September 26, 2024 – Ohio Attorney General Dave Yost and 11 other Republican attorneys general on Monday filed a brief in federal court in Cincinnati arguing that an attempt by the Federal Trade Commission to block the merger of grocery giants Kroger and Albertsons is unconstitutional.
If successful, their argument would stunt the FTC’s ability to fight anticompetitive practices in a plethora of other areas, from prescription drugs to concert tickets. It would also threaten the independent powers of myriad other executive-branch agencies that also practice administrative law.
The argument made by Yost and his colleagues tracks closely with a proposal made in Project 2025, a controversial roadmap for a potential second administration of Donald Trump. Trump has been trying to distance himself from it.
Food giant
Yost’s office didn’t respond to questions for this story — including whether he regarded one of the attorney general’s core functions to be facilitating grocery mega-mergers.
But in a statement announcing the friend-of-the-court brief he led, the attorney general said, “The FTC’s judges are part of the executive branch, and that means they’re supposed to be subject to removal by the president. Their multilayered protections from removal undermine the president’s authority and violate the constitution.”
The FTC, an agency intended to police anticompetitive practices, in March released a report saying that big grocers such as Kroger and Walmart engaged in several schemes that artificially increased grocery prices during the pandemic, and that they seemed to be continuing.
Even before that, Cincinnati-based Kroger and Boise-based Albertsons proposed a merger. If allowed, it would create a chain that owned 5,000 stores and approximately 4,000 retail pharmacies and employ nearly 700,000 across 48 states. Fearing that would sap even more competition and send grocery prices still higher, the FTC in February sued to stop the merger.
Last month, Yost and three other attorneys general filed a friend-of-the-court brief seeking to end the FTC’s intervention. They claimed that creating a mega-grocer would actually increase competition.
“The acquisition would likely increase, not restrain, competition in the market for grocery sales, benefiting consumers,” it said. “It promises to strengthen Kroger’s ability to compete effectively for consumer dollars in an already crowded field of retailers, and there is no factual or legal basis for the (FTC) to claim otherwise.”
As components of that “crowded field of retailers,” they listed chains such as Costco, Sam’s Club, Aldi, Whole Foods, as well as Family Dollar and Dollar General.
Sweeping challenge
On Monday, Yost and 11 colleagues filed a brief challenging the very constitutionality of the mechanism the FTC used to try to stop the merger. They claim that the agency’s use of administrative law judges is unconstitutional because it doesn’t give the president the power to fire them.
“This case arises from an administrative proceeding that defies the separation of powers. Kroger, a prominent grocery-store chain, is being subjected to proceedings before an Administrative Law Judge of an executive branch agency, the Federal Trade Commission,” Yost and the other attorneys general argue in their brief. “Although the presiding ALJ is part of an executive branch agency that must stand in the chain of command from the People to the President, Congress has legislated to insulate that officer from that chain of command.”
In addition to Ohio, the AGs of Alabama, Georgia, Iowa, Louisiana, Montana, Nebraska, Oklahoma, South Carolina, Tennessee, Texas and West Virginia joined the amicus brief.
What they’re seeking to do could upend decades of rulings in administrative law proceedings conducted by scores of agencies. They include the Environmental Protection Agency, the Securities and Exchange Commission and the Federal Trade Commission.
The brief by Yost and his colleagues argues that earlier guidelines set out in a Supreme Court ruling after the 1914 Federal Trade Commission don’t cover the FTC’s action against the Kroger-Albertsons merger.
In 1933, President Franklin Roosevelt tried to remove Federal Trade Commissioner William Humphrey, who was appointed by Roosevelt’s predecessor, Herbert Hoover. Roosevelt thought 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 said the Constitution never gave the president unlimited power to remove executive-branch employees — especially those in agencies like the FTC, which had quasi-judicial and quasi-legislative functions.
For more than a decade, some in the conservative movement have been trying to roll back that decision. It’s a movement that has also tried to greatly expand presidential power beyond its already vast boundaries.
Controversial ideas
A version of the argument made by Yost and the Republicans attorneys general appears in Project 2025, a 900-page policy document for a second Trump term created by right-wing thinkers. In addition to expanding presidential power by rolling back civil-service protections, its proposals include prohibiting the federal government from calling abortion health care, gutting attempts to counter global warming, and phasing out Title I funding for low-income schools.
In an era of surging corporate power, Project 2025 questions the very need for the Federal Trade Commission to exist.
“Should the FTC Enforce Antitrust—or Even Continue to Exist?” it asks. “Some conservatives think that antitrust enforcement should be invested solely in the Department of Justice (DOJ). The FTC’s commissioners are not removable at will by the President, which many quite reasonably believe violates the Vesting Clause of Article II of the Constitution; it is for this reason that conservatives have long believed in either ending law enforcement activities of independent agencies or ending their independent status. The Supreme Court decision in Humphrey’s Executor seems ripe for revisiting — and perhaps sooner rather than later.”
Conundrum
Yost has been a foe of what he regards as anticompetitive practices on other fronts. He’s overseen several lawsuits against giant health conglomerates that own pharmacy middlemen whom he accuses of using their dominance to raise drug prices.
The suits include one under Ohio antitrust law against Cigna-Express Scripts. Yet if the argument he made in the Kroger case is successful, it would gut what some observers say is among the most serious attempts so far to rein in the pharmacy drug middlemen.
On Friday, the FTC filed a lawsuit accusing the big-three health conglomerates of working to raise the cost of insulin — a drug many diabetics need to stay alive. As with its action to stop the Kroger-Albertsons merger, it was filed as an administrative law proceeding within the FTC.
That’s a process that Yost and his colleagues seem intent on ending.
By Marty Schladen, Ohio Capital Journal
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