The Federal Trade Commission (FTC) and Kroger/Albertsons are likely going to face off in court over the proposed grocery merger, claims a new brief penned by members of the International Center For Law & Economics (ICLE). Federal regulators are ratcheting up merger guideline requirements, and the grocery giants’ CEOs have said they are ready for a fight, but in the end ICLE believes it is “unlikely” the FTC will prevail. Here’s a glimpse of the ICLE’s Five Point rationale for why we might see a showdown -- and perhaps why the FTC is fighting an uphill battle. 

The Agencies Are Trying to Rewrite Merger-Review Standards, which could cause a lawsuit:

• The FTC and Department of Justice recently released a draft of its revised merger guidelines with much stricter “structural guidelines,” meaning increased market concentration, rather than total monopolistic control, could be a violation of the law.
• Also, the FTC had already indicated it is tightening up merger enforcement prior to issuing the guidance having brought numerous high profile cases to court in recent years. The ICLE believes the agency is “willing to push the law beyond its limits” to curb consolidation, regardless of the competitive effect. 

But the Relevant Market Is Broader Than Supermarkets:

• The FTC is using outdated parameters to define “the relevant market” size without considering which stores hold the majority share of retail sales. 
• In the case of Kroger and Albertsons, the government body’s definition only encompasses supermarkets and excludes club stores like Costco, organic and natural grocers like Whole Foods, online delivery platforms such as Instacart, ethnic-specialty stores, and even limited assortment stores like Aldi and Trader Joe’s. And, as we all know, consumers love their ecommerce ordering and Costco adventures (it’s not just for giant packs of toilet paper). 
• But, ICLE argues most consumers purchase groceries from multiple sources simultaneously. The center notes supercenters like Walmart have doubled their share of retail sales while supermarkets have lost nearly a quarter of their hold on grocery in the years since the FTC last challenged a merger in the sector. 

The Merger Is Unlikely to Increase Labor Monopsony Power:

• Grocery workers aren’t going to have less employment options if the merger goes through as many, if they leave their job, don’t always go to the same type of job in the same industry. 
• Particularly in the case of retail workers, it is likely they bounce between industries so to make a case that the merger would harm workers and reduce bargaining power takes too narrow of a look at labor dynamics, ICLE argues. 

"Waterbed Effects" Are Highly Speculative:

• Previous case studies can not clearly point to anti competitive policy as an effective method to stop the “Waterbed Effect” – which is when buying power is consolidated and negatively impacts small retailers as larger grocers negotiate lower prices from suppliers. 

And Lastly, Remedies Can Solve Any Remaining Competitive Concerns:

• Geographically determined divestitures are often the “appropriate and adequate” solution to quelling consolidation. The ICLE said that while the failure of divestitures from Albertsons/Safeway merger have been cited as reason all will fail post-merger, it should instead be viewed as a case study to learn from, rather than replicate. 

Go Deeper: Watch Kroger and Albertsons CEOs Take The Stand In The Senate 

While some food manufacturers have appropriately responded to Sesame becoming the 9th major allergen – A.K.A. reworking facilities to reduce the risk of cross contamination – others have taken a different approach that FDA commissioner Robert Califf does not support: intentional self-contamination.

But not every food producer wants to play nice, with many looking for shortcuts to avoid having to de-sesame (that’s a term, right?) their plants. In a recent edition of “Catching Up With Califf,” the commissioner called out manufacturers who have instead begun adding small amounts of sesame to products that previously did not contain the ingredient so that they comply with allergen disclosure laws. That practice is having a negative effect on consumers, Califf claims: "I don’t think anyone envisioned there being a decrease in the availability of products that are safe choices for sesame allergic consumers.”

Go Deeper: FDA Looks To Issue Guidance On Non-Listed Food Allergens

The Peas, Legumes, and Nuts Today Act – or PLANT Act – was introduced to Congress last week and outlines a roadmap for supporting plant-based food production in the U.S. by creating new opportunities for farmers and advancing plant-based food research and production.

• The act, which would be adopted as a provision of the 2023 Farm Bill reauthorization, would provide support to farmers growing plant-based food ingredients and ensure that companies using those ingredients for plant-based foods qualify for USDA producer programs. 
• The bill also supports targeted R&D investments, made by the USDA, to support American innovation around plant-based foods. 
• PLANT Act is supported by nearly 30 plant-based CPG food producers, including Beyond Meat, Oatly, Tofurky, No Evil Foods, Ben & Jerry’s and Califia Farms, among many others. It also has a significant number of trade organizations, nonprofit groups, chefs, doctors and dieticians, and a wide range of other stakeholders.  
• “America is the world’s plant-based foods leader, but other countries are making big investments in their plant-food sectors,” said Scott Faber, Environmental Working Group SVP of government affairs. “If Congress does not support our farmers and food companies, America could lose our place…USDA has always supported our meat and dairy farmers, investing more than $50 billion since 1995. Now, to maintain our global leadership role, it’s time for USDA to also support the farmers growing for the plant-based industry.”

Gopuff last week released a new program to highlight local brands in NYC. Dubbed “The Taste of New York,” the sampling program offers shoppers an array of local brands -- each for only five cents. “Gopuff is leaning into local in a big way and this is just the start for highlighting some unbelievable brands,” wrote Dylan Levin, Gopuff senior program manager, alcohol strategy and operations in a Linkedin post. 

The sampling effort was spearheaded by Alex Fertel, senior program manager for Gopuff Ads, and represents the company’s “first ever local sampling program,” according to the post, which was reshared by Fertel. Brands participating included BUBLUV, Papa’sPops, Kooshy, Elieni’s New York and SAYSO. Gopuff originally launched in NYC in October 2021. 

Wonder how this will stack up compared to the retailer’s “girl dinner” category, which features Van Holton pickles and Uncrustables? 

To snack puffs and beyond! Lesser Evil has teamed up with Disney and Pixar (again), this time on Toy Story themed versions of its Lil’Puffs. Let’s break down the details of the mouse themed munchies:

• Lil’Puffs are the brand’s toddler puffs -- a Disney sweet spot. 
• The new collection features packaging highlighting fan-favorite characters Buzz Lightyear, Woody, Jessie and The Little Green Aliens. 
• There are four flavors at launch, all with Buzz Lightyear themed : Star-berry Beet, Sweet Potato Apple Asteroid, Intergalactic Voyager Veggie Blend and Celestial Cheddar. 
• The limited edition snacks hit Whole Foods, Target and H-E-B store shelves in August for a SRP of $2.99-$3.99 per 2.5 oz. bag

The new product launch marks the snack brand’s latest collaboration with the mouse. In April, LesserEvil rolled out a limited edition Celebration Popcorn flavor to celebrate Disney’s 100 Years of Wonder. In an effort to tell the story of Disney over the years, the product was packaged in a bag that showcased characters from both classic and modern Disney films, from Mickey Mouse to Moana.

Check out more new products the NOSH team spotted last week.