An Emboldened F.T.C. Bolsters Biden’s Efforts to Address Inflation
An independent federal agency has become one of the most reliable executors of President Biden’s attempts to fight inflation, at a time when the White House has few weapons of its own to quickly bring down stubbornly high prices of consumer staples like groceries.
The Federal Trade Commission filed a lawsuit on Monday, joined by several state attorneys general, to challenge a merger between the supermarket giants Kroger and Albertsons. The agency’s rationale in many ways echoed Mr. Biden’s renewed attempts to blame corporate greed for rising prices and shrinking portions in grocery aisles.
“If allowed, this merger would substantially lessen competition, likely resulting in Americans paying millions of dollars more for food and other essential household goods,” agency officials wrote in a legal complaint. Because grocery prices have risen significantly in recent years, they added, “the stakes for Americans are exceptionally high.”
That is true for consumers, and it is true for the president. More Americans disapprove of his handling of the economy than approve of it. Consumer confidence, while improved in recent months, remains relatively weak for an economy with low unemployment and solid growth like the one Mr. Biden is presiding over.
An internal analysis by White House economists suggests that no single factor is weighing more on consumer sentiment than grocery prices. Those costs soared in 2022 and have not fallen, though their rate of increase has slowed.
White House officials concede that there is little more Mr. Biden can do unilaterally to reduce grocery prices and even less chance of legislative help from Congress. That is why Mr. Biden has resorted to the bully pulpit, calling on stores to reduce prices and chastising snack makers for engaging in “shrinkflation” — reducing portions while raising or maintaining prices.
That is also why the F.T.C.’s action on Monday was so important for the president, at least politically. Administration officials suggest it demonstrates the federal government has taken a big swing to keep food prices from surging further.
A White House statement on the F.T.C. complaint on Monday included an entire paragraph about administrative efforts to bring down grocery prices. Officials declined to comment directly on the lawsuit. But Jon Donenberg, deputy director of the National Economic Council and director for competition council policy, said in the statement that “when large corporations are not checked by healthy competition, they too often do not pass cost savings on to consumers and exploit their workers.”
Kroger officials dispute the F.T.C. rationale. They say their past acquisitions have yielded corporate efficiencies that have translated to lower prices. “Kroger has a proven track record of lowering prices so more customers benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choices for America’s consumers,” the company said in a statement on Monday.
Mr. Biden and the F.T.C. chair, Lina Khan, have greeted similar arguments about the benefits of corporate mergers with intense skepticism.
Early in his term, Mr. Biden appointed Ms. Khan, who has steered the agency to its most aggressive antitrust enforcement in decades. The president also stocked a 2021 executive order, meant to promote competition in the economy, with directives for the F.T.C. — including to more stringently scrutinize certain types of mergers.
The agency has responded vigorously. It has now taken action against about 40 mergers, including tie-ups of video game heavyweights, discount airlines, hospital chains and pharmaceutical companies. About half of those mergers have been abandoned, though the agency has not always succeeded: A federal judge cleared the way last year for the acquisition of the video game maker Activision Blizzard by its rival Microsoft.
Those actions have largely delighted a school of progressive economists and economists who blame increased corporate concentration for higher consumer prices and lower worker wages.
Some new champions of aggressive antitrust enforcement, including some Republican senators, have urged the agency to go even further, to break up big tech companies. A bipartisan set of lawmakers has pushed it to block the newly announced merger between the credit card titans Capital One and Discover.
When Mr. Biden issued his competition order, less than six months into his presidency, he centered it on workers. When companies get too big, he argued, they gain power to keep wages low.
Since then, Mr. Biden has seen his economic message consumed by the most rapid price increases America had experienced in four decades. By the end of his first year, Mr. Biden’s aides were beginning to frame his competition efforts in the language of taming inflation.
F.T.C. officials have leaned into the price argument. “Fair competition and a check on corporate monopoly power brings down the costs of everything from prescription drugs and automobiles to everyday grocery items like milk, bread and eggs,” Douglas Farrar, an agency spokesman, said on Monday.
Former Biden officials say the agency is now helping advance the president’s inflation efforts.
“Investigating, developing and litigating these cases takes time,” said Bharat Ramamurti, a former economic aide to Mr. Biden and an architect of his competition agenda.
“I like to think that this was all part of the plan.”
