By Chris Matthews
Federal Trade Commission Chairwoman Lina Khan pointed to concentration in the markets for baby formula and meat packing as major factors contributing to shortages and rapidly rising prices during a Congressional hearing Wednesday.
A nationwide shortage of baby formula was catalysed by an Abbott Laboratories /zigman2/quotes/203724446/composite ABT +1.45% recall of powder formulas, initiated due to a potential bacterial contamination at its plant in Sturgis, Mich. Two babies died after being fed the formula, though Abbot said in a statement last week that ”there is no evidence to link our formulas to these infant illnesses.”
Khan said during a Wednesday hearing before the a House Appropriations subcommittee that there were several factors leading to the shortage, including “the high concentration that we see in this market where three to four companies control the U.S. market.” She also pointed to the fact that states sign exclusive contracts with formula manufactures to provide products for for low-income parents with children found to be at nutritional risk.
The FTC is monitoring the situation for ”any deceptive or fradulent conduct to ensure that bad actors are not taking advantage of the situation and exploiting the panic and anxiety parents are facing,” Khan said.
The regulator is also watching to see if online bots are being used to “buy a product and jack up prices” and whether distributors are discriminating against smaller retailers in a way that could exacerbate the situation.
“We’re really stepping back to understand how we got to this stage where we have such deep concentration in this market, look at the mergers that contributed to is and figure out how we can apply these lessons to make sure that other markets for these types of essential goods are not in such a fragile state,” Khan added.
Representatives also questioned Khan about the rising prices of staple grocery purchases in recent months, with the cost of meat, poultry, fish and eggs rising 14.3% in April compared with the year earlier, according to the Bureau of Labor Statistics.
Khan said that Congress stripped the FTC’s ability to directly oversee the meatpacking industry more than a century ago and is now regulated by the Department of Justice’s Antitrust Division. Still, the FTC is looking into how growing concentration in the grocery store market and anticompetitive behavior by manufactures of farm equipment could ultimately feed into higher prices at the supermarket.