Iowa AG joins briefing that would undermine federal antitrust enforcement

Kroger Co. headquarters located in downtown Cincinnati. (Photo: Scott Olson/Getty Images)

Iowa Attorney General Brenna Bird joined 11 other Republican attorneys general who filed a lawsuit in federal court in Cincinnati this week arguing that the Federal Trade Commission’s attempt to block the merger of grocery giants Kroger and Albertsons is unconstitutional.

If successful, their argument would limit the FTC’s ability to crack down on anticompetitive practices in many other areas, from prescription drugs to concert tickets. It would also threaten the independent authority of countless other executive branch agencies that also practice administrative law.

The argument, initiated by Ohio Attorney General Dave Yost, is closely related to the proposal presented in Project 2025, the controversial roadmap for a potential second administration of Donald Trump. Trump is trying to distance himself from it.

Culinary giant

Yost’s office did not respond to questions for this story, including whether he believes one of the attorney general’s main functions is to facilitate grocery mega-mergers.

However, in a statement announcing the friend-of-the-court briefing he led, the attorney general said: “FTC judges are part of the executive branch, and that means they should be removed by the president. Their multi-layered protection against removal undermines the president’s authority and violates the constitution.”

The FTC, an agency tasked with combating anticompetitive practices, released a report in March finding that large grocery stores such as Kroger and Walmart engaged in several programs that artificially raised grocery prices during the pandemic, and it appears that these programs are continued.

Cincinnati-based Kroger and Boise-based Albertsons have previously proposed a merger. If allowed, it would create a network that would include 5,000 stores and about 4,000 retail pharmacies and employ nearly 700,000 workers in 48 states. Fearing this would reduce even more competition and raise grocery prices even further, the FTC filed a lawsuit in February to stop the merger.

Last month, Yost and three other attorneys general, including Bird, filed a friend-of-the-court brief seeking to end the FTC’s intervention. They argued that it would actually be enough to create a mega-grocery store increase competition.

“The acquisition is likely to increase, not reduce, competition in the grocery sales market, to the benefit of consumers,” he said. “It promises to strengthen Kroger’s ability to compete effectively for consumer dollars in an already crowded retail marketplace, and there is no factual or legal basis for the (FTC) to claim otherwise.”

They included chains such as Costco, Sam’s Club, Aldi, Whole Foods, as well as Family Dollar and Dollar General in the “crowded field of retailers.”

Sweeping challenge

On Monday, Yost, Bird and 10 of his colleagues filed a complaint challenging the very constitutionality of the mechanism used by the FTC to stop the merger. They argue that the agency’s use of administrative law judges is unconstitutional because it does not give the president the authority to fire them.

“This case arises from an administrative procedure that opposes the separation of powers. “Kroger, a leading grocery chain, is under investigation by an executive branch administrative law judge, the Federal Trade Commission,” Yost and the other attorneys general argue in their letter. “Although the ALJ chairman is part of the executive branch that must stand in the chain of command from the People to the President, Congress has enacted legislation intended to insulate this officer from that chain of command.”

In addition to Ohio and Iowa, AGs from Alabama, Georgia, Louisiana, Montana, Nebraska, Oklahoma, South Carolina, Tennessee, Texas and West Virginia joined the amicus brief.

What they want to do could overturn decades of rulings in administrative law proceedings by dozens of agencies. These include the Environmental Protection Agency, the Securities and Exchange Commission and the Federal Trade Commission.

The position of Yost and his colleagues is that the earlier guidance contained in the Supreme Court’s ruling issued after the 1914 Federal Trade Commission meeting does not cover the FTC’s actions against the Kroger-Albertsons merger.

In 1933, President Franklin Roosevelt tried to remove federal Trade Commissioner William Humphrey, appointed by Roosevelt’s predecessor, Herbert Hoover. Roosevelt believed that Humphrey was blocking some of his New Deal initiatives and, as head of the executive branch, the president believed he had the power to remove him.

Not so fast, the Supreme Court unanimously ruled in Humphrey’s Executor v. United States. The court found that the Constitution never gave the president unlimited power to dismiss executive branch employees — especially those in agencies like the FTC, which performed quasi-judicial and quasi-legislative functions.

For more than a decade, parts of the conservative movement tried to reverse this decision. It is a movement that has also attempted to greatly expand presidential power beyond its already vast limits.

Controversial ideas

A version of Yost and Republican attorneys general’s argument appears in Project 2025, a 900-page policy document for Trump’s second term created by right-wing thinkers. In addition to expanding the president’s power by rolling back civil service protections, his proposals include prohibiting the federal government from calling in abortion care, gutting efforts to address global warming and phasing out Title I funding for low-income schools.

In an era of growing corporate power, Project 2025 questions the very need for a Federal Trade Commission.

“Should the FTC Enforce Antitrust Laws – Or Should They Still Exist?” – he asks. “Some conservatives believe that antitrust enforcement should be solely the responsibility of the Department of Justice (DOJ). The president cannot arbitrarily remove FTC commissioners, which many argue reasonably violates the vesting clause of Sec. II of the Constitution; For this reason, conservatives have long believed in an end to independent law enforcement agencies or their independent status. The Supreme Court’s decision in Humphrey’s Executor appears to be ripe for reconsideration – and perhaps sooner rather than later.”

Riddle

Yost has been hostile to practices he considers anticompetitive on other fronts. He has overseen several lawsuits against giant healthcare conglomerates that own pharmaceutical intermediaries, whom he accuses of using their dominance to drive up drug prices.

The lawsuits include one under Ohio antitrust law against Cigna-Express Scripts. But if the argument he made in the Kroger case proves successful, it would derail what some observers consider one of the most serious attempts yet to rein in pharmacy drug middlemen.

On Friday, the FTC filed a lawsuit accusing three large health care conglomerates of working to raise the cost of insulin, a drug many diabetics need to survive. Like the lawsuit to stop the Kroger-Albertsons merger, it was brought in an administrative proceeding under the FTC.

Yost and his colleagues seem to want to end this process.

This story was originally published by the Ohio Capital Journal, which is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. The Ohio Capital Journal maintains editorial independence. If you have any questions, please contact editor David Dewitt: [email protected]. Follow Ohio Capital Journal on Facebook and X.