Pat Wellenbach/AP Photo
Mars, the snack food company that owns products including M&M’s and Skittles, will buy Kellanova, makers of Pringles and other snack foods, in a deal valued at $35.9 billion.
The Harris-Walz campaign has led a charmed life. The base is enraptured by being saved from having to vote for and defend a second Joe Biden term—not to mention, probably being saved from a Trump second term. In the battle of running mates, you have one of the starkest polling differences in recent history, an energizing high school football coach versus someone who repels half the population. The Trump campaign has been flailing for six weeks, and a ticket wanting to distance itself from the epithet of being “weird” has now allied itself with Robert F. Kennedy Jr.
Recent real-world events are also falling into place for the Democratic nominee. Harris’s first set of economic pronouncements focused on the cost of food and housing. It turns out that evidence of precisely the harms she has identified has come out of courtrooms and corporate press releases over the last couple of weeks. In her prime-time interview on CNN tonight, Harris can cite these developments as a basis for her policies.
For example, earlier this month Mars, Inc., announced a $30 billion proposed merger with Kellanova, a company created from the snack foods in the Kellogg stable. (Kellogg retained the brands in its cereal business.) If successful, the merger would put M&M’s, 3 Musketeers, Milky Way, Altoids, Twix, Starburst, Combos, Kind Bars, Life Savers, Snickers, Skittles, Pringles, Cheez-It, Pop-Tarts, Carr’s, Town House, Zesta, Nutri-Grain, Rice Krispies Treats, Eggo, RXBAR, Special K, and MorningStar under the same corporate parent. Essentially all chewing gum brands in America would be owned by this company as well.
The Harris agenda that she promoted in a speech in Raleigh, North Carolina, on August 16 has caught the most attention for endorsing a federal price-gouging law on groceries. But just as prominent was her insistence in a campaign fact sheet that “extreme consolidation in the food industry has led to higher prices that account for a large part of higher grocery bills.” Harris vowed to “crack down on unfair mergers and acquisitions that give big food corporations the power to jack up food and grocery prices and undermine the competition that allows all businesses to thrive while keeping prices low for consumers.”
The Mars-Kellanova announcement is the largest proposed merger of the year. It could also herald a wave of consolidation in the food industry, which is trying to make up for somewhat slower growth now that supply chains and inflation have eased. Other, smaller deals, like Campbell Soup’s purchase of Sovos Brands (makers of Rao’s pasta sauce) and J.M. Smucker’s acquisition of Hostess Brands, were completed in the last year. Failure to challenge the Mars-Kellanova merger would likely send food companies looking for other acquisition targets.
Moving from wholesale to retail, a three-week hearing that could temporarily halt the merger of grocery giants Kroger and Albertsons began this week in Portland, Oregon. The Federal Trade Commission and nine state attorneys general sued to block this merger because it would reduce head-to-head competition in numerous markets while also reducing wages for grocery workers.
Evidence of precisely the harms Harris has identified has come out of courtrooms and corporate press releases over the last couple of weeks.
In just the first couple days of the hearing, the FTC identified multiple markets where a merged Kroger-Albertsons would control 60 percent of all grocery purchases; showed that Kroger’s primary pricing strategies involve competition with Albertsons that would vanish if the two companies merged; produced testimony that Kroger deliberately raised prices above input costs on milk and eggs when inflation rose and kept those prices high even as inflation subsided; demonstrated that Kroger actually doesn’t concern itself with Walmart’s prices, despite the companies making competition with Walmart their primary argument for merging; and released internal documents revealing that the merger would weaken collective-bargaining efforts. Kroger, which is currently facing a strike of 4,500 Fred Meyer workers in Portland, where the hearing is taking place, has responded by filing suit claiming that the FTC’s administrative court process, which is also scrutinizing the merger, is unconstitutional.
Once again, the merger challenge fits squarely into Harris’s stated principle that more enforcement actions need to be taken to prevent consolidation in the grocery industry. Though many have scoffed at the condemnation of high profits in a retail industry with low net margins, it’s clear that net margins are a gameable statistic that include as costs what common sense would designate as profits—things like executive salaries or “management fee” payments to private equity owners. Kroger and Albertsons’ operating margins and general profitability grew significantly higher after the pandemic and have stayed there. Harris has room to highlight this, and how it could worsen if the two companies were allowed to combine.
In housing, Harris has gotten notice for a few splashy proposals, like the YIMBY-forward call for reducing barriers to build in some cities (which presidents don’t have a ton of control over) and a $25,000 first-time homebuyers tax credit (a demand subsidy operating at cross-purposes with the supply-side approach that could merely incentivize increases in home prices). But buried in her fact sheet was also a vow to go after corporate landlords, manifested in two policies: removing a tax credit for investors that purchase single-family homes for rentals, and preventing landlords from “using private equity-backed price-setting tools to collude with each other and jack up rents dramatically in communities across the country.”
It so happens that last Friday, the Justice Department and eight states filed a monopolization lawsuit against RealPage, the leading private equity–backed price-setting company in residential housing markets. RealPage gathers nonpublic, competitively sensitive information across the breadth of local housing markets and encourages its member landlords to accept its recommended price changes. It uses auto-accept to make price increases easier to adopt, and uses pricing advisers to lean on landlords who do not comply and raise prices. The result is coordinated price hikes, through both algorithms and in real-world interactions, that distort the market, lessen competition, and diminish the supply of affordable rentals.
As one RealPage client put it: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing.”
This isn’t just in the ballpark of Harris’s economic program, it’s precisely what she said should be stopped. And now, here’s the Justice Department and eight states, doing what they can to stop it.
I asked the Harris campaign about all three of these matters: the Mars-Kellanova proposed merger, the Kroger-Albertsons hearing, and the RealPage lawsuit. They did not respond. But these are powerful pieces of evidence that fill in precisely the picture that Harris attempted to lay out in her economic speech in Raleigh. Heightened concentration, opportunistic displays of market power, and high-tech forms of collusion are preying on the American people. Harris saw it coming and pointed to it as a top priority. In tonight’s CNN interview, she will certainly get questions on this, one of the few articulated elements of her agenda. The evidence is available for her to lay out.
