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ShortageWatch: “Sorry. No French Fries with any order. We have no potatoes.”

By Matt Stoller


Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on…

Today I’m going to follow up on last week’s issue on shortages. I got a TON of feedback, and the topic even came up at last week’s Federal Trade Commission meeting. The good news is that shortages are now on the political radar, with one FTC Commissioner talking about the rise of “Too Big to Fail” industrial firms causing shortages across the economy.


  • A Tennessee judge dealt cheerleading monopolist Varsity Brands a brutal setback.
  • Congress gets interested in how antitrust law intersects with the labor question.
  • Some thoughts on Apple vs Epic Games and the coming end of monopoly app stores.
  • Biden appoints a new FTC commissioner.

First, some house-keeping. For the 20th anniversary of 9/11, I went on the awesome podcast Breaking Points to talk about how corporate America granted an unusually large number of stock options to its executives immediately after the attack when the stock market was depressed. This includes firms like Merrill Lynch, which granted its CEO more pay ten days after a bunch of its employees died. The story was published by the Wall Street Journal in 2006, but it’s something most people don’t know. It always makes me mad, and Saagar Enjeti and Krystal Ball let me rant about it.

And now…

Shelves, Empty, Hamster Buying, Sold Out, Business

“Sorry. No French Fries with any order. We have no potatoes.”

In the last BIG issue, I asked you for help identifying shortages in your neck of the woods. Hundreds of you responded, so I’ll talk about some of the shortage stories you are sharing, as well as how this problem is resonating among policymakers.

My favorite story is quintessentially American, and un-American, at the same time. It’s from a Florida realtor who was in a hurry and stopped at a Burger King for lunch. He saw a sign, “Sorry. No French Fries with any order. We have no potatoes.” At first he thought he was imagining things. What kind of fast food place runs out of fries? Is this, he wondered, a sign of things to come?

It’s a good question. Fast food exists in a land of plenty, of surplus, of mass produced food with a reliable infrastructure of trucks, trains, farms, and distributors. Shortages of everyday goods conflicts not only with most of our lived experiences, but also with our very conception of who we are. There’s a name for this framework, and it’s called affluence.

In 1958, John Kenneth Galbraith coined the term “The Affluent Society” to describe a nation beyond material concerns, a nation with immense unthinkable wealth. In such a world, with consumer sovereignty paramount, the only way to go without is if you cannot afford something, not if society can’t produce it. Think about all the politicians who say ‘in the wealthiest country in the world surely we can afford XYZ.’ For the last sixty years, with the exception of the oil crisis in the 1970s, we haven’t had to think about production. If you have the money, you can get the stuff. But now our production systems, once so resilient and strong they appeared invisible, are breaking down.

So what is happening in the case of this particular Burger King? It’s hard to say, but the problem is clearly widespread. Taco Bell, Chick-fil-A, and Starbucks are having trouble sourcing ingredients, as are school and college cafeterias. Here’s one notice posted on Reddit on school districts having similar issues.

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One culprit is the food distribution industry, which is highly consolidated (due to the standard litany of anti-competitive tactics like mergers and exclusive contracts with customers and suppliers). Problems at some of the biggest firms, like Sysco, have even forced summer camps and restaurants in some areas to shut down.

Burger King uses McLane distribution, a leading firm for grocery distribution. McLane is having trouble recruiting drivers, which is a clear problem everywhere. You’ll hear a number of causes for this shortage, from poaching by Amazon to a large number of truckers retiring rather than be on the road during the pandemic. Here’s a BIG reader on the problem.

Truck drivers that would transport cargo on flatbed trucks are being recruited away by Walmart and Amazon to exclusively pull box trailers or shipping containers. Large items like steel piles and premade concrete pieces either can’t fit or can’t be loaded into containers or box trailers. Vendors tell me demand is as high as 40:1, meaning for every available flatbed truck there are up to 40 waiting customers. The roads around the NYC metro area are as clogged with truck traffic as ever, but we’re facing longer waits and higher prices to haul non-containerized cargo.

If you listen to transportation executives, they’ll tell you the real cause. “It comes down to money for drivers in many respects,” said Mark McKendry, regional vice president of intermodal at NFI Industries. “If we get the pay right, you know, we’ll have a little more flexibility.”

