Baby formula is missing from retail shelves. Gas prices are more than $4 per gallon in every state. A global semiconductor chip shortage has limited the production of new cars and caused a spike in the prices of new and used cars. American families are suffering—and paying more for less at every turn.
The big question is how we got here.
Eighty percent of baby formula production in the United States is currently controlled by only two companies. Now, after a single plant producing baby formula shut down in February, more than 40 percent of the most popular baby formula products are out of stock.
Even before the onset of the COVID-19 pandemic, U.S. oil companies slowed production. Since mid-2020, gas prices have been on an upward trajectory and major oil companies are seeing their highest profits in decades.
A single company in Taiwan produces as much as 60 percent of the world’s automotive microcontrollers. As Taiwan experiences its worst drought in half a century, semiconductor manufacturing has been crippled due to the lack of water necessary to produce these chips.
Baby formula, gas, and semiconductor chips all have one thing in common—these industries have each grown increasingly concentrated over the last few decades, leaving us with fewer and bigger companies controlling larger shares of the market.
So now, we find ourselves at the mercy of a handful of corporate giants for critical goods and services. And when something goes wrong with just one of them, the resulting supply chain snarls send ripple effects throughout the nation. We saw it in February when Abbott shut down a baby formula plant, in May 2021 when Colonial Pipeline and JBS were targeted by cyberattacks, and in August 2019 when a fire tore through a Tyson Foods beef processing plant in Kansas.
Recent crises, such as the pandemic and Russia’s invasion of Ukraine, have laid bare how harmful this market concentration is to our economy.
On May 17, I held an Antitrust Subcommittee hearing on this very issue. That hearing made clear that America has lost much of its supply-chain resiliency. Markets need a diversity of businesses of different sizes able to respond to supply shocks in different ways. But, with mega corporations having acquired or squeezed out many of the small and medium businesses that we rely on to be nimbler and better able to offer alternative solutions to supply shocks, we are seeing the harsh realities of rampant consolidation.
Without healthy competition, we have lost much of the natural checks that are necessary to curtail anticompetitive practices and corporate profiteering. Workers’ wages have stagnated, and the recent, modest increases in wages have not kept up with the rate of inflation. Consumer prices are spiking, and so are corporate profits. Instead of spending money on innovating or increasing production, or investing in their employees, corporations are buying back stock and paying dividends to keep investors happy, at the expense of the rest of America.
These systemic problems require systemic solutions.
In May, President Biden announced how he is using the Defense Production Act to fast-track domestic production and import of infant formula to address the formula shortage as safely and quickly as possible.
Congress has also undertaken a series of actions to provide relief to hardworking Americans.
Democrats have introduced a suite of bills in the House and Senate to tackle price gouging, address price manipulation in the gas market, strengthen competition laws, enable antitrust enforcement against ocean shipping carriers and nationalized oil companies, and ensure essential medical necessities like insulin are affordable.
We passed the Consumer Fuel Price Gouging Prevention Act to help lower gas prices to a fair level by cracking down on price gouging and penalizing market manipulations and two pieces of legislation to address the baby formula shortage — H.R. 7790, the infant formula supplemental funding bill, and the Access to Baby Formula Act.
But to be clear, there is no silver bullet to this crisis, and unless we address corporate concentration in America, our economy will continue to be vulnerable to corporate greed and profiteering. With concentrated power comes concentrated risk, whether its America’s energy supply or the availability of baby formula. We cannot afford to wait until the next crisis before Congress acts to solve this underlying structural problem that allows corporations to abuse their dominance to raise prices with impunity.
We know what the problems are: runaway consolidation and corporate greed. We have solutions within our grasp. Now, we need to take action that puts an end to corporations’ outrageous practices and brings relief to the American people.
US Representative David Cicilline represents Rhode Island’s First District, and is the Chair of the Antitrust Subcommittee.