Large Grocers Took Advantage of Pandemic Supply Chain Disruptions, F.T.C. Finds

A report found that large firms pressured suppliers to favor them over competitors. It also concluded that some retailers “seem to have used rising costs as an opportunity to further hike prices.”

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The report concluded that supply chain disruptions did not affect companies equally across the grocery industry.

Large grocery retailers took advantage of supply chain disruptions to beat out smaller rivals and protect their profits during the pandemic, according to a report released by the Federal Trade Commission on Thursday.

The report found that some large firms “accelerated and distorted” the effects of supply chain snarls, including by pressuring suppliers to favor them over competitors. Food and beverage retailers also posted strong profits during the height of the pandemic and continue to do so today, casting doubt on assertions that higher grocery prices are simply moving in lock step with retailers’ own rising costs, the authors argued.

“Some firms seem to have used rising costs as an opportunity to further hike prices to increase their profits, and profits remain elevated even as supply chain pressures have eased,” the report read.

The report’s release comes as the F.T.C. cracks down on large grocery retailers. Last month, the commission and several state attorneys general sued to block Kroger from completing its $25 billion acquisition of the grocery chain Albertsons. They argued that the deal would weaken competition and likely lead to consumers paying higher costs.

The independent federal agency’s actions have helped bolster the Biden administration’s efforts to address rising prices. In recent weeks, President Biden has taken a tougher stance on grocery chains, accusing them of overcharging shoppers and earning excess profits. Although food prices are now increasing at a slower rate, they surged rapidly in 2022 and have not fallen overall. As a result, the high cost of food has continued to strain many consumers and posed a political problem for the administration.

Mr. Biden has also tried to tackle the issue by fixating on food companies, denouncing them for reducing the package sizes and portions of some products without lowering prices, a practice commonly called “shrinkflation.” During his State of the Union address earlier this month, Mr. Biden again called on snack companies to put a stop to the practice.

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