President Biden and Democratic senators target companies over price gouging

A group of senators has introduced legislation designed to create a federal ban on excessive price increases implemented by corporations. The Price Gouging Prevention Act was introduced on Feb. 26 and would empower the Federal Trade Commission and state attorneys general to police excessive price increases in order to protect consumers.

The legislation would clarify existing federal regulations and define price gouging as an unfair and deceptive business practice under the Federal Trade Commission Act, which was made law in 1914 and created the FTC, a U.S. government agency that enforces laws on antitrust issues and deceptive advertising.

“Big corporations are price gouging Americans, taking in record profits, and giving their executives lavish bonuses, all while Wisconsin families struggle to get by. It’s wrong and we need to do more to hold these big corporations accountable and give Wisconsinites some breathing room,” Wisconsin U.S. Senator Tammy Baldwin, a Democrat and one of the legislation’s lead sponsors, said in a release.

Other sponsors of the bill are independent Sen. Bernie Sanders (VT), and Democratic Sens. Jeff Merkley (OR), Elizabeth Warren (MA), Sheldon Whitehouse (RI), Richard Blumenthal (CT), and John Fetterman (PA). Rep. Jan Schakowsky (D-IL) introduced a version of the bill in the House on Feb. 15.

The Senate bill is currently being considered by the Committee on Commerce, Science, and Transportation, while the House bill was referred to the Energy and Commerce Committee.

Costs for many consumer goods have increased at a higher rate than the norm in recent years, with grocery prices in particular increasing 11% in 2022 and 5% in 2023. A May 2023 report from the St. Louis Federal Reserve determined that corporate profits made a substantial contribution to inflation in 2022. At the same time, many companies that make consumer goods have reduced the sizes of the products they sell, creating what is called “shrinkflation.”

In a video released during the Super Bowl, President Joe Biden criticized this corporate behavior.

“I’ve had enough of what they call shrinkflation. It’s a rip off. Some companies are trying to pull a fast one by shrinking the products little by little and hoping you won’t notice. Give me a break,” Biden said, and called on companies to cease the practice.

Politico reported that Biden is considering speaking about the issue again during his 2024 State of the Union address to the nation, depending to some extent on the outcome of White House testing of related messaging.

In another sign that the Biden administration is attempting to rein in consumer prices, the FTC filed a federal lawsuit on Feb. 26 to block the proposed merger of supermarket chains Kroger and Albertsons. In its suit, the agency said that if the two companies combined, it would eliminate the existing competition between them and lead to higher consumer prices.

The agency also noted that a combined company would harm unionized workers, who currently negotiate with both firms: It said a merger would make it harder for workers to obtain wage increases and better workplace conditions and benefits.

The Institute for Local Self-Reliance, a nonprofit that advocates for independent businesses, praised the Biden administration’s lawsuit.“Blocking this merger is a crucial step in restoring healthy competition to food retailing,” Stacy Mitchell, co-executive director of the group, said in a statement.