Driving a truck, which used to be a middle class job in the 1970s, has become a cyclical low-paid profession with high burnout and little stability, a so-called “sweatshop on wheels.” While it’s tempting to blame this situation on trucking firms, the reality is that the problem is due to the market structure of transportation created by the deregulation of the 1970s. Prior to deregulation, state and national regulators set routes and prices for trucking firms, which allowed for sufficient margin to make trucking a unionized well-paid profession. Such rules raised shipping prices and were often needlessly bureaucratic, but also ensured the system would be stable, free from ‘ruinous competition,’ as well as absurd drops and spikes in pricing and wages.

Jimmy Carter, however, and a litany of Democrats, simply hated the union representing truck drivers, which was the Teamsters. Carter advisor Alfred Kahn, the economist who later deregulated airlines with Stephen Breyer’s help, was explicit about lowering trucker wages and breaking their political power. (Kahn, not coincidentally, is beloved by center-left antitrust scholars.)

The deregulation of the 1970s forced trucking firms to compete against each other to offer lower shipping prices, and the way they did this was by lowering pay to their drivers. Trucking on a firm-level became unpredictable and financially fragile, so for drivers the scheduling became nightmarish and unsustainable, even if the pay during boom times could be high. Today, few think trucking has a future, and even though pay is high, the scheduling is crushing drivers. And so, because we’ve allowed an unregulated trucking system for decades and treated truck drivers like crap for forty years, increasingly we can’t count on getting french fries from Burger King.

The Bicycle Monopoly Problem

As Covid caused consumers to focus on outdoor activities, many turned to biking. It turns out that bicycles and bike parts are in serious shortage. Here’s one reader.

Great newsletter! My latest example is buying a US (hand) made bicycle from in Portland, OR. They make their own frames and assemble complete bikes using US made parts as much as possible. I placed a deposit around six months ago and was just informed that I’m looking at an approx one year wait from now due to part, aka supply chain, delays. I mention this because it looks like another example of how small businesses are last in line, ultimately making it very difficult for them to survive.

The bicycle industry has a well-known monopoly problem. One major player is Shimano, which is a Japanese firm that has tremendous market power in the industry.

The industry, particularly key parts is very concentrated by Shimano. In some parts they have over 80% market share. Additionally, despite how they are badged there is major concentration in frame manufacturing in China and Taiwan. Walk into a bike shop and they have almost no inventory. Because of size, the main part manufacturers are supporting the big brands, like Trek, and starving the smaller companies. The current wait for a new bike ranges 6-9 months if you can get into the queue. This is more than just a short term demand spike.

Bicycle parts, specifically disc brakes and chains, two of the biggest consumables for any bike owner

The other lesser known player is SRAM. As a different reader told me, “SRAM (big industry supplier of key parts) seems to be rolling up a lot of other companies into what can only be described as a mega supplier. You can now buy literally every single part needed on a bike other than the frame from them and I’m told they’re squeezing bike manufacturers for all they’re worth.”

Market power, in other words, had led to output reduction, because the production is in East Asia and the ports are overloaded. And remember, this isn’t some new technology. While bikes are constantly improving, the basic technology is almost two hundred years old.

Whither Plastic? Lab Supplies, Boat Parts, and the Texas Deep Freeze

There is a very serious problem in getting supplies for labs. Here’s one reader.

I work in a biology research lab at a university. Just about every single plastic item we try to order including pipettes, tips, flasks, tubes, Petri dishes, tissue culture dishes, gloves, etc is back ordered for months. In the past when I have ordered these items they’ve shipped the same day. The ones I tried to order today said shipping in 5 months. This has been getting progressively worse over the last year. Today my lab mates and I were talking about how we actually can’t get our work done because we do not have the supplies, because no company seems to have them in stock.

This one’s probably a result of concentration in a few areas. There is consolidated distribution – Thermo Fisher and VWR have durable market power in selling lab supplies. They are, in their own words, a “duopoly.” But it’s not just horizontal consolidation in the distribution layer for these supplies. Thermo Fisher also makes many of them, indeed being one of the members of the biopharmaceutical plastic bag cartel for vaccine production.

