The National Grocers Association has submitted comments to the Federal Trade Commission and the Department of Justice urging the scrutinization of what it says is harm to competition that results from enhancement of buyer-side market power.
In an effort to rein in what it calls “dominant food retail ‘power buyers’ that have amassed immense economic power as a result of increasing consolidation in the retail grocery sector,” NGA’s comments argue that merger transactions must be challenged when the combined firm gains the ability to demand preferential terms and conditions from suppliers in a way that disfavors rivals.
How are these practices impacting the produce industry specifically? The Packer reached out to NGA for comment.
“Produce advocates tell us some produce suppliers have been pressured into unreasonable contract terms by their largest customers,” said NGA.
“In addition to lax enforcement of the Robinson-Patman Act, independent grocers are put at a disadvantage because dominant retailers have been allowed to consolidate with little consideration over how these transactions increase anticompetitive buyer power,” Chris Jones, NGA’s senior vice president of government relations and counsel, said in a news release. “NGA appreciates the opportunity to weigh in with antitrust enforcers about the need for a fresh approach towards merger enforcement policy.”
The comments were submitted as part of the FTC and DOJ's process of seeking stakeholder input in revamping guidelines for merger enforcement, said NGA.
NGA also weighed in during the FTC and DOJ listening session on March 17 that focused on the food and agriculture sectors. NGA members Tom Charley, co-owner of Charley Family Shop N’ Save in Greensburg, Pa., and Anthony Pena, owner of City Supermarkets located in Norwalk, Conn., provided their personal stories about how consolidation in the food retail marketplace has harmed their ability to compete in a market dominated by mega-retailers.
NGA is a national trade association representing the retail and wholesale community grocers that comprise the independent sector of the food distribution industry. It defines an independent retailer as a privately owned or controlled food retail company operating a variety of formats.
The independent grocery sector is accountable for about 1.2% of the nation's overall economy and is responsible for generating more than $250 billion in sales, 1.1 million jobs, $39 billion in wages and $36 billion in taxes, according to NGA.