Lax antitrust enforcement threatens the security of domestic supply chains

There is an emerging school of thought that monopolies and oligopolies allowed to operate due to lax antitrust enforcement are extremely harmful. Two new books, Barons: Money, Power, and the Corruption of America’s Food Industry and The Everything War: Amazon’s Ruthless Quest to Own the World and Remake Corporate Power, make this argument. They harm democracy, lead to lower wages and hinder job creation. Food oligopolies also harm water quality, reduce the quality of life and property values ​​in the locations where they operate, and may have adverse health effects. It is now argued that lax antitrust laws are also harming supply chain resilience in many industries.

Schlosser was interviewed on National Public Radio about his article in The Atlantic, “Do We Really Want a Food Cartel?” “Free market rhetoric “has been cleverly used to thwart government oversight of corporate power, block antitrust enforcement — and eliminate free markets,” Schlosser said. “When four companies control 40 percent or more of a product or service market, real competition no longer exists.” Mega companies can signal to each other how much they want to pay suppliers.

Interviewer Tom Mosley touched on the infant formula shortage we’ve seen in 2021. This shortage occurred when a dangerous pathogen was found in infant formula. The source of the contamination was Abbott Nutrition.

Schlosser pointed out that four companies control 97-99% of the infant formula market. Abbot’s infant formula plant in Sturgis, Michigan, occupies an area larger than 12 football fields. In this factory, the level of contamination was quite constant, a dangerous pathogen that can kill between 40% and 60% of infants infected with it. There were diseases associated with this factory and the factory was closed.

When this one plant closed, the United States lost about 20% of its capacity to produce infant formula. For some specialty formulas, 70% to 80% of the formula was produced in this factory. Access to infant formula has become more difficult day by day. Parents had to work hard to get food for their children. “It’s an extremely good symbol,” Schlosser emphasized, “of what happens when we have an overly concentrated monopoly or oligopoly-controlled food system. “It’s not only wrong, it’s fragile.”

The FDA, which is supposed to ensure food safety, responded with a delay to these reports. “Their food safety section employs the same number of workers today as it did in 1978, and the United States employs approximately 100 million more people. For decades, the FDA has been deliberately underfunded,” Schlosser charged. “Industry groups have fought against any rigorous enforcement of food safety regulations.”

In October, the FDA received a warning that potentially dangerous infant formula was being produced at the facility. The whistleblower sent a 34-page memo detailing all the production quality issues. The FDA did nothing about it. “They met with him, dismissed his concerns, and the factory continued to deliver questionable product,” Schlosser said.

This company used equipment that was over 60 years old. “There were water leaks. It had a lot of amazing food safety lapses. But because of the concentrated power of these companies, they can still ship them,” Schlosser said.

This company, Abbott Nutrition, remains one of the largest producers of infant formulas. “No one from this company has been sent to prison. Nobody was fired.” But this plant – a plant that supplies one-fifth of America’s infant formula – operated “under completely unsanitary conditions. This is what you get with unchecked corporate power,” Schlosser reiterated.

The United States has shown a willingness to act when supply chain resilience issues arise due to consolidated overseas supplies, as was the case with the concentration of semiconductor plants in Taiwan. China has made it clear that Taiwan may be invaded and the chip supply will be controlled by a nation that does not share our values.

As a result, in August 2022, President Biden signed the CHIPS and Science Act into law. The act provided $280 billion in funding to expand semiconductor production in the United States. Since then, tens of billions in subsidies have been awarded to foreign and U.S. semiconductor companies that wanted to build domestic factories. On the other hand, when domestic industries become concentrated, they also gain political power, making it much more difficult to promote resilience.