Corporate Consolidation, Lack of Competition Linked to Rising Grocery Prices

Eric Galatas | Colorado News Connection

As a federal judge considers a lawsuit aiming to block a proposed $25 billion merger between Kroger and Albertsons, a new report detailed how skyrocketing grocery store prices are linked to record profits and a lack of competition between a shrinking number of corporations dominating the nation’s food system.

Rakeen Mabud, chief economist for the Groundwork Collaborative, the Washington, D.C.-based think tank behind the report, said fewer competitors in the industry can lead to price gouging.

“There are only a few companies that control big chunks of entire supply chains that get food to grocery stores,” Mabud pointed out. “That consolidation, the fact that there are only a few companies that really control the supply chain, facilitates price gouging and profiteering.”

The report recommended expanding laws banning price gouging nationwide. Statutes are already at work in 40 states including Louisiana, Tennessee and Texas. It also called for limiting mergers reducing competition. Grocers have blamed rising prices on the pandemic and other supply-chain disruptions. Kroger has also argued the proposed merger would help bring down prices, benefit workers and allow them to compete with companies such as Amazon and Walmart.

Mabud pointed to comments made by Kroger and other supermarket executives to shareholders admitting inflation was good for boosting profits. She added cargo ships, railroads and trucks are all owned by just a handful of firms.

“Our supply chain was built to maximize profits for giant corporations that control it,” Mabud contended. “It was not built to maximize efficient delivery of goods.”

If approved, the merger would create a virtual monopoly in places like Gunnison, whose 6,000 residents would have to travel 65 miles to find a grocery store not owned by Kroger. Mabud noted health care, housing and education costs have also been on the rise for decades.

“The conversation around grocery prices is really part and parcel of a broader set of power dynamics that we need to disrupt,” Mabud argued. “And that problem is that big corporations have way too much power, and everyday people have too little.”