billion into lowering prices if this buyout goes through.

Perhaps they’ve confused that number with the identical amount the company is spending on fighting the FTC. This transaction is needed, they maintain, to successfully compete with Amazon and Walmart.

The devil lies in the details of the deal which has implications all the way up and down the supermarket food chain.  

The we-can-prove-it-won’t be-a-monopoly wrapping on this joining would be the divestiture of 579 stores (of various brand names) to C&S, a wholesaler owning 23 Grand Union locations and franchisor for the Piggly Wiggly brand. That company is woefully unprepared for such an acquisition. 

Errol Schweizer, writing at GroceryNerd, visited Kroger in Atlanta, followed by trips to three Piggly Wiggly locations, which he described as “easily the worst operated grocery stores I have ever been in.” 

• These were all stores in working and middle class Black neighborhoods. But the folks near the Kroger had a best in class, full service grocery store just minutes away from other high quality, well priced competitors such as Lidl, Aldi and Walmart. Even an employee-owned Publix nearby too, although their prices were a tad high.

• But the folks who lived near this Piggly Wiggly? Taken advantage of. Hoodwinked. Bamboozled, to paraphrase Malcom X. These stores were an insult to good taste. They were an offense to the community who depended on them. There were a handful of locals shopping in each of these stores when I walked through. No one looked happy to be there. It was just nearby, just there. Maybe a step up from the dollar store across the strip mall. At least with a semblance of produce. But hardly a pleasure. Separate and unequal.

Those of us who remember the Albertsons-Safeway merger, which drove divestee Haggen into bankruptcy, have a clue of what’s to come. In the San Diego area, only the Spring Valley Albertson’s is listed for divestiture. In California, 63 stores are to be spun off.  For those who don’t remember:

• Safeway/Albertsons (2015): 146 stores divested to Haggen. Haggen filed for bankruptcy in 2016 and sold 29 stores back to Albertsons.

• Bi-Lo/Winn Dixie/Lone Star Funds (2007): two bankruptcies, 2010 and 2018.

Not included in this Kroger-Albertsons deal is any of the infrastructure supermarkets need to stay in business: no warehouses, private labels, or producer connections. Oh, C&S has no experience in operating pharmacies, a primary source of customer loyalty for supermarkets. This transaction, if completed, won’t be a good thing for communities, customers, or employees.

Locals of the United Food and Commercial Workers are opposed to this deal, holding that nothing good can come from a merger. They’ve held press conferences, store actions, webinars and interviews to get their concerns to the public through more than a thousand media stories. 

Grocery Prices As a Campaign Issue

Republican candidates for the White House have taken to showing up in grocery stores this week, awkwardly trying to make the point that they care about the burden of high food prices. 

Big Don handed a hundred dollar bill to a store patron at checkout, which Fox news portrayed as him handing out cash to customers hurt by inflation. 

• (The customer told reporters she plans to frame the bill, so I guess she wasn’t hurting.)

Lil’ Vance posed for cameras holding a flat of eggs (2.5 dozen) with cartons in the background clearly priced at $2.99, blaming Vice President Harris for $4 per dozen prices. 

• (Recurrent waves of avian flu have resulted in the deaths of 100 million chickens over the past two years, causing a shortage and the higher prices that go with it.) 

I think they failed to make their point, but succeeded in providing raw material for Saturday Night Live skits. If their handlers learned anything from the experience it should be that the bros need to stay in their bubble.

Perhaps one of these candidates could have wandered over to the breakfast cereal aisle, and noted the 20% increase in the price of Cheerios, which General Mills is blaming on inflation.

• General Mills just paid a $300 million dividend to investors, bought back $150 million of its stock, is paying its CEO $16 million, and making an annual profit of $2.1 billion. But, yeah, inflation.

But wait! There’s more! Oligopoly alert!

• The market for breakfast cereals is dominated by a few large corporations, such as Kellogg's, General Mills, and Post. These corporations produce a high volume of breakfast cereals and take advantage of economies of scale to produce them efficiently. This allows them to sell their products at a price that smaller firms cannot, because the smaller firms would not make a profit.

Zoom out at the entire universe of food purveyors/manufacturers and the real cause of inflation is revealed. From the Guardian:

• A joint investigation by the Guardian and Food and Water Watch found that consumer choice is largely an illusion – despite supermarket shelves and fridges brimming with different brands.

• In fact, a few powerful transnational companies dominate every link of the food supply chain: from seeds and fertilizers to slaughterhouses and supermarkets to cereals and beers.

• The size, power and profits of these mega companies have expanded thanks to political lobbying and weak regulation which enabled a wave of unchecked mergers and acquisitions. This matters because the size and influence of these mega-companies enables them to largely dictate what America’s 2 million farmers grow and how much they are paid, as well as what consumers eat and how much our groceries cost.

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Democrat Kamala Harris has made going after price gouging at the checkout counter a talking point in her campaign’s effort to win over voters who think the GOP would be better for the economy. 

There’s a bad hangover in this country from the COVID trauma that manifests itself as an ongoing feeling of dread, coupled with observable evidence of  monopolistic/oligopolistic-caused degradations of living standards. There’s a lot of magic thinking going on as to how things might get better, driven by people who don’t see or acknowledge this market’s reality.

The solutions to these problems aren’t quick and easy. Ronald Reagan’s economic prescriptions have had four-plus decades to make the rich richer and erode public trust in the viability of government to problem-solve. 

To their credit, the Biden administration has shifted emphasis in federal regulatory interventions to benefit the middle class. 

