A legal challenge to New York City’s planned network of publicly backed grocery stores is asking a federal court to reconsider how decades-old antitrust principles apply when the alleged competitor is a government rather than a private company.
The National Supermarket Association is challenging Mayor Zohran Mamdani’s plan to establish municipal grocery stores across the city, arguing that taxpayer support would allow the stores to sell some products at prices private retailers cannot sustainably match. The association says the program amounts to predatory pricing and threatens existing grocers, according to Bloomberg Law.
The dispute could test the reach of a legal framework that has made predatory-pricing cases particularly difficult to win. Under US Supreme Court precedent, plaintiffs generally must establish not only that a defendant is selling below an appropriate measure of cost, but also that it has a dangerous probability of later recovering those losses through higher prices.
That second requirement poses a significant obstacle for the supermarket association because New York’s stores are intended to use public support to keep prices low rather than eventually increase them to recover earlier losses, legal experts told Bloomberg Law.
The association argues that this distinction is precisely why the traditional test should not control the case. Unlike a private company that eventually needs to recoup losses from customers, a government-backed operation can absorb losses through taxpayer funding, the group said in court filings described by Bloomberg Law. The association argues that conventional concerns about discouraging legitimate price competition therefore apply differently when public money finances the alleged below-cost pricing.
The litigation comes as the city moves ahead with its grocery initiative. Mamdani has said the first municipal store is expected to open by the end of 2027, with four additional locations planned before the end of his term, according to Bloomberg Law. Proposals from potential store operators are due Oct. 16. The supermarket association is seeking to prevent the city from selecting operators while the litigation is pending, while the city plans to seek dismissal of the case.
A High Bar for Predatory Pricing
At the center of the dispute is the Supreme Court’s 1993 decision in Brooke Group Ltd. v. Brown & Williamson Tobacco Corp. That ruling established a demanding two-part standard for predatory-pricing claims: plaintiffs must show prices below an appropriate measure of cost and a dangerous probability that the seller will subsequently recover its losses.
The standard reflects courts’ longstanding reluctance to punish aggressive price cutting because lower prices ordinarily benefit consumers and are a central feature of competition.
David Schwartz, an attorney at Bryan Cave Leighton Paisner, told Bloomberg Law that decades of Supreme Court precedent have discouraged judges from attempting to distinguish harmful price reductions from ordinary competition. Predatory-pricing cases consequently are among the most difficult antitrust claims to pursue, he said.
Sam Weinstein, co-director of Cardozo School of Law’s Heyman Center on Corporate Law and Governance, similarly told Bloomberg Law that the consumer-harm requirement creates a fundamental difficulty for the plaintiffs. The municipal program is designed to reduce grocery bills, making eventual consumer injury difficult to demonstrate under the existing framework.
Brian Shearer of Vanderbilt University’s Policy Accelerator for Political Economy and Regulation said the complaint effectively acknowledges the difficulty of proving that the city could later recoup its losses. He characterized the litigation as an attempt to establish a new exception to existing doctrine for government-supported competitors, according to Bloomberg Law.
Read more: Canada Competition Bureau, Empire Settle Grocery Property-Control Probe
Public Competition Isn’t Entirely New
The supermarket association also argues that there are few modern precedents for municipal governments directly entering consumer retail markets. Some legal scholars dispute that characterization.
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Shearer pointed to publicly operated pharmacies and liquor stores, state lotteries and other government ventures as examples of public entities participating in markets alongside private businesses, according to Bloomberg Law. Government provision of services is even more common, he said.
Municipal retail ventures have also appeared elsewhere. Somerset, Kentucky, opened a city-operated fuel station in 2014 after complaints from local businesses, but the project did not produce a comparable lawsuit, the city’s communications director told Bloomberg Law.
Atlanta opened the city-supported Azalea Market grocery store in 2025. Mayor Andre Dickens told Bloomberg Law that the project was structured as a public-private partnership and accompanied by assistance for other neighborhood grocers, including $50,000 grants to 15 stores.
The origins and motivation of the New York litigation are also disputed. The America First Policy Institute, a think tank led by former Trump economic adviser Lawrence Kudlow, is serving as co-lead counsel for the supermarket association. Shearer told Bloomberg Law he views the federal litigation and related state cases as politically motivated.
Eric R. Levine, co-counsel for the supermarket association, rejected that characterization and said the group believes both the facts and the law support its case, according to Bloomberg Law.
The antitrust case is not the only legal challenge facing the grocery initiative. The Multicultural Business Coalition has brought separate state-court litigation alleging the municipal stores would disproportionately damage small and minority-owned businesses, according to Bloomberg Law.
Those cases focus less on federal predatory-pricing doctrine and more on the potential economic consequences for existing neighborhood retailers.
Stephen Zagor, a professor at Columbia Business School, told Bloomberg Law that the litigation raises questions about whether city officials adequately examined the effect of subsidized stores on retailers already offering discounted products.
The federal case, however, presents a broader legal question: whether a predatory-pricing doctrine developed largely around profit-seeking private companies can accommodate a government competitor that may have neither the need nor the intention to recover losses by later charging consumers more.
For now, existing Supreme Court precedent remains the benchmark — and the supermarket association is asking the courts to carve out new ground for taxpayer-financed competition.
Source: Bloomberg Law
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