Antitrust in Us

NACS pushes for a level playing field in the issues that matter most to convenience retailers.

Antitrust in Us

September 2021   minute read

By: Jon Taets

There is a renewed interest in federal antitrust activity in Washington these days, and it’s bipartisan in nature. The initial focus of Congress has been in the big tech space. Congressional Democrats accuse companies, such as Google and Facebook, of gobbling up competitors and exercising market power in ways that make it very difficult for others to launch a competing product. On the other side of the ideological spectrum, many Republicans believe these types of companies have too much of a hold on information and use that power to censor conservative viewpoints. The result has been a somewhat odd set of allies at congressional hearings, with senior tech company executives taking flak from both sides of the aisle.

Legal Movement

On the House side, legislation has begun to move in this arena. Not long ago, the House Judiciary Committee passed bills aimed at different ways to curb the power of big tech companies or attempt to force their breakup. At the time of this writing, these bills have not seen action in the full House, but work continues to bring antitrust legislation to the floor.

In early July, President Joe Biden issued an executive order to promote competition in the American economy. The order directs various federal agencies to step up their enforcement activity and is focused primarily on agriculture, technology, telecommunications and pharmaceuticals but may have a much broader impact, depending on what action agencies like the Federal Trade Commission (FTC) or the Department of Justice (DOJ) take.

A Broken System

Amid renewed interest in antitrust activity from Congress and the White House, NACS is working with policymakers to highlight market failures that put the convenience industry at a disadvantage. Payments is one of the top areas where our industry experiences a market failure due to the lack of competition. Having a duopoly on the market, Visa and Mastercard use their dominance to set the prices that the banks charge retailers each time a card is swiped in their stores. Furthermore, they have used exclusivity agreements to block smaller competitor networks. An egregious example is that banks are required to enable two networks on a debit card transaction, yet on transactions where a customer chooses to not enter a PIN, the bank has only enabled one network, either Visa or Mastercard. NACS has advocated for the FTC and DOJ to investigate the major card brands. The DOJ has started down this road by blocking Visa’s attempt to acquire payments company Plaid. And, the DOJ is investigating whether Visa’s work to block competition among networks that handle debit transactions violated antitrust laws. Of course, given the broken credit card market, more is needed from Congress, DOJ and the FTC to try to bring real competition to credit cards.

NACS has advocated for the FTC and DOJ to investigate the major card brands.

Unfair Pricing

NACS is also engaging with relevant federal authorities in channel price discrimination against the convenience industry. For decades, certain suppliers and manufacturers have charged higher prices to our industry than they do to other retail channels, such as big box stores or grocery stores, for the same products. This often occurs regardless of the sales volume or the delivery method. NACS has found many instances where convenience retailers are charged significantly higher prices for nonalcoholic packaged beverage products compared to competitors’ retail prices. Often, the only reason for these higher prices is that the manufacturers and distributors are selling to our channel. The problems don’t stop with being charged higher prices. Often, convenience retailers are not allowed to purchase certain popular package types or sizes simply because they aren’t designed for our channel. This treatment of our industry must come to an end. When retailers are purchasing the same amount of product, delivered in much the same way as our competitors, they should pay the same price as other retailers.

Congress remains active on antitrust cases, including examining current issues through a series of hearings. And federal agencies, spurred by the president’s executive order, are reevaluating what they can do on these fronts. NACS will continue to work with federal authorities on these antitrust issues and others that may arise in the coming months.

Jon Taets

Jon Taets

Jon Taets is NACS director of government relations. He can be reached at jtaets@ convenience.org.

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