by Marion Nestle

Currently browsing posts about: Consolidation

Aug 27 2024

Kroger v. the Federal Trade Commission: Not a pretty story

Recall that the large grocery chain, Kroger, proposed a couple of years ago to acquire another large grocer, Albertsons, for about $25 billion.

The FTC did not think this was a good idea.  It FTC filed a suit to prevent the proposed merger on the grounds that it would make the US supermarket landscape even less competitive than it already is.  It would be likely to raise prices for consumers, reduce wages for employees, and (as I’ve written previously) lead to the closure of many stores.

Kroger is fighting back.  It filed an injunction arguing that blocking the merger violates the constitution. 

In its news release, Kroger said

“The merger between Kroger and Albertson’s is squarely focused on ensuring we bring customers lower prices starting day one while securing the future of good-paying union jobs,” said Rodney McMullen, Kroger Chairman and CEO. “We stand prepared to defend this merger in the upcoming trial in federal court – the appropriate venue for this matter to be heard – and we are asking the Court to halt what amounts to an unlawful proceeding before the FTC’s own in-house tribunal.”

In the meantime, BIG, a newsletter on the politics of monopoly power, reports

After two years of investigations and negotiations over court logistics, next week, the Federal trial for the $24 billion Kroger-Albertsons supermarket merger begins. And this one’s really bitter, with new revelations emerging a few days ago from the Federal Trade Commission that a group of Albertsons executives, including CEO Vivek Sankaran, have been deleting text messages relevant to the trial that the court ordered them to preserve. That’s a big legal no-no.

A big legal no-no indeed. This from the FTC’s complaint (references omitted)

On January 17, 2024, the FTC requested a detailed accounting from Albertsons about how responsive documents were lost and what efforts had been taken to recover lost documents. Albertsons did not respond for nearly four months. When they finally responded, they detailed efforts to recover deleted messages from Mr. Broderick’s and Vivek Sankaran’s phones. . Although Albertsons was able to recover approximately 70 text messages from Mr. Sankaran’s phone, further efforts proved unsuccessful…For months, Plaintiffs have tried to seek information about the extent to which Albertsons’ text messages were deleted, obtaining a court order in the Administrative Adjudication requiring production of texts from potential trial witnesses,  and raising repeated inquiries about inexplicably missing documents.

This is what the USDA says consolidation in the grocery industry looks like now.  The proposed merger will only add to monopoly power int he grocery industry.  For the record, Walmart accounts for about 25% of grocery sales int he US.

The share of food sales at supermarkets, other grocery stores, warehouse clubs, and supercenters of the top 4, 8, and 20 retailers trended upwards for the last three decades

Is the Kroger-Albertson’s merger likely to be good for the public?  The FTC does not think so and neither do I.

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Jan 19 2023

Politics in (in)action: USDA and JBS

I’m indebted to Politico for this one: Federal government won’t stop buying food from meatpacker tied to bribery case.

Should the US government do business with a company that uses bribes to conduct its business?  The answer, apparently, is yes.

At issue is the relationship of USDA to the Brazilian meatpacking company, JBS, one of four companies controlling 85% of the US meat supply.

In 2020, JBS paid a $256 million fine to the US to resolve charges of bribing Brazilian officials.  A US subsidiary of JBS pleaded guilty to price-fixing charges in 2021.

The USDA has awarded nearly $400 million in contracts to JBS since October 2017, and at leat $60 million since the 2020 fines.

“Removing a firm from government-wide procurement would potentially impair competitive choice for the taxpayer in securing affordable food for the range of needs that government must provide for, from school lunches to meals for our soldiers,” Vilsack wrote.

Meat companies have way too much power.  Secretary Vilsack vowed to break up some of that power.  It would be good to make good on those promises.

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Nov 4 2022

Weekend reading: Nature Food on Cellular Agriculture

TODAY: Petaluma, 140 Kentucky, Copperfield’s Books, 7:00 p.m.  Information is here.

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Nature Food has an issue devoted largely to the topic of cell-based meat.

It is worth reading for getting an idea of where current thinking is on this issue, and also because of Phil Howard’s latest take on power on industry the cellular food category.

See his commentary article below.

Research Highlight: The price is right for artificial meat, Anne Mullen

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Jul 22 2022

Weekend viewing: Robert Reich on Big Ag

I came across this from a tweet by Ricardo J Salvador @cadwego
Wherein the former Secretary of Labor clearly lays out one of the major drivers for price increases, as well as a clear way for the Biden administration to use its authority to relieve the problem. The core issue is the anti-competitive, monopoly power of consolidated industries.
Just 4 firms control 85% of the beef market, 66% of the pork market, and 54% of the poultry market. The result? -Lower pay for farmers. -Bigger profits for monopolies. -Higher prices for you. There’s no question: We need to break up Big Ag.
He explains this in a video–How Farmers Are Getting Shafted By Monopolies–which, I am delighted to report, I figured out how to embed here.

 

His bottom line:

Just 4 firms control 85% of the beef market, 66% of the pork market, and 54% of the poultry market.

The result?
-Lower pay for farmers.
-Bigger profits for monopolies.
-Higher prices for you.

