New York City is facing a second lawsuit from private grocers over Mayor Zohran Mamdani’s a city-run supermarket initiative.
The latest case, filed in federal court Wednesday morning, claims the government’s plan to roll out five publicly funded stores will undermine competition. local competitors violates U.S. antitrust laws. The lawsuit is being led by the trade group National Supermarket Association, with support 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 New York merchants.
Businesses in New York say they can’t compete with Mamdani’s supermarkets
Mamdani’s shopping plan will include a range supermarkets in the five boroughs on city property. Due to open in 2029, the government says it will subsidize a 30% discount on core goods such as meat, dairy and produce at all locations. This financial support is in addition to the city’s rental and property tax waivers Society for Economic Development.
Mamdani has committed $70 million to initially open the stores, of which $30 million will go toward rebuilding the East Harlem location from scratch.
Local retailers have told Business Insider they cannot compete with the lower prices offered at the city-run stores, which will be located in each neighborhood near major rail lines. The grocers’ profit margins are already low — about 1% to 3% — and plaintiffs in both cases believe the city-run stores will unfairly divert customers from the convenience stores.
“If I had a chance to sit down with Mamdani, I would say don’t do a grocery store that will be cheaper for people,” Yesi Morillo, who runs a small business in upper Manhattan, told Business Insider last month. “There have been grocery stores here for decades that serve the community and where the community feels comfortable shopping.”
In the federal case filed Wednesday, the NSA and affiliated 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 basic goods.
“A tax-supported rebate designed to undercut competitors is precisely the type of predatory pricing prohibited by the nation’s antitrust laws,” the lawsuit said.
EDC leaders added that they are considering offering subsidies to some local grocers in New York to allay fears of competition from the new city stores, but none have been announced yet.
In response to the September 9 lawsuit, a spokesperson for the mayor’s office said they remain confident in the legality and necessity of the initiative, and that: “By the end of the mayor’s first term, every municipality will have a high-quality, affordable grocery store that New Yorkers can count on.”
In the meantime, the city is accepting applications from potential operators to operate the supermarkets. These applications must be submitted in October. One applicant told Business Insider that it is financially challenging to run grocery stores – large or small – and “It will be important that the city and the operator understand those economics.”
