Nonsense. Like many market failures it is about consumers facing decisions but lack good information to make their purchase decision or need to optimize over too many competing product parameters.
For supermarket produce there isn't a good way to judge product quality before buying. There is some quality improvement with paying more but usually the improvement is very little compared to the price increment. For instance, a supermarket might sell tomatos at 2.99 for regular tomatos and 4.99 for a premium/organic variety. The taste will only marginally differ so that only few people buy premium. This prevents economies of scale for the better product to drive down the price.
For supermarket produce there isn't a good way to judge product quality before buying. There is some quality improvement with paying more but usually the improvement is very little compared to the price increment. For instance, a supermarket might sell tomatos at 2.99 for regular tomatos and 4.99 for a premium/organic variety. The taste will only marginally differ so that only few people buy premium. This prevents economies of scale for the better product to drive down the price.
Very little about this is about regulation.