Additionally, it’s hard for distributors to even source many of these items. The further you go back up the supply chain, the more one culprit sticks out: plastic resin. Resin is used to make pipettes for lab work, but it is foundational to so much more. The resin shortage is hitting industries across the board. Here’s another BIG reader.

My company performs marine construction; docks, piers, waterfront repairs, and the like for both private and government customers. The industry is facing a myriad of shortages and delays.

Supplies of UHMW and HDPE (plastics used as low-friction sliding surfaces) products are bottlenecked not at the fabricator or mill, but at a single Texas plant making the majority of domestic plastic resin. The Texas winter storm last year caused a major plant failure, with no return to normal production in sight. In order to keep up with the service life of certain pieces, I have to order replacements as soon as the originals arrive!

Many of these products require resin, and most of it is made in Texas, largely to take advantage of the shale boom last decade with huge amounts of investment in petrochemical plants. That said, Texas never built the infrastructure to handle the amount of plastic being produced in that area; Houston’s port was already overloaded before Covid. While firms are building plastic production facilities in Pennsylvania, West Virginia, and Ohio, chemical plants take significant amounts of capital and time. Pricing variability matters, as does being able to dump cheap resin on the market via predatory pricing.

Where the $&*$@! Are the Mason Jar Lids?

Then there are canning lids for mason jars. Canning and mason jars is a big deal, not just because there’s a community of people who love doing it, but because businesses use a lot of jars. Here are a few submissions.

Our local hardware store hasn’t seen individual canning lids for over a year

And another.

It’s been very difficult to find new lids for canning jars since Covid hit last Spring. While it’s possible to reuse the glass jars, new lids are required when you can something. In the last year and a half I have found a total of 3 boxes of lids at one store that I shop at regularly. Of the 3 I bought 2 of the boxes. It is possible to find new lids on new jars, but like most people who can often, I have plenty of jars. I’ve talked to several people at different stores and they tell me that the lids just aren’t available. Sure, I thought, maybe there were issues with manufacturing at the beginning of Covid times, but there seems to be plenty of lids for new jars. And of course, a box of a dozen lids is much cheaper than a carton of a dozen jars.

This shortage is a result of the conglomerate Newell Brands, which apparently has a monopoly over canning lids through its control of the Ball and Kerr brands. Lids are something of a rounding error on the balance sheet for Newell, so if there’s a shortage, that firm doesn’t so much notice. But businesses that rely on lids, like barbecue sauce makers, do.

FTC Commissioner Chopra: When Too Big to Fail Hits the Supply Chain

I got feedback on many more shortages, I’ve picked out just a few to give a flavor of what’s out there.

Fortunately, our flagging of shortages and its relationship to monopoly has gotten some attention from regulators. Last week, the Federal Trade Commission held a public meeting to listen to the public and to vote on some key action items. One BIG reader, Nicholas Giraldo, spoke eloquently about the lid shortages, and how this is destroying small businesses who make and package sauce. Meanwhile, the commission gave a signal it is paying attention to this problem. In an important statement, Commissioner Rohit Chopra connected stronger merger enforcement to the shortages we’re seeing in the economy.

FTC Commissioner Chopra speaks about supply shortages and vertical mergers.
FTC Commissioner Chopra speaks about supply shortages and vertical mergers.

Here’s Chopra:

One of the effects we are seeing of the growing concentration in our economy is supply shortages. Since the pandemic began, we have seen shortages of critical goods and manufacturing inputs, affecting vast segments of the economy. These shortages are not merely inconvenient—they are slowing the economic recovery from the pandemic. Businesses report “widespread concern about ongoing supply disruptions and resource shortages.” Small businesses are particularly harmed by these shortages, since dominant firms have the power to demand that their suppliers fill their orders first.

The focus on small businesses getting less supply than larger competitors is exactly the phenomenon of power buyers and economic discrimination that I touched on in my last issue. Walmart, for instance, forces its suppliers to deliver on time 98% of the time, or it will fine them 3% of the cost of goods, but smaller competitors can’t do that. That means smaller stores are out of stock more often than big ones, purely because they have less bargaining power.

