NYC’s Grocery Plan Could Be Blocked Before Stores Open

NEW YORK CITY— The Mamdani administration’s plan to open publicly owned grocery stores faces a federal lawsuit from supermarket owners who argue taxpayer-funded discounts could drive nearby private stores out of business.

The National Supermarket Association, which represents independent grocers, and two supermarkets filed the lawsuit Wednesday in U.S. District Court in Manhattan against the City and the New York City Economic Development Corporation.

The lawsuit challenges the City’s plan to sell a core group of groceries at prices 30 percent below competing private retailers. It asks a federal judge to block the program from using public money to support those discounts.

What Does The Lawsuit Challenge?

The City announced its grocery program in July as part of Mamdani’s effort to reduce food costs.

The plan calls for five stores, one in each borough.

The City would own the stores and provide the buildings or property, while private operators would handle day-to-day operations such as hiring workers, stocking shelves and managing sales.

The City plans to offer a core basket of groceries at prices averaging 30 percent below competing stores, including: fresh produce, meat, seafood and other common grocery staples.

The City expects the discounts to reduce an average grocery bill by about 15 percent.

The supermarket association argues the discounts could not be matched by privately owned stores because the City plans to absorb costs those businesses must pay themselves.

The lawsuit points to free rent, property-tax exemptions, $70 million in City capital funding and ongoing “Affordability Payments” intended to cover losses from the discounted prices.

The grocers argue those subsidies give the City stores an advantage unavailable to private competitors.

“I continue to be fully confident in both the legality and the importance of our initiative to deliver five city-run grocery stores,” Mayor Zohran Mamdani said.

Where Are The Grocery Stores Planned?

The lawsuit focuses heavily on the neighborhoods surrounding the first two planned stores.

The Bronx store will be built at The Peninsula in Hunts Point, a redevelopment of the former Spofford Juvenile Detention Facility. The project will include hundreds of affordable apartments and commercial space for the grocery store.

The East Harlem store is planned for La Marqueta, a longtime public market on East 116th Street, where the City plans to build a roughly 9,000-square-foot grocery store.

In East Harlem, City Fresh Supermarket operates on East 116th Street, less than one-fifth of a mile from the planned La Marqueta location.

“Why so close?” City Fresh manager Jerry Nunez asked Mamdani at a forum in April.

Mamdani told him East Harlem had residents “being priced out of the basic essentials,” according to Nunez.

Nunez said City Fresh has operated in East Harlem for about 15 years and employs 50 full-time workers.

“You don't survive that long by sitting back and waiting for customers to come to you,” Nunez said at a news conference announcing the lawsuit.

Mamdani has argued the five locations will not significantly affect the hundreds of grocery stores and thousands of bodegas operating across the City.

What Does The Lawsuit Ask A Judge To Do?

The grocers are suing under Section 2 of the Sherman Act, a federal antitrust law that prohibits monopolization and attempts to monopolize markets.

They want the court to declare the grocery program unlawful and permanently block the City from implementing the 30 percent discount when it relies on free rent, property-tax exemptions or taxpayer-funded payments to cover the costs.

The lawsuit also argues the City could violate antitrust law when it selects a private operator and signs an agreement requiring the store to maintain the discounted prices.

The case does not ask the court to decide whether New York City can operate grocery stores at all. Instead, the plaintiffs argue the City must compete under the same economic rules as private supermarkets.

The Hunts Point store is targeted to open by the end of 2027.

The East Harlem store at La Marqueta has a targeted opening in 2029.

The City has not yet selected locations for the planned Brooklyn, Queens and Staten Island stores.

The private-operator bidding process remains open, with proposals due Oct. 16. The lawsuit asks the federal court to intervene before the City moves further into the process.