Small business coalition urges FTC to enforce antitrust law
Independent grocers, pharmacies, restaurants, convenience stores and farmers launched a coalition Thursday urging the Federal Trade Commission (FTC) to enforce antitrust laws on dominant firms such as Walmart and Amazon.
The Main Street Competition Coalition is warning that the largest retailers and suppliers are abusing anti-competitive tactics that could leave small businesses without access to markets or key goods and services as the nation’s supply chain crunch worsens.
“As a result of unprecedented levels of concentration, small and medium-sized businesses are increasingly subject to discriminatory terms and conditions, including less favorable pricing and price terms, less favorable supply, less favorable retail packaging, and sometimes an inability to access products in short supply that are available to their competitors,” coalition members wrote in a letter to FTC officials first shared with The Hill.
The coalition is pushing the FTC to enforce the Robinson-Patman Act, a rarely used 85-year-old antitrust law designed to protect small and independent businesses from price discrimination.
“Robinson-Patman hasn’t been enforced in more than 20 years, and as a result we’ve seen behavior in markets that favor the largest players and harm the smallest grocery stores and wholesalers,” said Chris Jones, senior vice president of government affairs and counsel at the National Grocers Association.
The independent grocers’ group says that dominant retailers use their leverage to secure lower prices and first dibs on suppliers’ goods, as well as exclusive products that aren’t available to smaller competitors.
Amid the pandemic, independent grocery stores — most recently Arizona-based chain Bashas’ — have been forced to sell to larger competitors in order to stock their shelves.
“What we’ve seen since the onset of the pandemic and the supply chain crunch is that the larger players are able to use their market power to secure priority delivery of products that are in short supply, which means the smaller competitors get shorted,” Jones said.
Lawmakers and regulators have most closely scrutinized consolidation in the tech sector, where only a small handful of powerful companies wield massive power. But the coalition argues that mergers and acquisitions in various other industries are just as dangerous.
“We are hearing more and more concerns from organic farmers about consolidation in our supply chains,” said Patty Lovera, policy director at the Organic Farmers Association. “This has been an epidemic in traditional agriculture for a long time, but it’s now happening in the organic space as well.”
Independent farmers say that when retail becomes more concentrated, they lose access to customers. After Amazon purchased Whole Foods in 2017, the company leaned less on local independent farms and more on larger systems that could deliver huge amounts of product.
“It’s really, really hard to be a big enough farm to sell to a big-box store,” Lovera said. “It’s much more conceivable that you could sell to an independent grocer in your area. That opportunity is diminishing in a lot of regions.”
The National Community Pharmacists says that large pharmacy benefit managers like CVS Caremark, a subsidiary of the pharmacy chain, are squeezing small competitors. Independent pharmacies often have no choice but to accept contracts that reimburse them for less than the price it costs to purchase drugs and require them to send patients to large chains to get refills.
“It really creates an uneven playing field for all of those involved,” said Matt Seiler, the group’s general counsel. “How do you compete against a CVS Pharmacy that is going to be better compensated for the same medication than you are as an independent pharmacy?”
Like independent grocery stores, a majority of smaller pharmacies represent underserved communities in rural areas and inner cities. When independent stores begin to struggle, they are often replaced by one large chain, saddling consumers with little choice and potentially higher prices, members of the coalition argued.
The coalition is urging the FTC to use its powers under the Robinson-Patman Act to bring enforcement actions against dominant firms employing what they see as anticompetitive tactics. It also wants the agency to enact studies on economic discrimination and investigate whether agreements between large retailers and suppliers hurt smaller competitors.
It’s a tall ask, as the FTC hasn’t brought a case under the law in more than two decades and hasn’t seriously enforced it since the 1970s. In 2007, a bipartisan commission authorized by Congress recommended that lawmakers repeal the law in its entirety, arguing that it prevents retailers from offering lower prices to consumers.
Dominant retailers such as Amazon have made similar arguments against antitrust enforcement, pointing to the benefits of their low prices to consumers that are made possible by their expansive operations.
Still, advocates are hopeful that if any FTC chairperson will revive the Robinson-Patman Act, it’s Lina Khan, a Biden appointee and fierce critic of corporate consolidation who took the reins at the commission in June.
Khan, a Columbia Law School professor, has previously written positively about the law. In July, Khan voted with Democratic commissioners to rescind a 2015 policy statement that limited the FTC’s power to enforce a ban on “unfair methods of competition,” a move that some lawyers said could set the stage for renewed action on price discrimination.
The coalition is also emboldened by President Biden’s July executive order aiming to crack down on anticompetitive practices that specifically noted that corporate consolidation has left consumers in underserved communities with little to no options.
Sen. Amy Klobuchar (D-Minn.) and Rep. David Cicilline (D-R.I.), lawmakers leading antitrust legislation, have also shown support for antitrust proposals offered by members of the coalition. While some independent business groups had been pushing Congress to address the issue in an antitrust bill, they now see Khan’s FTC as their best bet for swift action.
“If you start to investigate companies that take advantage of the lack of antitrust enforcement, that would send a signal to the marketplace that could potentially stop this kind of behavior,” Jones said.
The National Association of Convenience Stores, the American Beverage Licensees, the National Association of Truck Stop Operators, Energy Marketers of America and Protect Our Restaurants also signed on to the coalition letter to FTC officials Thursday.
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