Large grocery retailers have been accused of taking advantage of supply chain disruptions to edge out smaller competitors and boost their profits during the pandemic, according to a report released by the Federal Trade Commission (F.T.C.) on Thursday.
The report revealed that some large firms manipulated the effects of supply chain snarls by pressuring suppliers to prioritize them over their rivals. Despite claims that higher grocery prices were a result of rising costs, the report argued that some companies used the opportunity to further increase prices and maintain elevated profits even as supply chain pressures eased.
The F.T.C.’s actions against large grocery retailers have supported the Biden administration’s efforts to address rising prices. President Biden has criticized grocery chains for overcharging consumers and earning excessive profits, particularly during the pandemic. The report highlighted that small grocery retailers faced more challenges in obtaining products compared to larger firms during the height of the pandemic.
F.T.C. Chair Lina Khan stated, “The F.T.C.’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 report also shed light on how large retailers pressured suppliers to gain access to scarce products, giving them a competitive advantage over smaller rivals. Despite facing some limitations in imposing penalties on suppliers, retailers were able to boost their stock of products and increase their profits.
The report’s findings suggest that consumers are still feeling the impact of the pandemic’s price hikes, as retailers continue to enjoy elevated profits. The F.T.C. called for further investigation into the industry’s profit levels and urged policymakers to take action.
The disruptions in the food supply chain, exacerbated by the pandemic, led to major product shortages and higher food costs. While food price gains have started to cool in recent months, companies are planning smaller price increases this year as some consumers push back and reduce their spending.
Overall, the report highlights the challenges faced by smaller grocery retailers and the need for greater scrutiny of the practices of large firms in the industry.
