It was a tough fight, but false and misleading advertising appears to have edged out inflation as the key culprit in a regulatory battle.
The Council on Wage and Price Stability yesterday filed a brief in support of a Federal Trade Commission staff investigation of the Kroger Co. in which the FTC alleges that Kroger was misleading the public with its "Price Patrol" advertising.
It was only a few months ago, however, that COWPS wrote a letter to the FTC critical of the probe, warning that the kind of competitive advertising Kroger was doing was anti-inflationary. To discourage such advertising through an investigation, COWPS warned, could have inflationary effects.
The FTC had alleged that Kroger's "Price Patrol" ads, which compared Kroger's prices with those of major competitors for each of 150 items, were unfair because the sample of products used was not statistically correct.
Kroger argued, with the apparent support of COWPS, that to apply strict statistical support for such a comparative shopping list would cost so much that comparative advertising would be too costly to perform, and consumers would lose a powerful tool for careful shopping.
But the FTC claimed the problem with Kroger's advertising was more serious than just statistical problems. Kroger, the FTC alleges in its papers, despite its claims to the contrary, does not have lower prices overall.
And the evidence on the public record may be one of the reasons COWPS decided to throw some support to the FTC.
Kroger had said it had left fresh meat and produce prices out of its survey because they were too difficult to price.
In fact, FTC papers show, another survey done by Kroger for itself showed that "Kroger was consistently higher-priced than its competitors on these items."
The FTC found that Kroger had done several studies not used for its advertising which showed that using a genuine random sample of items, Kroger actually lost out in price comparisons to one or more competitors at least a third of the time.
"These checks, which were not conducted weekly . . . were inconsistent with Price Patrol representations," the FTC said.
COWPS, in its filing with the FTC, does express the opinion that Kroger should still be able to do comparative advertising on specific items without having to meet strict survey procedures.
The FTC filings indicate no opposition to comparative advertising, but a concern that before an overall statement that one supermarket is less expensive than another can be made, such a claim be significantly substantiated.