Chopra touched on more than discrimination, noting the obsessive approach to cost-cutting pioneered by private equity firms who engage in acquisitions. This financial model “reduces productive capacity and resilience,” aka it means shutting down production lines. Market power facilitates such shutdowns. In competitive industries, firms with excess capacity try to find new customers, but when there’s no competition, dominant firms just produce less.

Chopra argued policymakers should became more assertive against mergers, and stop counting efficiencies as valid justifications to allow combinations. Enforcers should no longer “ignore situations where firms in many sectors are becoming too big to fail, and their short-term cost-cutting measures create a risk of widespread shortages and outages.”

The commission then voted to withdraw guidelines it had issued in 2020 to facilitate what are known as ‘vertical mergers,’ which is when a firm buys a customer or supplier. These kinds of mergers, like the roll-up of the biopharmaceutical equipment sector that led to the shortage of specialized plastic bags necessary for vaccine production, do actually lead to shortages and less resiliency. So it’s promising that Chopra made this statement, and that the FTC withdrew this guidance. (Incidentally, for economists out there looking for an interesting research subject, the relationship between vertical mergers and shortages would be quite useful.)

There’s a lot more here, because our economy is immensely screwed up. Next issue I’ll talk about medical supply shortages. From what I’ve gathered, it feels increasingly Soviet out there. We seem to be controlled by distant centralized actors with little information or guidance about what we are experiencing. But at least, in a democracy, we can demand our government do something about it.

Judge Deals Cheerleading Monopolist Varsity Brands a Brutal SetbackRegular BIG readers know of the cheerleading monopolist Varsity Brands, a Bain Capital owned firm that controls the sport of cheer. I’ve reported on it a number of times, and now there’s a class action antitrust suit against the firm in Tennessee. Late last month, the judge issued a ruling which is quite promising for the plaintiffs who brought the case.

Antitrust is messed up for a lot of reasons, but a very basic one is that judges don’t like to handle complex business litigation. So they often just dismiss antitrust suits before they get to trial, or even before the plaintiffs can ask for internal documents from the monopolist to see what happened (this is called ‘discovery’). It’s easy for judges to do this because the Supreme Court has made it much easier to toss out antitrust cases, even when there’s a good claim. So monopolists almost always file a motion to dismiss, and often win.

That’s what Varsity did this time, hoping that they would be able to avoid both discovery of sensitive documents, and an embarrassing trial. However, in this case, Judge Sheryl Lipman brutally smacked down the motion to dismiss. On every single count, Lipman ruled that the plaintiffs should get their trial.

The plaintiffs made the case that Varsity controls the sport through a number of mechanisms. They noted it owns 90% of All-Star cheer competitions and sells 80% of All-Star apparel. Varsity controls gyms, which is where cheerleading happens, by enticing gym owners with rebates to sign exclusive supply contracts. Varsity also bought up competitors, and schemed with the nonprofit governing the sport – the United States All Star Federation – to block rivals from getting access to various championship tournaments.

Varsity disputed all of these claims. They claimed the plaintiffs didn’t show there was a monopoly, pointing to the fact that there are still competitors in the market. Lipman responded with, ‘nah, Varsity has 90% market share, and if that’s the case, it’s a monopoly.’ They made technical objections to bringing suit against Varsity’s various exclusive contracts with gyms and rebate schemes, to which the judge ruled, ‘nah, that looks suspicious.’ Varsity said it’s too late to contest its ten plus mergers that facilitated its monopoly, the judge rejected that claim as well. And Judge Lipman concluded by noting that the possibility of a conspiracy between Varsity and USASF is also viable.

All in all, it’s a pretty devastating loss for Varsity. Now there’s discovery, which means that the plaintiffs get to ask for internal documents from Bain and Varsity. And perhaps a trial, presided by a judge who takes the antitrust claims seriously.

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What Does Antitrust Have to Do with Labor? As policymakers get more intrigued by the possibilities of expanded antitrust law, there’s increasing interest in how competition law applies to labor. The House Antitrust Subcommittee is holding a hearing on the topic later this week, and both the FTC and DOJ are increasing resources dedicated to wage-fixing. In New York, the new Abuse of Dominance antitrust bill includes provisions that are specifically oriented towards employer dominance over workers.

