How Supermarkets Failed U.S.

For roughly a century, supermarkets have dominated everyday Americans’ shopping routines. We buy medicine from their pharmacies, vegetables from their produce sections, bread from their bakeries, and cleaning supplies from their aisles. A hallmark of convenience and capitalism, the supermarket has undeniably established itself as a necessity in the 21st century. Yet this convenience is enjoyed unequally: 18.8 million Americans live in areas with low access to supermarkets, in part because when a supermarket chain closes a location, it can, and often does, block competitors from taking its place in a bid to redirect customers to the chain’s other locations. In high-poverty areas, this practice creates widespread food insecurity. How can we begin to fill the voids shuttered supermarkets leave behind? The answer may lie in federal antitrust law.

In the wake of a supermarket’s closure, two major corporate practices perpetuate food insecurity. Supermarket chains may impose restrictive, “scorched-earth covenants in their deeds of sale that [forbid] any future owner from operating or allowing a supermarket at that location.” Or, they may “simply leave the building vacant,” a practice known as “going dark,” which similarly prevents competitors from using that location to provide services to former customers. 

These practices form part of a discriminatory process dubbed “supermarket redlining”—a consequence of a campaign perpetuated by the Federal Housing Administration from the 1930s to the late 1960s that drove Black people to urban centers and facilitated “white flight” to the suburbs. The redlined parts of town, where most minority populations were forced to reside, were deemed “unappealing for major supermarket chains.” As a result, supermarkets abandoned Black neighborhoods with disproportionately high poverty rates, following their more profitable white customers into the suburbs. As supermarkets left, other companies were either unwilling or unable to replace them due to restrictive covenants and going dark, and food deserts emerged in their wake.

"Piecemeal, state-by-state court decisions will surely not be sufficient in protecting low-income Americans from systemically-rooted food insecurity."

Disparities in supermarket access remain significant today. In 2002, there were roughly four times as many supermarkets in predominantly white areas compared to mostly Black ones. For instance, a 2018 study found that 31.5 percent of Black Baltimore residents lived in food deserts, or “Healthy Food Priority Areas,” compared to just 8.9 percent of the city’s white residents.

Some areas have taken steps to combat this crisis. A 2018 Washington, DC law prohibits both scorched-earth covenants and going dark; an encouraging report found that 20 new supermarkets opened in DC within five years of the law’s enactment. In Washington State, the state Attorney General forced the grocery store chain Albertsons to remove a scorched-earth covenant that had transformed Bellingham’s Birchwood neighborhood into a food desert for eight years—a “huge victory for the community.”

However, legislators and activists fighting for similar progress face setbacks from courts that consider the impacts of anticompetitive practices from the perspective of “the average consumer”—a middle-class American with access to a vehicle or public transportation and enough expendable time to travel across town for groceries. A court must define a business’s market to assert that it is violating antitrust law, and the assumption that shoppers have access to transportation leads many courts to label entire cities rather than distinct neighborhoods as markets. In Acme Markets v. Wharton Hardware & Supply Corp., a New Jersey District Court defined the market for a single grocery store as both Medford and Marlton, two adjacent towns. This definition allowed the court to declare that a supermarket in Marlton had violated a Medford store’s restrictive covenant, which prohibited a competing supermarket from opening nearby. Decisions like this can be quite damaging, especially when imposed on low-income Americans, who are both less likely to live in neighborhoods that contain supermarkets and less likely to have consistent access to transportation. Taking these facts into account, the geographic market for a grocery store must be more narrowly defined in antitrust decisions to account for individuals who cannot conceivably travel far for their groceries.

Even when courts do recognize that scorched-earth covenants and going dark might negatively impact low-income Americans, they often fail to curb these harmful anticompetitive practices. In the 1980s in New Brunswick, New Jersey, the supermarket Davidson Bros. imposed a restrictive covenant declaring that its closing location “shall not be used as and for a supermarket or grocery store of a supermarket type, however designated, for a period of forty (40) years.” Ten years later, in Davidson Bros., Inc. v. D. Katz & Sons, Inc., the New Jersey Supreme Court rejected the argument that “there is need for a supermarket for some unspecified number of low and middle-income residents who presumably do not drive.” The court also argued that “businesspersons, either as lessees or purchasers may be hesitant to invest substantial sums if they have no minimal protection from a competitor starting a business in the near vicinity,” concluding that, “restrictive covenants may increase business activity.” Ultimately, the majority reaffirmed the legitimacy of scorched-earth covenants, even when they pose a detriment to the well-being of low-income communities. Today, New Brunswick is the 13th most severe food desert out of 50 in the state of New Jersey.

An ongoing lawsuit initiated by the Federal Trade Commission (FTC) to block a merger between Albertsons and Kroger demonstrates a novel determination to restrain supermarkets’ monopolistic practices at a higher level. The suit focuses on how the loss of competition between the two retailers might facilitate a surge in prices for consumers, a critical consequence of supermarket conglomeration. Although this suit represents a step toward an America with expanded food accessibility, the FTC should expand its argument to underscore the store closures that occur in the wake of major mergers. By basing its argument solely on price levels, the FTC is neglecting the millions of Americans who reside in food deserts where food availability, not pricing, is the main scourge. 

Food deserts, scorched-earth covenants, and going dark are all consequences of redlining policies and failing antitrust law. Piecemeal, state-by-state court decisions will surely not be sufficient in protecting low-income Americans from systemically-rooted food insecurity. Even if DC is strengthening its supermarket antitrust legislation and Washington State is taking steps to address the role of monopolistic practices in breeding food deserts, many other parts of the country are not. Federal action is urgently needed. The FTC’s lawsuit against Kroger and Albertsons represents a new era for consumer protection; however, its argument fails to acknowledge the risk of food scarcity, not just higher prices, in the merger’s aftermath. It is imperative that the US government clearly and explicitly recognize the harm that scorched-earth contracts and going dark thrust upon low-income communities and put these woeful practices to a definite end.