NGA Lauds FTC Report on Supply Chain Disruption

The National Grocers Association applauded the results of the Federal Trade Commission’s recent study on the causes behind supply chain disruptions in the grocery sector and anticompetitive practices that have negatively impacted U.S. consumers, Thursday.

“As the pandemic illustrated, a major shock to the supply chain can have cascading effects on consumers, including the prices they pay for groceries,” said FTC Chair Lina M. Khan in a statement. “The FTC’s report examining U.S. grocery supply chains finds that dominant firms used this moment to come out ahead at the expense of their competitors and the communities they serve.”

The supply chain disruptions disproportionately affected smaller grocery retailers and businesses, making it more difficult for them to obtain products compared to larger firms, suggests the report's findings.

“This study confirms what independent grocers and their customers experience firsthand: dominant national chains or so-called ‘power buyers’ are abusing their immense economic power to the detriment of competition and American consumers. In communities nationwide, independent grocers strive to compete on price, quality, service, convenience, and product range. However, decades of lax antitrust enforcement enable grocery power buyers to coercively squeeze suppliers to comply with their trade demands, unfairly disadvantaging smaller competitors,” said NGA President and CEO Greg Ferrara in a statement. “The result–confirmed by the FTC’s study–is a less efficient consumer supply chain where buyer power dictates priority distribution of high-demand products and special pricing arrangements.”

In 2021, the FTC investigated nine major retailers, including Walmart, Amazon, and Kroger, under the authority of Section 6(b) of the FTC Act to determine whether anticompetitive practices were causing disruptions that burdened consumers and strained the U.S. economy.

The report concluded “limited competition can lead to bottlenecks that increase the impact of supply chain shocks on different businesses and consumers while simultaneously creating opportunities for further entrenchment…As supply chains normalize, some of these symptoms may subside, but the underlying issues remain.”

Independent grocers have been arguing for years that the nation’s biggest chains are getting bigger and more powerful because they are using their size to pressure suppliers, and taking advantage of arbitrary market segment loopholes to negotiate special pricing and package sizing of consumer goods that are denied to smaller competitors, said the NGA.