Fair Markets for Rural America

Letting people fix their things has widespread and bipartisan appeal. All 50 states have introduced bills over the last eight years to ensure that consumers and independent shops can access the manuals, diagnostic software, parts, and tools necessary to repair things, but only six have passed them. Of these six, no bill is universal: Massachusetts’s law covers cars; California and New York’s laws cover electronics; Colorado’s bill targets agriculture equipment and consumer electronics; while Minnesota and Oregon’s bills cover most consumer goods except farm equipment. Of the 29 states that introduced right-to-repair bills this legislative session, 21 would protect farm equipment.

Farm equipment carve outs, and failed bills, demonstrate the lobbying might of manufacturers like Deere to fight right-to-repair. During the 2023 legislative session, the president of the Nebraska Farmers Union joked that “there was hardly enough room in the rotunda” for all of the farm equipment manufacturers’ lobbyists. These bills also draw opposition from Big Tech lobbyists and other corporate interests that can easily overwhelm state legislatures. However, it is important for state legislators to keep pushing for right-to-repair laws that cover all critical equipment, especially the farm machinery that puts food on the table. 

Ending big-box favoritism in the grocery business  

Walmart and dollar stores like Dollar General are having significant impacts on local businesses, particularly in rural communities. Studies find that Walmart and dollar-store openings correlate with nearby small-business closures and long-term community income and employment decline that, on net, cost households more than they save on cheap goods. 

Walmart particularly dominates rural grocery markets. The chain sells 25% of all groceries nationally and in 2019 it sold 50% of groceries in one in three so-called micropolitan areas—population centers outside big cities. As Walmart and other large chains came to dominate food retail, rural food access has gotten worse. Before the 1980s, for example, nearly every small town in North Dakota had a grocery store or two. Today, half of rural North Dakotans live more than 10 miles from the nearest grocery store. More communities lack access to full-service grocery stores now than in 2010. Policymakers have created many incentives to bring grocers to underserved rural communities, with lackluster results. 

Walmart and other consolidated national grocery chains have some scale economies that help lower prices. But they also get better sales terms from wholesalers because they have the market power to demand them. Independent grocers can offer fresh produce for the same price or less than big-box retailers, but they generally can’t compete on shelf-stable products, because even the largest consumer packaged goods companies lack the bargaining power of Walmart. During the pandemic, Walmart demonstrated how this works, threatening suppliers with a penalty for late or incomplete deliveries, which in turn diverted more scarce goods to Walmart while shorting other retailers. Albertsons recently told its suppliers that it will not accept cost increases due to tariffs without prior authorization, which could force suppliers to make up their losses by charging more to less powerful buyers. 

A federal law, the Robinson-Patman Act, bans special pricing concessions based on brute bargaining power. It says that any discounts or promotions need to be based on demonstrable cost savings, such as bulk discounts for larger orders that lower per-unit shipping costs. Independent grocers often form buying clubs to buy in larger, more efficient volumes, yet even then they pay more for wholesale than some chains sell at retail. Federal antitrust enforcers only recently started cracking down on Robinson-Patman violations after generations of non-enforcement.

States can step in if federal enforcers sit back. For one, state attorneys general can use existing federal law to bring Robinson-Patman charges. But they only have the authority to make businesses stop their price discrimination; state enforcers cannot levy other penalties like fines (except in very specific circumstances). 

States can thus introduce local prohibitions on price discrimination that go beyond federal law. Minnesota recently introduced a bill, with bipartisan co-sponsors, that would create an expanded state-level version of the Robinson-Patman Act, specifically for the grocery sector. The law would ensure that all grocers can acquire goods for similar prices, on equal terms, if they meet efficient order minimums and use lower-cost purchasing methods. This would reduce prices at independent grocers, which are more likely to serve rural communities left behind by large chains. The law gives the state attorney general and private grocery suppliers or retailers authority to seek injunctions and civil penalties for violations. 

Strengthening healthcare merger review 

Decades of unchecked mergers and acquisitions have allowed a few corporations to corner the market for essential goods and services, driving up prices and stifling competitive innovation. While the federal government is generally responsible for blocking mergers, state attorneys general have underutilized authority to intervene in deals that would harm their residents, either by joining federal suits or bringing their own. Colorado and Washington recently made headlines for challenging the proposed grocer mega-merger between Kroger and Albertsons, citing concerns that the deal would lead to higher prices and store closures across their states. Washington won its suit, as did the federal government, successfully blocking the deal.

States have proposed legislation to give attorneys general more authority and resources to conduct costly merger reviews. New York, California, Minnesota, and Pennsylvania have all introduced legislation to make it easier for states to challenge mergers and go after other unfair corporate conduct. One market that could particularly benefit from more state-level merger enforcement is healthcare. 

Nearly every part of the healthcare system, from hospitals and insurance to medicines
and pharmacies, has consolidated since the 1990s. Healthcare consolidation harms rural communities by driving service cuts and hospital and pharmacy closures. The federal government considers 80% of rural America “medically underserved.” Rural patients must travel farther and farther to seek healthcare, and increased travel times are associated with worse patient outcomes and higher mortality rates
in emergencies. 

Rural healthcare providers, especially hospitals, struggle to remain profitable serving fewer and fewer people who tend to be older with higher levels of chronic illness. Rural hospitals feel pressure to merge to survive. Between 2005 and 2016 alone, there were 380 rural hospital mergers implicating 12% of all rural hospitals. Nearly 30% of rural communities report experiencing a large hospital chain coming in and buying up a local provider. 

Sometimes a merger is the only option to keep a rural hospital afloat, but in other cases, mergers drive rural hospital closures and service cuts. One study found that struggling rural hospitals were more likely to stay open if they affiliated with a larger healthcare system, while financially stable rural hospitals faced a higher risk of closure if they affiliated rather than remaining independent. For instance, the Pennsylvania Health Access Network found that one in three hospital mergers and acquisitions in the state since 2004 eventually led to a full or partial hospital closure. Merged hospitals and rural hospitals acquired by larger healthcare systems are more likely to eliminate maternal care, surgery departments, on-site diagnostic imaging, primary-care services, and outpatient non-emergency visits compared to independents. 

Studies also find that hospital consolidation increases costs as hospitals face less local competition. Larger hospitals also use their market power to lower workers’ wages, which particularly hurts rural economies where local healthcare systems can be major employers. 

Healthcare is a good example of an industry in which local mergers can seriously decrease competition and raise prices for lifesaving services, but regional deals may not meet the federal threshold for antitrust review. As such, most states require that healthcare companies give advance notice of a merger, but only 16 states have passed laws to give their attorney general (or another agency) special authority to review and approve healthcare mergers. This gives states more power to block deals they believe could raise prices, decrease care, hurt local jobs, or otherwise harm constituents.