Warren, Markey, McGovern, Pressley Push Stop & Shop Parent Company on Price Gouging Concerns in Massachusetts Communities

October 01, 2024

Warren, Markey, McGovern, Pressley Push Stop & Shop Parent Company on Price Gouging Concerns in Massachusetts Communities

Study found significant price differences between different communities in the Commonwealth, indicating Stop & Shop may be price-gouging working-class neighborhoods

"It is shameful that Stop & Shop appears to be engaging in corporate profiteering schemes that squeeze residents and families in Massachusetts"

Text of Letter (PDF)

Washington, D.C. - U.S. Senators Elizabeth Warren (D-Mass.) and Ed Markey (D-Mass.), along with Representatives Jim McGovern (D-Mass.) and Ayanna Pressley (D-Mass.), sent a letter to Frans Muller, CEO of Ahold Delhaize-parent company of Stop & Shop-demanding information on reports of price disparities at store locations in Massachusetts. Specifically, the lawmakers are concerned that Stop & Shop's potential use of pricing algorithms is leading to price gouging, resulting in higher prices in minority and working class communities in Massachusetts.

A group of Boston youth volunteers at the Hyde Square Task Force led a 2023 investigation that revealed pricing discrepancies between Stop & Shop locations in Massachusetts. The study found that Stop & Shop was charging 18% more for groceries in a largely minority and working-class area of Boston's Jamaica Plain neighborhood, compared to the store location in Dedham, a more affluent suburb.

"These types of price discrepancies place significant burdens on already-struggling consumers," wrote the lawmakers.

The median household income for the census tract of the area surrounding the Jamaica Plain Stop & Shop is $35,900 per year. Due to the high prices at the Jamaica Plain location, some families from Jamaica Plain could be forced to spend thousands of dollars extra annually on groceries.

This is just one example of a larger trend of price gouging that began during the COVID-19 pandemic.

"Stop & Shop's actions appear to reflect a problem of opportunistic and sometimes-predatory pricing practices by major food and grocery corporations in the United States," wrote the lawmakers. "During the COVID-19 pandemic, large corporations across the economy took advantage of supply chain disruptions to prey on consumers by raising prices by even more than necessary to cover increases in costs. Nearly two years later, corporations' production costs are down and their profits are ballooning, yet prices continue to climb-suggesting a pattern of corporate profiteering."

The lawmakers are requesting information from Stop & Shop on the pricing algorithms used by the company, the reasons for price differences at different stores, and any steps taken to lower prices and improve consistency across all 124 Massachusetts locations.

In February, Senator Warren, along with other lawmakers, reintroduced the Price Gouging Prevention Act of 2024, which would protect consumers and crack down on major companies that exploit American consumers or exercise unfair leverage while jacking up prices. It would also protect small businesses that raise prices in good faith.

As a champion for American consumers and a secure and healthy economy, Senator Warren has engaged in oversight of corporations for unfairly increasing prices for consumers. She has also long called for more competition and stronger enforcement of antitrust laws to bring down prices for families:

• In September 2024, U.S. Senators Elizabeth Warren (D-Mass.) and Ed Markey (D-Mass.), and Representative Seth Moulton (D-Mass.) demanded answers from 13 corporate landlords operating in Massachusetts as to whether they are using RealPage's algorithm to raise rents for families.
• In August 2024, Senators Elizabeth Warren (D-Mass.) and Bob Casey (D-Pa.) sent a letter to Rodney McMullen, chairman and CEO of Kroger, raising concerns about Kroger's use of Electronic Shelving Labels (ESLs) to potentially surge grocery prices and exploit consumers.
• In May 2024, while chairing a Senate Banking Subcommittee on Economic Policy hearing, Senator Warren (D-Mass.) called out giant corporations for hiking up food prices while raking in record profits, and urged action to promote competition and bring down costs.
• In May 2024, Senator Warren and Rep. Jim McGovern led a group of lawmakers in a letter to President Joe Biden, urging the Biden administration to use its executive authority to take action to lower food prices.
• In May 2024, during a hearing of the U.S. Senate Committee on Banking, Housing, & Urban Affairs, Senator Warren called out food industry price gouging and urged action to combat unfair pricing practices.
• In April 2024, Senator Warren (D-Mass.), Bob Casey (D-Penn.), and Ben Ray Luján (D-N.M.) wrote to DoorDash and UberEats, the two largest delivery platforms, calling out their use of hidden junk fees.
• In March 2024, Senator Elizabeth Warren (D-Mass.) and Representative Mary Gay Scanlon (D-Penn.) led a group of 14 lawmakers in a letter to FTC Chair Lina Khan urging the agency to revive enforcement of the Robinson-Patman Act (RPA), a critical tool to promote fair competition in the food industry.
• In February 2024, Senator Warren joined Senator Bob Casey (D-Pa.) in introducing the Shrinkflation Prevention Act to crack down on corporations that deceive consumers by selling smaller sizes of their products without lowering prices.
• In February 2024, Senators Warren, Baldwin, Casey, and U.S. Representative Jan Schakowsky (D-Ill.) reintroduced the Price Gouging Prevention Act of 2024, which would protect consumers and prohibit corporate price gouging by authorizing the FTC and state attorneys general to enforce a federal ban against grossly excessive price increases.
• In December 2023, Senator Warren urged the FTC to block the Kroger-Albertsons merger, which would give the five largest food retail companies control of 55 percent of all grocery sales, allowing them to further control and ultimately raise consumer prices, while also reducing job competition, decreasing wages, and decreasing the bargaining power of organized labor.
• In November 2023, Senator Warren called out TransDigm for its refusal to provide cost and pricing information needed to prevent price gouging of taxpayers and the Department of Defense.
• In the past few years, Senator Warren has urged the Biden administration to closely scrutinize other potentially anticompetitive mergers that could lead to higher prices for consumers and accelerate industry consolidation. She has led letters about the proposed mergers of Frontier and Spirit airlines, JetBlue and Spirit Airlines, Sanderson-Wayne, WarnerMedia-Discovery, and Amazon-MGM.
• In March 2022, Senator Warren introduced the Prohibiting Anticompetitive Mergers Act to help stomp out rampant industry consolidation that allows companies to raise consumer prices and mistreat workers. The bill would ban the biggest, most anticompetitive mergers and give the Department of Justice and Federal Trade Commission the teeth to reject deals in the first instance without court orders and to break up harmful mergers.
• In February 2022, at a hearing, Senator Warren called out corporations for abusing their market power to raise consumer prices and boost profits.
• That same month, Senator Warren requested the Department of Justice to take aggressive action against corporations violating antitrust laws to hike prices for consumers.
• In January 2022, Senator Warren questioned Federal Reserve nominee Lael Brainard about market concentration and price gouging driving inflation.
• At a January 2022 hearing, Senator Warren pressed Fed Chair Jerome Powell on the role of corporate concentration in driving up prices for consumers during his renomination hearing to be Chair of the Board of Governors of the Federal Reserve System.
• In a New York Times op-ed published in April 2020, Senator Warren urged Congress to focus on cracking down on price gouging in its ongoing effort to address the impact of the coronavirus pandemic.
• In March 2020, Senator Warren joined her colleagues in urging the FTC to use its full authority to prevent abusive price gouging on consumer health products during the COVID-19 pandemic.

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