Regulatory Issues Archives - Page 3 of 14

Food Retailers Respond to Proposed ‘Price Gouging’ Ban

Published August 19, 2024

Vice President Kamala Harris caught the attention of the food industry with remarks she made Aug. 15 that included a proposal to ban “price gouging” by food suppliers and grocery stores.

“Under the Biden-Harris administration, grocery prices have shot up 21 percent, part of an inflation surge that has raised overall costs by about 19 percent and soured many Americans on the economy, even as unemployment fell to historic lows,” Christopher Rugaber reported for the Associated Press. “Wages have also risen sharply since the pandemic, and have outpaced prices for more than a year. Still, surveys find Americans continue to struggle with higher costs.”

“We all know that prices went up during the pandemic when the supply chains shut down and failed,” Harris said Friday in Raleigh, N.C., as reported by Rugaber. “But our supply chains have now improved and prices are still too high.”

“Grocery prices are still painfully high compared to four years ago,” Rugaber reported, “but they increased just 1.1 percent in July compared with a year earlier, according to the most recent inflation report. That is in line with pre-pandemic increases.”

Food Industry Association President and CEO Leslie G. Sarasin decried price gouging, but denied that food retailers are to blame.

“Inflation has caused the price of many consumer goods – from gasoline to apparel – to increase. But 2024 Consumer Price Index (CPI) numbers reveal that the pace of year-over-year inflation continues to moderate, and food prices actually represent a bright spot in the data,” Sarasin said in a statement. “In fact, yesterday’s July CPI placed year-over-year food-at-home inflation at 1.1 percent, which remains below the 2.9 percent increase in overall inflation.

“Food retailers’ profit margins are, and always have been, extremely tight – just 1.6 percent last year. The entire food industry works tirelessly – amidst fierce competition – to address inflation and keep prices as low as possible to meet the needs of shoppers. However, the food industry continues to face significant economic headwinds – including increases in labor costs, volatile energy prices, an uptick in climate change-related severe weather events, supply chain challenges, and an unprecedented level of regulatory burden – that increase the costs to produce food and get it to store shelves,” Sarasin said.

“It is both inaccurate and irresponsible to conflate an illegal activity like price gouging – a defined legal term in which specific violations of trade practices law occur − with inflation, which is a broad, macroeconomic measure of increases in consumer prices over time due to supply chain cost pressures. In the context of food, inflation impacts how far the dollar goes when buying groceries.

“Americans should feel confident that the food industry has zero tolerance for deceptive practices like price gouging, an illegal activity that has no place in our stores and is inconsistent with the way the food industry conducts its business of feeding American families.

“When discussing food prices, it is imperative that our conversations remain grounded in reality and data, rather than rhetoric.”

National Grocers Association President and CEO Greg Ferrara said price gouging is not the problem.

“The proposal calling for a ban on grocery price gouging is a solution in search of a problem,” he said.

“Our independent grocers, already operating on extremely thin margins, are hurting from the same inflationary pressure points as their customers. Labor, rent, swipe fees, utilities; you name it, the price has increased. But what’s really hurting our local, independent grocers, is the lack of fair competition with big box retailers, who leverage their influence in ways that your independent grocer down the street can’t, leading to increased prices for everyone else.

“We’re hoping the next Administration (and the current one) will look closely at anticompetitive behaviors, including price discrimination, that are increasing prices for independent grocers and the community members they serve,” Ferrara said.

“We firmly believe that rather than proposing new legislation far-off in the future, the government should be enforcing the Robinson-Patman Act, a key antitrust law that already exists, but has been ignored for decades as big chains unfairly wield their influence.

“If Washington is serious about helping lower prices for consumers, it can help in three important ways: lower skyrocketing swipe fees, rein in excessive and burdensome regulations, and enforce antitrust laws like the Robinson-Patman Act that enhance price competition amongst retailers, regardless of size or location,” Ferrara said.

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UPSIDE Foods Sues Florida Over Cultivated Meat Ban

Published August 15, 2024

The Institute for Justice, a nonprofit, public interest law firm, filed a lawsuit challenging a newly enacted Florida law that bans the production, distribution, and sale of cultivated meat, which allows consumers to enjoy the taste of meat grown directly from real animal cells, without the need to raise or kill animals.

The lawsuit, which was filed in the U.S. District Court for the Northern District of Florida, argues that Florida’s ban violates the Constitution’s provisions that prohibit protectionist measures designed to favor in-state businesses at the expense of out-of-state competitors. By targeting cultivated meat, which is produced outside Florida, the law seeks to protect local meat producers from competition, undermining the principles of a national common market.

“If some Floridians don’t like the idea of eating cultivated chicken, there’s a simple solution: Don’t eat it.” said Paul Sherman, a senior attorney at the Institute for Justice. “The government has no right to tell consumers who want to try cultivated meat that they’re not allowed to. This law is not about safety; it’s about stifling innovation and protecting entrenched interests at the expense of consumer choice.”

To bring this lawsuit, IJ partnered with UPSIDE Foods, a pioneering company in the field of cultivated meat. Founded by cardiologist Dr. Uma Valeti, UPSIDE Foods was born out of a transformative experience Valeti had while running a student kitchen in college. When he needed to buy meat at a slaughterhouse, he was profoundly dismayed to see animals suffer.

Vowing to find a more humane and sustainable way to produce meat, he established UPSIDE Foods in 2015, which now produces chicken meat grown directly from real chicken cells. This innovative process allows UPSIDE Foods to produce meat without the need for raising and slaughtering animals, providing a cruelty-free alternative that maintains the taste and texture of conventional meat. In fact, UPSIDE’s chicken is cooked and prepared the same way as conventional chicken.

