An 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 lower the stubbornly high prices of consumer staples like groceries.
The Federal Trade Commission filed suit Monday, along with several state attorneys general, to challenge the merger between supermarket giants Kroger and Albertsons. The agency’s reasoning echoed in many ways Mr. Biden’s renewed efforts to blame corporate greed for rising prices and shrinking portions in grocery aisles.
“If permitted, this merger would significantly reduce competition, causing Americans to pay millions of dollars more for food and other household essentials,” agency officials wrote in a legal complaint. Because food prices have risen significantly in recent years, they added, “the stakes for Americans are extremely high.”
This is true for consumers, it is true for the president. More Americans disapprove of his handling of the economy than approve of him. Consumer confidence, while improving in recent months, remains relatively weak for an economy with low unemployment and steady growth like the one Mr. Biden presides over.
An internal analysis by White House economists shows that no single factor weighs more heavily on consumer sentiment than grocery prices. These costs skyrocketed in 2022 and have not abated, although the rate of increase has slowed.
White House officials concede there is little more Mr. Biden can do unilaterally to lower food 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 “shrinkage” — cutting portions while raising or holding prices.
It’s also 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 pivoted to prevent food prices from rising further.
A White House statement on the FTC’s complaint Monday included an entire paragraph about the administration’s efforts to lower grocery prices. Officials declined to immediately comment on the lawsuit. But Jon Donenberg, deputy director of the National Economic Council and director of policy for the competition council, said in the statement that “when big companies are not controlled by healthy competition, they too often fail to pass on cost savings to consumers and take advantage of their workers. “
Kroger officials dispute the FTC’s reasoning. They say their past acquisitions have yielded corporate efficiencies that have translated into lower prices. “Kroger has a proven track record of lowering prices so more customers can benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choices for America’s consumers,” the company said in a statement Monday. .
Mr. Biden and FTC Chairman Lina Kahn greeted similar arguments about the benefits of corporate mergers with strong skepticism.
Early in his tenure, Mr. Biden appointed Ms. Kahn, who led the agency in its most aggressive antitrust enforcement in decades. The president also issued a 2021 executive order aimed at promoting competition in the economy with guidance for the FTC — including stricter scrutiny of certain types of mergers.
The agency responded forcefully. It has now taken action on about 40 mergers, including tie-ups 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 takeover of video game maker Activision Blizzard.
These actions have largely pleased a school of progressive economists and economists who blame increased corporate concentration for higher consumer prices and lower worker wages.
Some new advocates of aggressive antitrust enforcement, including some Republican senators, have urged the agency to go even further, to break up big tech companies. A bipartisan set of lawmakers pushed her to block the recently announced merger between credit card titans Capital One and Discover.
When Mr. Biden issued his campaign mandate, less than six months into his presidency, he focused it on workers. When companies get too big, he argued, they gain power to keep wages low.
Since then, Mr. Biden has seen his economic message consumed by the fastest price increases America has seen in four decades. By the end of his first year, Mr. Biden’s aides began framing his competitive efforts in the language of taming inflation.
FTC officials have leaned toward the price argument. “Fair competition and checks on corporate monopoly power lower the cost of everything from prescription drugs and cars to everyday groceries 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.
“It takes time to investigate, develop and adjudicate these cases,” said Bharat Ramurti, a former finance aide to Mr. Biden and an architect of his campaign agenda.
“I like to think this was all part of the plan.”
