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'The Indicator From Planet Money': Can an old law bring down grocery prices?

A MARTÍNEZ, HOST:

Grocery prices have spiked since 2020, well outpacing inflation. Smaller grocers say part of the problem is that big retailers have an unfair pricing advantage. Our colleagues over at The Indicator from Planet Money, Wailin Wong and Adrian Ma, explore an old antitrust law that some grocers want to revive.

ADRIAN MA, BYLINE: The largest grocery retailer in the U.S. is Walmart. But back in the 1930s, another grocery chain dominated the industry - A&P. Large companies like A&P could leverage their size to get more favorable pricing from their grocery suppliers, and this was putting small businesses in jeopardy during the Great Depression.

WAILIN WONG, BYLINE: And so in 1936, Congress passed the Robinson-Patman Act. It was an antitrust law focused on combating price discrimination at the wholesale level. Price discrimination is when a seller charges different pricing for the same good or service. Timothy Richards is an economist at Arizona State University.

TIMOTHY RICHARDS: So they passed the Robinson-Patman Act essentially to prevent suppliers from charging different prices to A&P, or other big retailers, than they do to small businesses.

WONG: The Federal Trade Commission brought hundreds of cases under the law in the 1960s, but then it fizzled out.

RICHARDS: It's such a dead horse of a piece of legislation. So now trying to revive different sections of it, that's why it's so controversial, because it literally was not being used by the government.

MA: And yet one group trying to resuscitate this supposedly dead-horse piece of legislation is the National Grocers Association. It's a trade group representing privately owned supermarkets. Randy Arceneaux is a member of that trade group and also CEO of Affiliated Foods, which is a grocery wholesaler based in Texas. He distributes groceries to hundreds of independent retailers in eight states.

RANDY ARCENEAUX: As Walmart got bigger and the Krogers of the world got bigger, the inability for us to be competitive on cost has gotten worse.

WONG: Randy's company is a middleman in the grocery supply chain.

MA: And Randy says the problem is the prices he pays at wholesale are higher than what Walmart charges their customers.

ARCENEAUX: Take Betty Crocker cake mix, for example, right? Our cost is $1.65 wholesale. Walmart's are $1.38 on the shelf. So we're higher before we even touch the box.

MA: Of course, the reason Walmart's able to get such low prices from manufacturers is because it's so big and buys so much. But smaller grocers say the Walmarts of the world - you know, they're getting too big of a discount.

WONG: Chair Lina Khan said in 2022 that the FTC is taking a fresh look at Robinson-Patman.

MA: But whether reviving the law would result in lower grocery prices for a wholesaler like Randy Arceneaux and, therefore, lower prices on store shelves, that is where things get a little complicated.

ARCENEAUX: The manufacturer does have to make money. The end game is the opportunity to be the same. And so our costs would go down, and Walmart's costs would go up.

MA: I mean, so, like, when you think about all the people who shop at a Walmart or a Kroger, they could be paying more for groceries.

WONG: Potentially, yeah. And prices at a neighborhood grocery store could go down. But still, higher prices at the places where most of our grocery dollars go is a very tough sell.

MA: Adrian Ma.

WONG: Wailin Wong, NPR News.

(SOUNDBITE OF MUSIC)

MARTÍNEZ: If you want to hear more on this topic, you can listen to the full Indicator episode wherever you get your podcasts. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Wailin Wong
Wailin Wong is a long-time business and economics journalist who's reported from a Chilean mountaintop, an embalming fluid factory and lots of places in between. She is a host of The Indicator from Planet Money. Previously, she launched and co-hosted two branded podcasts for a software company and covered tech and startups for the Chicago Tribune. Wailin started her career as a correspondent for Dow Jones Newswires in Buenos Aires. In her spare time, she plays violin in one of the oldest community orchestras in the U.S.
Adrian Ma
Adrian Ma covers work, money and other "business-ish" for NPR's daily economics podcast The Indicator from Planet Money.