An emboldened FTC strengthens Biden’s efforts to tackle inflation

An independent federal agency has become one of the most trusted implementers of President Biden’s efforts to combat inflation, at a time when the White House has few weapons of its own to quickly bring down stubbornly high prices of consumer goods like groceries.

The Federal Trade Commission, along with several attorneys general, filed a lawsuit Monday challenging a merger between supermarket giants Kroger and Albertsons. The the agency’s reasoning in many ways reflected Mr. Biden’s renewed efforts to blame corporate greed for rising prices and shrinking portions on supermarket shelves.

“If allowed, this merger would significantly reduce 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, she added, “the stakes for Americans are exceptionally high.”

That goes for consumers, and it goes for the president, too. More Americans disapprove of his handling of the economy than approve. While consumer confidence has improved in recent months, it remains relatively weak for an economy with low unemployment and solid growth like Biden’s.

An internal analysis by White House economists shows that no factor weighs more on consumer confidence than grocery prices. These costs have increased dramatically in 2022 and have not decreased, although the rate of increase has slowed.

White House officials concede there is little more Biden can do unilaterally to lower grocery prices and that the likelihood of legislative help from Congress is even slimmer. That’s why Mr. Biden has resorted to the pulpit, calling on stores to cut prices and chastising snack makers for engaging in “shrinkflation” — reducing portions while raising or maintaining prices.

That’s also why the FTC’s action Monday was so important for the president, at least politically. Administration officials suggest this shows the federal government has taken a big step to prevent food prices from rising further.

A White House statement on the FTC’s complaint on Monday included an entire section on administrative efforts to drive down grocery prices. Officials declined to comment directly on the lawsuit. But Jon Donenberg, deputy director of the National Economic Council and director for policy at the Competition Council, said in the statement that “when large companies are not controlled by healthy competition, they too often fail to pass on the cost savings to consumers and exploit their employees. ”

Kroger officials dispute the FTC rationale. They say their past acquisitions have delivered business efficiencies that have translated into lower prices. “Kroger has a proven track record of lowering prices so that more customers can benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choices for American consumers,” the company said Monday in a statement.

Mr. Biden and FTC Chairman 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 toward its most aggressive antitrust enforcement in decades. The president also issued a 2021 executive order aimed at promoting competition in the economy, with guidance for the FTC — including to more rigorously scrutinize certain types of mergers.

The agency responded strongly. It has now taken action against about 40 mergers, including the merger of video game heavyweights, discount companies, hospital chains and pharmaceutical companies. About half of those mergers have been halted, although the agency has not always succeeded: a federal judge cleared the way last year for the acquisition of video game maker Activision Blizzard by its rival Microsoft.

These actions have largely delighted a school of progressive economists who blame increased corporate concentration for higher consumer prices and lower wages for workers.

Some new advocates for aggressive antitrust enforcement, including some Republican senators, have urged the agency to go even further and break up big tech companies. A bipartisan group of lawmakers has pushed for the recently announced merger between credit card titans Capital One and Discover.

When Biden issued his competition order, less than six months into his presidency, he focused on workers. When companies grow too big, he argued, they gain power to keep wages low.

Since then, Mr. Biden has seen his economic message consumed by the fastest price increases America has seen in four decades. By the end of his first year, Biden’s aides began framing his competitive efforts in the language of taming inflation.

FTC officials have leaned on the price argument. “Fair competition and checks on corporate monopoly power lower the costs of everything from prescription drugs and cars to staples like milk, bread and eggs,” Douglas Farrar, an agency spokesman, said Monday.

Former Biden officials say the agency is now helping advance the president’s inflation efforts.

“Researching, developing and litigating these things takes time,” said Bharat Ramamurti, a former economic aide to Mr. Biden and architect of his competitiveness agenda.

“I like to think this was all part of the plan.”