Broadly speaking, the goal of competition and labor law in a production-friendly society should be to enable people who work for a living to cooperate with one another through coops, unions, farm supports, trade associations, standard-setting bodies, and so forth. At the same time, antitrust and other forms of corporate law should stop capital from colluding to suppress labor and business production. This is done by blocking mergers, ending various forms of predatory pricing or exclusive arrangements, as well as breaking up banks and regulating financial markets.

If you want to know the details of how antitrust law applies, or should apply, to workers, law professor Eric Posner has a new book out called How Antitrust Failed Workers. I wrote a review of it for the American Compass. While there are some problems with the book, it’s an important contribution to the field.

Some thoughts on Apple vs Epic Games and the coming end of monopoly app stores: In August of last year, Epic Games filed a critical antitrust suit against Apple, accusing the iPhone maker of preying on app developers through its monopoly control of the Apple app store. This antitrust suit was far more than a simple business dispute, it broke the silence from the business world, and launched a civil war in the business community, with big tech on one side and everyone else on the other. Since the case was filed, states and the Federal government have begun considering restrictions on app stores, and South Korea actually implemented a law blocking Apple and Google from forcing app developers to use an exclusive payment mechanism.

Last week, Judge Yvonne Gonzalez Rogers ruled on the original Epic claim. My best legal sources had been telling me for months that the Epic Games legal strategy was fatally flawed from the start, just straight-up bad lawyering by biglaw powerhouse Cravath. And sure enough, because of the narrow state of antitrust law, Epic Games lost the case; Rogers ruled that Epic floundered on every Sherman Act claim, failing to define the market, breaching its contract with Apple, all in an attempt to avoid Apple’s 30% app store fee. Apple celebrated, and Epic’s CEO Tim Sweeney vowed to appeal.

But, and this is what’s interesting, the judge ruled for Epic Games on one count of California’s Unfair Competition Law, saying that Apple’s behavior, whatever its market power might be, was unfair, and an antitrust violation in its incipiency. I read this as Rogers wanting to rule for Epic, but not finding any legal grounds to do so under the narrowed scope of antitrust law. In her ruling, the judge said that Apple can no longer block developers from communicating with their customers, which means they can direct customers to other ways of buying their apps that don’t involve Apple. That said, Apple is still in control of its monopoly app store, so it’s not clear yet how this ruling in and of itself will change app stores.

That said, this case has become more than a legal question. There is the legal element, of course. Hopefully, the case will go up to the Supreme Court, and judges will have a chance to revisit some of the narrow case law that hemmed in Epic. But more importantly, app store bills will pass in multiple jurisdictions, and legislatures will see this case as a reason to strengthen antitrust law in general. The most significant consequence of this case is what I noted when it was first filed, which is that businesses across the board are now willing to go public about market power problems. And the importance of that cannot be overstated.

Biden Appoints a new FTC Commissioner: Last week, Biden appointed Georgetown Professor and former Al Franken Senate staffer Alvaro Bedoya to take over Rohit Chopra’s slot at the FTC, as Chopra will be moving on to run the Consumer Financial Protection Bureau. It’s too early to know how Bedoya will operate as a commissioner. Bedoya is a progressive and a specialist in surveillance and consumer protection issues. He doesn’t have a track record in antitrust. Hopefully he’ll support the stated Biden administration policy of forcing more competition into concentrated sectors of the economy.

Once again, if you’ve seen a shortage in your neck of the woods, let me know about it.

Thanks for reading. Send me tips on weird monopolies, stories I’ve missed, or comments by clicking on the title of this newsletter. And if you liked this issue of BIG, you can sign up here for more issues of BIG, a newsletter on how to restore fair commerce, innovation and democracy. If you really liked it, read my book, Goliath: The 100-Year War Between Monopoly Power and Democracy.


P.S. For some reason I’ve always hated this duopoly.

I live on the California coast in a 50-year-old condo building. It’s a 3 story building with 2 elevators. The elevators will be in need of replacement soon. There are only two possible elevator companies we can work with, Thyssen-Krupp and Republic. They quote almost exactly the same prices at about $100,000 per elevator. I ran into an elevator repairman on the street (I looked at the name on his van) and asked him if he would come by the building. He said his small firm had been bought by Thyssen-Krupp (or Republic, not sure which) and he told me it’s a duopoly.

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