Cory Doctorow, amid explaining the economists who are bribed to testify at merger hearings:

• After 40 years of rampant corporate crime, there's a new sheriff in town: Jonathan Kanter was appointed by Biden to run the DOJ's Antitrust Division, and he's overseen *170* "significant antitrust actions" in the past 2.5 years, culminating in a court case where Google was ruled to be an illegal monopolist.

• Kanter's work is both extraordinary *and* par for the course. As Kanter said in a recent keynote for the Fordham Law Competition Law Institute’s 51st Annual Conference on International Antitrust Law and Policy, we're witnessing an epochal, global resurgence of antitrust.

• Kanter's incredible enforcement track record isn't just part of a national trend - his colleagues in the FTC, CFPB and other agencies have also been pursuing an antitrust agenda not seen in generations - but also a worldwide trend. Antitrust enforcers in Canada, the UK, the EU, South Korea, Australia, Japan and even China are all taking aim at smashing corporate monopolies. Not only are they racking up impressive victories against these giant corporations, they're stealing the companies' swagger. After all, the point of enforcement isn't just to punish wrongdoing, but also to deter wrongdoing by others.

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Republicans everywhere have heard the clarion call to save grifting and greed as an economic strategy and are filing lawsuits and shopping for judges left and right trying to save the one percent from deprivation of wealth, embarrassing legal judgements and bad press.

Kroger/Albertsons are behind a lawsuit headed to the Supreme Court which would dismantle the country’s antitrust enforcement. Both companies' disrespect for the rule of law has included deleting emails suitable as evidence in their antitrust trial.

• Earlier this year, Kroger defended the proposed merger by highlighting its relationship with a blueberry grower that The Lever found had hired a labor contractor accused of operating one of the largest trafficking rings in U.S. history.

A major point in Project 2025’s playbook for a second Trump term concerns shifting government focus away from anti-trust –unless there’s a political motivation. (Like Trump accusing the ABC Broadcast network of bias in their handling of the September debate.)

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CBS News program 60 Minutes recently featured an interview with FTC Chair Lina Khan:

• In the interim, Khan went on 60 Minutes and was shown embarking on what she described as a grocery prices listening tour. One shopper shown on the popular news magazine program described getting “sticker shock” on each trip to the supermarket because “groceries are so expensive now”.

• Stahl, in her conversation with Khan, cited economists’ conclusions that those high prices stemmed from supply chain problems caused by the Covid-19 pandemic as well as Russia’s invasion of Ukraine rather than monopolies.

• Khan said: “There’s no doubt that the pandemic and the war led prices to soar.” But, she added, “what’s been interesting is that even as some of those supply chain pressures have eased, prices have not come down concurrently as much”.

Going to the source of our national greedflation, namely the corporate consolidation of the past few decades, should be an antidote. Whether or not antitrust continues to advocate for consumers is one of those important things on the ballot come November.

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Wednesday News to Peruse

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It’s Long Past Time to Abolish the Filibuster by Ben Burgis at Jacobin

• As historian Matt Karp has pointed out, the antislavery movement that ultimately elected Abraham Lincoln was a popular mobilization that saw “the slave power” as a threat to all free people. In words of the great abolitionist politician, William Seward, the planter class was “one one-hundredth” of the US population, yet expected the rest of the country to bend to its will.

• Similarly, the Civil Rights Movement, with its marches for “jobs and freedom,” targeted a system of segregation that was bound up with economic despotism. The segregationists who spent decades blocking any legislation that would give black people equal human and legal rights — right up to their unsuccessful filibuster of the Civil Rights Act of 1964 — correctly understood that “integrationism” went hand in hand with trade unionism and an attack on Southern oligarchs.

• It’s not a coincidence that the defenders of deeply antidemocratic causes like slavery and segregation, having abandoned hope of convincing even a majority of the Senate, felt the need to take refuge in pure obstruction.

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The Fleeting Euphoria of Intelligence Ops by Jeff Stein at SpyTalk

• “What I’m watching now in Lebanon is hauntingly similar to what I saw in 1982 as a young reporter in Beirut covering the Israeli invasion that year,” veteran national security journalist David Ignatius grimly warned Monday night in The Washington Post.  “The problem, then as now, was overreach. Israel wanted to go to the root, to crush its chief adversary at the time, the Palestine Liberation Organization. No more halfway measures; use every weapon in the arsenal.” 

• In went the IDF. Now it’s itching to go in once again and “finish” the job, driven by the unacceptable Hezbollah attacks on its northern towns. It looks like a suicide pact.

• “Israel had dazzling military and intelligence dominance back then, just as it does now,” Ignatius continued. “Its troops reached the suburbs of Beirut in days. But then what? Israel’s overwhelming power masked a strategic weakness: Its leaders didn’t have a good answer to the question, ‘Tell me how this ends.’”

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 “There are 5 executions set over a week’s span in the US. That’s the most in decades,” by AP’s Sean Murphy

•  Death row inmates in five states are scheduled to be put to death in the span of one week, an unusually high number of executions that defies a yearslong trend of decline in both the use and support of the death penalty in the U.S.

• The first execution was carried out on Friday in South Carolina. Two more death row inmates, in Missouri and Texas, were pronounced dead Tuesday evening following executions. If the two remaining scheduled executions, in Alabama and Oklahoma, are carried out this week, it will mark the first time in more than 20 years — since July 2003 — that five were held in seven days, according to the nonprofit Death Penalty Information Center, which takes no position on capital punishment but has criticized the way states carry out executions.

• If this week’s remaining executions are completed, the United States will have reached 1,600 executions since the death penalty was reinstated by the U.S. Supreme Court in 1976, said Robin Maher, the center’s executive director.