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View submission: The Great Grocery Squeeze
Then [The Robinson-Patman Act] was abandoned. In the 1980s, convinced that tough antitrust enforcement was holding back American business, the Reagan administration set about dismantling it. The Robinson-Patman Act remained on the books, but the new regime saw it as an economically illiterate handout to inefficient small businesses. And so the government simply stopped enforcing it.
That move tipped the retail market in favor of the largest chains, who could once again wield their leverage over suppliers, just as A&P had done in the 1930s. Walmart was the first to fully grasp the implications of the new legal terrain. It soon became notorious for aggressively strong-arming suppliers, a strategy that fueled its rapid expansion. By 2001, it had become the nation’s largest grocery retailer. Kroger, Safeway, and other supermarket chains followed suit. They began with a program of “self-consolidation”—centralizing their purchasing, which had previously been handled by regional divisions, to fully exploit their power as major national buyers. Then, in the 1990s, they embarked on a merger spree. In just two years, Safeway acquired Vons and Dominick’s, while Fred Meyer absorbed Ralphs, Smith’s, and Quality Food Centers, before being swallowed by Kroger. The suspension of the Robinson-Patman Act had created an imperative to scale up.
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