State and local officials welcomed the chair of the Federal Trade Commission to New Haven this week to discuss measures the federal government is taking to reduce the ever-increasing cost of food and other goods across the country.
“I want to point out the remarkable work that Chair Lina Kahn has done at the Federal Trade Commission to make sure that this economy works for all Americans, not just for the biggest corporations,” Congresswoman Rosa DeLauro, D-3rd District. “And I’m excited to have her join us today as we discuss how the Federal Trade Commission is working to combat rising food costs, price gouging, the hyper consolidation in the infant formula market and industry, and junk fees that drive up the cost of living.”
Khan explained that fewer competitors led to higher prices for products ranging from groceries to health care and oil and gas.
“One trend that we’ve seen across so many markets over the last 40 years is that markets have become more and more consolidated,” she said. “And what that means is that whereas decades ago, you had dozens of competitors fiercely competing, increasingly, you now just have a smaller and smaller set of companies controlling those markets. And that contributes to higher prices in a few ways, right? What we’ve seen is that when companies don’t have to compete, they can get away with hiking prices because they know that consumers don’t have many options.”
She also explained that consolidated markets are more susceptible to supply chain disruptions such as the COVID-19 pandemic, which can also lead to higher prices.
“The more concentrated markets are, the more you’re concentrating risk. And so any time you have a single disruption, a single factory contamination, a single hurricane, the whole system is more likely to seize up and create shortages,” she said. “The other thing we’ve seen is that when you have a more consolidated market, it’s easier for companies to collude, to coordinate, to say, hey, yeah, costs have come down, but what if we just collectively kept prices high? And so these are the set of issues in our wheelhouse.”
A report from the FTC found that there may be evidence that companies have artificially kept their prices high. In the report, released in March, the FTC stated that global supply chain disruptions from the pandemic did not adequately explain the increase and continued elevation of food prices. Food and beverage retailer revenue increased to more than 6% over total costs in 2021, higher than their most recent peak in 2015 of 5.6%. In the first three-quarters of 2023, retailer profits rose even more, with revenue reaching 7% over total costs. The report said that these large increases cast doubt on the assertions of some companies that rising prices at the grocery store were the result of retailers’ own rising costs.
These profits are a direct result of increased prices for consumers. According to the Department of Agriculture, in 2023, the consumer price index for food rose by 6%, and it rose nearly 10% in 2022. Over the past four years, food prices have risen over 25% in total. Food prices are expected to continue to rise in 2024, but at a much lower rate of 2.3%, which will continue to decrease to 2.0% in 2025.
The FTC has investigated monopolies to try and bring prices down for consumers, Khan said.
The FTC brought a lawsuit against Syngenta Crop Protection and Corteva, Inc., two pesticide giants, that the FTC determined were engaging in anti-competitive conduct in ways that were increasing prices for farmers. As a result farmers passed those higher prices onto consumers.
Connecticut Senate President Martin Looney, D-New Haven, talked about some of the measures that local officials were considering to bring down food prices for state residents. He cited the illegality of price gouging in Connecticut, and said that the governor only has the power to impose price restrictions during declared emergencies when certain products or services are in short supply.
“In the last session, we worked closely with Attorney General Tong, and we were exploring a bill that we didn’t have time to quite get through the whole process in the short session to allow the Attorney General to go after price gouging in a more expanded way,” Looney said. “What we’re talking about here is a chronic day-to-day situation, where prices for food and other items are being raised or kept high artificially, even when there’s no longer a supply chain crisis. We want to enhance the Attorney General’s powers and the Department of Consumer Protection’s powers to go after those kinds of abuses that are chronic and day to day, and not tied to an emergency situation. So we’ll be working on that legislation for the 2025 session.”