NYC grocers sue city over subsidized municipal grocery stores plan

The group of grocers in Harlem and the Bronx say the taxpayer-financed grocery stores planned by the city are effectively a deliberate displacement of independent grocers doing business in the five boroughs.MANHATTAN (CN) — A coalition of New York City grocers sued the city Wednesday, claiming Mayor Zohran Mamdani’s first-of-its-kind initiative to open five city-run grocery stores, offering a tax-supported 30% fixed discount on staples, is precisely the type of predatory pricing scheme designed to undercut competitors that is barred by federal antitrust laws.In July, Mamdani announced the official rollout of the city’s “N.Y.C. Groceries: A Recipe for Affordability” initiative to open five municipal grocery stores — one in each of the city’s five boroughs ­— following through on a campaign promise to address rising unaffordability for working families in the city.The plan promises to sell a “core basket” of household staples at a 30% discount from competitors’ prices, which will apply to all regardless of income, with those fixed discounts locked in and predictable rather than fluctuating week to week as is the case at private grocers.A group of large independent grocery stores in the city, led by the National Supermarket Association, claim in a civil complaint the tax-financed municipal stores rely on “predatory” pricing that will displace existing competitors and drive the unsubsidized local grocers out of business.“There is almost no modern example of a municipal government entering the retail consumer-goods market, using its own properties to eliminate occupancy costs, immunizing the enterprise from taxes, and then undercutting nearby private businesses through a permanent discount pegged to their competitors’ prices,” the grocers wrote in the antitrust complaint, filed Wednesday in U.S. District Court for the Southern District of New York.The grocers are seeking a permanent injunction under Section 16 of the Clayton Act, stopping the city from implementing the NYC Groceries program, insofar as it employs a discount on Core Basket goods through free rent, property-tax exemption, or “Affordability Payments” drawn from the city’s tax base paid to retailers to cover the losses sustained meeting the 30% discount target.“When government acts as a commercial participant in the retail grocery market with structural advantages unavailable to private firms—free rent, no property taxes, public capital, and Affordability Payments—the Sherman Act applies,” the grocers wrote in the complaint.A mayor’s office spokesperson said Wednesday the administration remains confident “in both the legality and the necessity” of the NYC Groceries program.“By the end of the mayor’s first term, every borough will have a high-quality, affordable grocery store that New Yorkers can count on,” a City Hall representative said. “At a time when too many New Yorkers are struggling to afford the food their families need, we have a responsibility to use every tool available to make groceries more affordable and accessible.”Mamdani announced in July the “Core Basket” set of kitchen staples covered by a mandated 30% discount would include all fresh produce, meat, and seafood, in addition to 20 other essential items like cheese, milk and bread.“Here’s how it will work. Once a month, our five city-run grocery stores will set prices for this core set of goods at 30% below typical retail prices — no exceptions, no gimmicks. The savings will last for the entire month,” he said. “That means no weekly fluctuations nor sticker shock at the checkout line; not for our seniors living on fixed incomes nor for the parents who rely on a regular supply of apple slices to keep toddler tantrums at bay.”Mamdani said New York families 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.Locations for the first two stores have been selected 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’s lawsuit is the second complaint filed against the city over the municipal grocery store initiative. Last month, the Multicultural Business Coalition, a group representing the owners of smaller grocery stores and bodega corner stores, brought a class action in Manhattan Supreme Court similarly challenging the plan for its potential negative impact on competitors.Subscribe 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