Trends in Consumer Shopping Behavior and their Implications for Retail Grocery Merger Reviews

Retail grocery mergers in the United States most often have been evaluated by the FTC. Through those investigations and litigations, FTC staff economists and experts have established one of the most detailed and well-understood programs of econometrics for merger evaluation. This program generally focuses on the estimation of measures of substitutability and price competition among proximate grocery store locations. In this article, we review the FTC’s approach to retail grocery merger reviews and discuss how recent changes in grocery competition and consumer shopping behavior may significantly affect the way the FTC evaluates such mergers, especially in the post-COVID world.  

By Dimitri Dimitropoulos, Renée M. Duplantis & Loren K. Smith¹

I. INTRODUCTION

In the United States, retail grocery mergers most often are reviewed by the Federal Trade Commission (“FTC”). The FTC’s economic and econometric evaluation of such mergers generally has been flexible enough to adapt to differences across retail grocery mergers with regards to relevant competitors and consumer preferences. However, recently, rapid technological advances and a global pandemic have significantly changed in the way consumers shop for groceries, which may force larger adjustments to the FTC’s standard approach than previously have been required. In particular, the FTC may need to rethink its approach to product and geographic market definitions in light of, among other factors, t