17 Jul 2013 Trade Association Supplanting Government Regulators in Restricting Access to Retail Products and Creating New Barriers to Entry

Washington, D.C. – The Retail Industry Leaders Association (RILA) is acting as an extra-governmental regulator, opening a private sector front against the free market by pushing so-called “sustainable” self-regulation that creates barriers to entry for small business and ultimately will limit the choices available to American consumers. These are the findings of Dr. Bonner Cohen in a new report entitled “The Retail Industry Leaders Association (RILA): A Cartel that Threatens Innovation and Competitiveness.”

“RILA has elevated its position on sustainability above company shareholders and consumers,” said Dr. Cohen. “In the absence of hard scientific evidence surrounding climate change, RILA advocates major ‘green’ overhauls in operations, supply chains, store development, product sourcing, real estate and nearly every other aspect of its member retailers’ operations. This is an all-out attack on capitalism, and since it is coming from the private sector itself, no one is noticing.”

In his newly-published paper, Dr. Cohen notes that “[i]n the name of sustainability, RILA has created a green straightjacket that will limit the choices of consumers to those products and technologies that meet the preconceived notions of RILA’s self-appointed stewards of sustainability.” According to Dr. Cohen, these actions restrict product and market access for goods and companies that do not meet RILA’s stringent green tests.

RILA is one of the country’s largest trade organizations, counting more than 200 retailers, manufacturers and suppliers as members. The companies it represents include popular chains such as Wal-Mart, Best Buy, Costco and Home Depot, among others, that have annual sales in excess of $1.5 trillion.

Dr. Cohen also exposes RILA’s political agenda, writing that:

While RILA remains vague about what is meant by the ‘root causes of deeply embedded social and environmental challenges,’ scratch beneath the surface of the high-minded sounding phrases, and the organization’s political agenda is revealed. The elevation of greenhouse-gas emissions to a place of prominence, for example, puts RILA squarely on the side of alarmists who, in the absence of any compelling data, blame human activities, i.e., the burning of fossil fuels, for climate change… While the standards and practices dictated by ‘sustainable’ trade associations do not have the force of law behind them, their effect on businesses and consumers can be as far-reaching as the most sweeping edicts from Washington regulators.

In its 2013 “Retail Sustainability Report,” RILA states: “Companies will often develop individual or industry voluntary programs to reduce the need for government regulations. If a retail company minimizes its waste generation, energy and fuel usage, land-use footprint, and other environmental impacts, and strives to improve the labor conditions of the workers across its product supply chains, it will have a competitive advantage when regulations are developed.”

“This shows RILA’s main mission – to be an extra-governmental actor working toward the same ends as the government’s regulatory bulwark in shaping rules and regulations that restrict free markets rather than assisting the business it’s supposed to represent,” explained Justin Danhof, Esq., Director of the National Center’s Free Enterprise Project. “RILA claims that companies should proactively self-regulate to obviate the need for government regulation, but then encourages this self-regulation as a hedge against inevitable government regulation. Cutting through the convolution, RILA knows its actions are simply a self-regulation precursor to green government regulations which it already supports.”

“RILA’s member companies should carefully scrutinize RILA’s true mission and critically evaluate whether RILA truly represents their interests,” added Danhof. “Does the Chamber of Commerce endorse the broad sustainability overhauls advocated by RILA? It’s not likely.”

RILA’s true agenda is to create a “new monopoly” – whereby large retailers push costly sustainability programs that limit market entry for new shops and products that don’t reach predetermined green standards. In order to protect consumers, shareholders and what remains of the free market, the National Center has been highlighting and criticizing RILA’s push for this new monopoly (under the banner of sustainability) for more than a year.

Starting in early 2012, National Center staffers confronted the CEOs of five major retailers who are all members of RILA – Target, J.C. Penney, Bed Bath & Beyond, Gap and CVS Caremark – about their engagement with RILA. Through its Free Enterprise Project, the National Center demanded these corporate leaders explain how RILA’s goals are consistent with their fiduciary duties to increase shareholder value, and explained how they could adversely affect customers.

And the retail industry took notice. Prominent retail writer Joan Verdon wrote an article detailing the National Center’s work to expose RILA that appeared in more than a dozen major publications nationwide including Bloomberg Businessweek, the Minneapolis Star-Tribune and the Honolulu Star-Advertiser.

In early 2013, the National Center’s Free Enterprise Project continued to pressure RILA members regarding their complicity with RILA’s new monopoly agenda. Through the shareholder resolution process, National Center Chairman Amy Ridenour and Free Enterprise Project Director Justin Danhof, Esq., had conversations with top executives at Best Buy and received assurances that the company would not pursue any RILA initiatives that, in their view, contradicted best business practices dictated by the free market.

Furthermore, at the 2013 Costco shareholder meeting, Danhof confronted company CEO Craig Jelinek and asked him if he would reject any RILA initiatives that would harm Costco’s bottom line. Jelinek refused to answer. That same month, Danhof asked Walgreen’s CEO Greg Wasson how much more a consumer should have to pay for retail products so that RILA members can push so-called sustainable goods. Totally flustered and baffled by the very simple question, Wasson became incoherent and was unable to answer or defend his company’s sustainability practices in any meaningful way.

Next, to assess the impact RILA’s sustainability agenda could have on its member companies, the National Center commissioned a poll asking the American public how much more they would be willing to pay for retail products in order for retailers to comply with heightened, costly sustainability standards. More than half (52 percent) of consumers polled said they would not spend a single penny more for products in order to meet RILA standards, and only three percent said they would be willing to spend ten percent or more.

In the first half of 2013, the National Center also confronted the CEOs of Apple, Sears and Home Depot, educating them about RILA’s new monopoly agenda. Following the Home Depot meeting, National Center President David Ridenour privately discussed the issue of RILA’s new monopoly with company CEO Francis Blake and other top executives. They assured Ridenour that the company does not always agree with RILA and would not pursue an initiative that would harm customers or the bottom line in the name of going green.

Also of note, at the Sears meeting, newly installed CEO Edward Lambert appeared to reject any extra-regulatory mechanism of RILA, saying in part that “[p]ersonally, I don’t like coercive solutions. I think America is overregulated.”

“I agree with Lambert, America is overregulated, and that is why our work to expose RILA’s new monopoly is so important,” said Danhof. “The extra layers of environmental self-regulation it seeks to impose will harm American consumers and company shareholders, and will adversely affect the market for small businesses and new products. Our fight to expose and stop RILA’s new monopoly efforts is an uphill battle, but one worth fighting.”

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than 4 percent from foundations, and less than 2 percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.

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