The National Grocers Association (NGA) supports the Department of Justice and Federal Trade Commission’s move to rewrite guidelines to curb mergers that enhance anti-competitive buyer power but asks that the final guidelines go further.
According to the NGA, the rules should address the theories of harm that occur when enhanced buyer power is transformed into economic discrimination.
In responding to Justice Department and FTC requests for comments on the July 19 draft update, the NGA notes that the biggest national grocery chains wield enormous power over food product suppliers, making it impossible for brands to refuse their demands.
As a result, small- and mid-sized businesses end up paying more and getting fewer products because the dominant players are allowed to abuse their advantage in the marketplace and gain the upper hand over rivals.
“After decades of unchecked grocery consolidation, large national chains like Kroger and Albertsons are merging, arguing they need the additional buyer power to remain successful against the big box and e-commerce giants,” said Chris Jones, SVP of government relations and counsel.
“The draft updated merger guidelines acknowledge the critical issue of buyer-side market power and its potential to undermine competition. In our comments to antitrust enforcers, NGA is reinforcing how constraints on buyer power will protect grocery competition and consumers.”
The NGA is calling on the Justice Department and FTC to balance the economic advantages of mergers with the anticompetitive dangers to the marketplace when dominant firms combine to strengthen their buyer-side market power.
It is NGA’s position that the final guidelines should also directly tackle the anti-competitive effects that mergers can have on buyers’ competitors.
In today’s grocery industry, dominated by a few national chains, buyer-side market power has been used to dictate terms and conditions to suppliers, thereby discriminating against independent grocers and their customers.
Read more association news from The Shelby Report.