UPSIDE’s chicken has been given a green light by both the FDA and USDA, affirming its safety and quality. And because it is cultivated in a controlled environment, the process has the potential to reduce the risk of food borne illnesses, contaminations, and other issues present in modern animal agriculture.

“Anyone who wants to try cultivated meat should have the opportunity to do so,” said Valeti. “Our mission is to offer a delicious, safe, and ethical alternative to conventional meat, and we believe Floridians deserve the freedom to make their own food choices. Cultivated meat represents a significant advancement in food technology with the potential to improve supply chain resilience and we are committed to making it available to all.”

On May 1, Florida Gov. Ron DeSantis signed SB 1084, banning the manufacture, sale, or distribution of cultivated meat in Florida. It went into effect on July 1, 2024. In a statement announcing the law, Florida Commissioner of Agriculture Wilton Simpson made its protectionist motivations clear, saying: “We must protect our incredible farmers and the integrity of American agriculture . . . . Together, we will keep Florida’s agricultural industry strong and thriving.” Gov. DeSantis said cultivated meat “is designed to be a threat to agriculture as we know it. . . . [W]e’re snuffing this out at the beginning.”

“For the same reason that California cannot ban orange juice made from oranges grown in Florida, Florida cannot ban UPSIDE’s meat,” explained IJ Attorney Suranjan Sen. “A major purpose for enacting the Constitution was to prevent exactly this kind of economic protectionism, ensuring that all Americans can benefit from a free and open national market. Florida cannot ban products that are lawful to sell throughout the rest of the country simply to protect in-state businesses from honest competition.”

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Strike Force Discusses Grocery Prices, Price Gouging in Industries

Published August 2, 2024

The Federal Trade Commission and the Department of Justice virtually co-hosted the first public meeting of the Strike Force on Unfair and Illegal Pricing to discuss Strike Force enforcement actions taken to lower prices for Americans.

FTC Chair Lina M. Khan, DOJ Acting Associate Attorney General Benjamin Mizer, Assistant Attorney General Jonathan Kanter, and Principal Deputy Assistant Attorney General Brian Boynton, along with other agencies on the strike force convened to highlight the following enforcement actions:

Khan highlighted the FTC’s recent work to stop corporate lawbreaking that raises prices for Americans, including uncovering evidence of corporate conduct that may raise the price of gas, working to lower the cost of many asthma inhalers to just $35 out-of-pocket, and making it easier for Americans to cancel online subscriptions they don’t want. Chair Khan announced that she will ask the Commission to launch an inquiry into grocery prices in order to probe the tactics that big grocery chains use to hike prices and extract profits from everyday Americans at the checkout counter.

Mizer described DOJ’s efforts to tackle unlawful behavior that affects the prices Americans pay for their groceries, transportation, and health care. Kanter highlighted the historic and concrete actions Antitrust Division staff are undertaking to enforce the law and lower prices in higher education, housing, transportation, food, agriculture, live music, healthcare and other vital industries.

Boynton highlighted the Civil Division’s work to combat fraudulent pricing schemes involving government agencies and financial institutions, as well as schemes designed to defraud consumers through unfair and deceptive marketing or billing practices.

U.S. Department of Agriculture Deputy Secretary Torres Small highlighted the all-of-USDA approach to tackling food and agricultural pricing challenges for farmers and consumers alike, including an ongoing investigative study on retail concentration and market practices as well as landmark efforts to modernize the Packers & Stockyards Act rulebook and build a competition partnership with state attorneys general.

U.S. Department of Health and Human Services Deputy Secretary Andrea Palm spoke on HHS’s work to make health care affordable, transparent, and fair for everyone. Increasing competition and transparency, lowering prescription drug prices, and expanding access to health care are key ways to make sure our health care system is working for all Americans.

Acting U.S. Department of Transportation General Counsel Subash Iyer spoke about DOT’s work to protect airline passengers from unfair practices that can make it more expensive to fly, including by proposing a ban on family seating junk fees and investigating Delta’s refund, reimbursement, and customer service problems during the recent IT meltdown.

U.S. Securities and Exchange Commission Chair Gary Gensler spoke about the SEC’s work to address unfair, deceptive, and anticompetitive business practices. The SEC is the cop on the beat for the securities markets. The agency’s rulemaking projects promote transparency, access, and fair dealing in the markets. And through market oversight, including examining registrants and reviewing tens of thousands of filings each year, the SEC guards against fraud and deceptive practices and promotes competition.

U.S. Federal Communications Commission Chairwoman Jessica Rosenworcel spoke about the FCC’s work to tackle unfair and deceptive pricing tactics in the communications sector, including by implementing new rules that will slash the exorbitant rates that incarcerated people and their families pay to stay connected.

Consumer Financial Protection Bureau Director Rohit Chopra spoke about the CFPB’s work on junk fees, highlighting a report on school lunch fees, and a recently launched inquiry into junk fees in mortgage closing costs. The CFPB continues its work on all aspects of the credit card market, including looking into bait-and-switch rewards tactics, curbing excessive fees, and ensuring competition, all against the backdrop of interest rate margins hitting an all-time high. Additionally, the agency announced further scrutiny on the role of private equity investors in price gouging.

In March 2024, at the sixth meeting of the White House Competition Council, President Biden announced the launch of the Strike Force to strengthen interagency efforts to root out and stop illegal corporate behavior that hikes prices on American families through anti-competitive, unfair, deceptive, or fraudulent business practices.

The Federal Trade Commission works to promote competition, and protect and educate consumers. The FTC will never demand money, make threats, tell you to transfer money, or promise you a prize. You can learn more about how competition benefits consumers or file an antitrust complaint. For the latest news and resources, follow the FTC on social media, subscribe to press releases and read our blog.

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