New York City is facing a second lawsuit from private grocers over Mayor Zohran Mamdani’s city-run supermarket initiative.
The latest case, filed in federal court Wednesday morning, alleges that the administration’s plan to roll out five government-funded stores will undercut local competitors in violation of US antitrust laws. The suit is led by the trade group National Supermarket Association, with backing from other retailers and private grocers.
It follows a lawsuit filed last month at the state level, in which the Multicultural Business Coalition said the Mayor’s Office is creating an unfair business environment for NYC vendors.
NYC businesses say they can’t compete with Mamdani’s grocery stores
Mamdani’s grocery plan will establish a set of supermarkets across the five boroughs on city-owned property. Set to open by 2029, the administration said it will subsidize a 30% discount on core goods like meat, dairy, and produce at all locations. This financial support will be in addition to the rent and property tax forgiveness provided by the city’s Economic Development Corporation.
Mamdani has pledged $70 million to initially open the stores, $30 million of which will go toward building the East Harlem location from scratch.
Local retailers have told Business Insider that they won’t be able to compete with the lower prices offered at the city-run stores, which will be located in each borough near major train lines. Grocer profit margins are already low — around 1% to 3% — and the plaintiffs in both cases feel that the city-run stores will unfairly divert customers from neighborhood grocers.
“If I had an opportunity to sit with Mamdani, I would say do not do a supermarket that’s going to be lower cost for people,” Yesi Morillo, who runs a small business in upper Manhattan, told Business Insider last month. “There are supermarkets here that have been here for decades that have been serving the community and where the community feels comfortable shopping.”
In the federal case filed Wednesday, the NSA and associated grocers are asking the court to do two things: Rule that the city-run stores violate key federal antitrust laws and block Mamdani’s planned discount on core goods.
“A tax-supported discount designed to undercut competitors is precisely the type of predatory pricing scheme prohibited by the Nation’s antitrust laws,” the lawsuit says.
EDC leaders added they are considering offering subsidies to some local NYC grocers to alleviate their fears about competition from the new city-run stores, but none have been announced.
The Mayor’s Office did not immediately respond with comment on the September 9 suit. At an August press conference, Mamdani told reporters that “I’m confident in both the legality of this — that it will stand up in court — and the importance of delivering it.”
In the meantime, the city is accepting applications from prospective operators to run the supermarkets. Those applications are due in October. One applicant told Business Insider that it’s financially challenging to operate grocery stores — big or small — and “It’s going to be important that the city, and the operator, understand those economics.”
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