There’s no question: We need to break up Big Ag.

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Dec 21 2021

The White House: meat companies have too much power

I was amazed to see this announcement from the White House, of all places: “Recent Data Show Dominant Meat Processing Companies Are Taking Advantage of Market Power to Raise Prices and Grow Profit Margins.”

In September, we explained that meat prices are the biggest contributor to the rising cost of groceries, in part because just a few large corporations dominate meat processing. The November Consumer Price Index data released this morning demonstrates that meat prices are still the single largest contributor to the rising cost of food people consume at home. Beef, pork, and poultry price increases make up a quarter of the overall increase in food-at-home prices last month.

The big concern is consolidation—monopoly power—in the meat industry.

Four large conglomerates control approximately 55-85% of the market for pork, beef, and poultry, and these middlemen were using their market power to increase prices and underpay farmers, while taking more and more for themselves…their gross profits have collectively increased by more than 120% since before the pandemic, and their net income has surged by 500%. They have also recently announced over a billion dollars in new dividends and stock buybacks, on top of the more than $3 billion they paid out to shareholders since the pandemic began.

The bottom line?

The meat price increases we are seeing are not just the natural consequences of supply and demand in a free market—they are also the result of corporate decisions to take advantage of their market power in an uncompetitive market, to the detriment of consumers, farmers and ranchers, and our economy [bold face in original].

Will the Biden Administration be able to do anything about this level of monopoly power?  Stay tuned.

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Nov 2 2021

Congressional staff report: Covid 3X harder on meatpacking workers

The majority staff of the House Select Subcommittee on the Coronavirus Crisis has issued a scathing report: “Coronavirus Infections and Deaths Among Meatpacking Workers Were Nearly Three Times Higher than Previous Estimates.”

Newly obtained documents from five of the largest meatpacking conglomerates, which represent over 80 percent of the market for beef and over 60 percent of the market for pork in the United States—JBS USA Food Company (JBS), Tyson Foods, Inc. (Tyson), Smithfield Foods (Smithfield), Cargill Meat Solutions Corporation (Cargill), and National Beef Packing Company, LLC (National Beef)—reveal that coronavirus infections and deaths among their meatpacking workers were substantially higher than previously estimated.

The report’s main findings:

  • Certain meatpacking plants saw particularly high rates of coronavirus infections during the first year of the pandemic. For example, 54.1 percent of the workforce at JBS’ Hyrum, Utah plant contracted the coronavirus between March 2020 and February 2021.
  • Across companies, Tyson saw 29,462 employee infections and 151 employee deaths, and JBS saw 12,859 employee infections and 62 employee deaths.
  • Coronavirus Outbreaks in Meatpacking Plants Disproportionately Impacted Minority Workers
  • The full extent of coronavirus infections and deaths at these meatpacking companies was likely much worse than these figures suggest.
  • OSHA made a political decision not to issue regulatory standards that might require meatpacking companies to take actions to protect workers.

Recall that meatpacking workers were among the first to get sick from Covid-19, causing

The report confirms that Covid-19 in meatpacking workers was and is a national tragedy and scandal, a direct result of corporate consolidation and capture of government.

The report’s recommendations to meatpacking plants, government agencies, and Congress can’t come soon enough.

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Sep 16 2021

The Biden Administration’s challenge to meat industry consolidation

I posted last week on meat-industry consolidation, an issue that has become so prominent that the White House is even talking about it.

The President understands that families have been facing higher prices at the grocery store recently. Half of those recent increases are from meat prices—specifically, beef, pork, and poultry. While factors like increased consumer demand have played a role, the price increases are also driven by a lack of competition at a key bottleneck point in the meat supply chain: meat-processing. Just four large conglomerates control the majority of the market for each of these three products, and the data show that these companies have been raising prices while generating record profits during the pandemic.

That’s why the Biden-Harris Administration is taking bold action to enforce the antitrust laws, boost competition in meat-processing, and push back on pandemic profiteering that is hurting consumers, farmers, and ranchers across the country.

Speaking for the White House, the director of the National Economic Council said:

When you see that level of consolidation and the increase in prices, it raises a concern about pandemic profiteering — about companies that are driving price increases in a way that hurts consumers who are going to the grocery store, and also isn’t benefiting the actual producers, the farmers and the ranchers that are growing the product.

The reactions

In a statement, Tyson’s Foods said “Tyson Foods categorically rejects the conclusions drawn earlier today by the Secretary of Agriculture and the Director of the National Economic Council in a White House press briefing.  The U.S. Department of Agriculture recently published a report detailing the drivers of consumer inflation in the food sector, none of which are related to industry consolidation or scale.”

Smithfield pointed to a statement from the North American Meat Institute.

And then there’s this @FarmPolicy tweet,

Interesting times, these.

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Mar 22 2008

The “Chickenization” of the Beef Industry

I’ve just learned a new word: “chickenization.” This comes from an article on meatpoultry.com explaining how consolidation in the beef industry has gotten so extreme that just three companies now control more than 70% of the market: JBS 31%, Tyson 21%, and Cargill 21%. Monopoly capitalism in action!

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