NYC confident Mamdani’s municipal grocery stores can beat antitrust claims

A group of New York City supermarkets claim the city’s plan to operate five subsidized grocery stores will offer such artificially low prices that no competitor in normal circumstances could ever charge or maintain.MANHATTAN (CN) — Attorneys for New York City told a Manhattan federal judge Thursday they are confident that Mayor Zohran Mamdani’s plan for city-run, discounted supermarkets is sound against civil antitrust claims from a coalition of local grocers who claim the campaign promise amounts to anticompetitive business practices.Mamdani announced in July the “Core Basket” set of kitchen staples covered by the city’s guaranteed 30% discount would include all fresh produce, meat, and seafood, in addition to 20 other essential items like cheese, milk and bread.A group of large independent grocery stores in the city, led by the National Supermarket Association, sued the city in September, claiming the tax-financed municipal stores rely on predatory pricing that will drive the unsubsidized local grocers out of business.The plaintiffs ask U.S. District Judge Jennifer Rochon impose a preliminary injunction, under Section 2 of the Sherman Act which prohibits attempted monopolization and conspiracy to monopolize, and to halt the city’s selection of a private operator to manage daily operations while litigation progresses.Attorneys for the city on Thursday however argued Rochon, a Joe Biden appointee in the Southern District of New York, could dismiss the motion for preliminary injunction for lack of irreparable harm to the plaintiffs absent the injunction.The city says the program is designed to improve affordability and consumer welfare, and certainly will not harm consumers.“The program is intended to be complementary to existing food retailers, not to replace existing food retailers,” Daniel Kuo Crandall, a lawyer for New York City Law Department’s commercial and real estate litigation division, said during oral arguments.An injunction delaying the rollout of the city’s first two discounted grocery stores, Crandall said, would instead cause concrete and definite harm to food-insecure and lower income New Yorkers.The plaintiffs claim Mamdani’s plan poses an “unprecedented” risk of anticompetitive monopolization, but the city argued Thursday that competition between the public and private sector is still competition.“Competition between the public and private sector can still benefit consumers and still be the type of competition that is supposed to be protected by the antitrust laws, and certainly should not be inhibited by any of the antitrust laws,” Crandall said.The city noted it does not intend for the five stores to have deli counters, butcher counters or other specialty items that other grocers carry, and will encourage New Yorkers to continue to visit other local food retailers for freshly prepared food.Mamdani has said New York families shopping at the city’s markets would save an estimated $90 on grocery bills each month, totaling over $1,000 annually.City-owned grocery stores were one of the key promises Mamdani, a self-described democratic socialist, centered his historic 2025 mayoral campaign on.The city has committed $70 million in municipal capital funding for construction and fit-out of the five stores.Richard Lawson, from the America First Policy Institute, argued Thursday that the city’s mandated discount runs afoul of predatory pricing provisions of federal antitrust law, designed to protect marketplace competition.Rochon did not rule on the preliminary injunction motion from the bench.The first two stores are planned for East Harlem and Hunts Point in the Bronx. The Bronx store, a redevelopment project at the site of the former Spofford Juvenile Detention Facility, is targeted to open first sometime next year, with a goal of no later than the end of 2027.The National Supermarket Association claims about 20 existing grocery stores will be affected given their proximity to the Hunts Point site in the Bronx, while 26 businesses are in range of the site in the more densely populated neighborhood of East Harlem.This lawsuit is the second filed over the municipal grocery store initiative. The Multicultural Business Coalition, a group representing the owners of smaller grocery stores and bodega corner stores, brought a class action in August in Manhattan Supreme Court similarly challenging the plan’s potential affects on competitors.Categories / Business, CourtsSubscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads