Alvaro Bedoya, one of Biden’s remaining progressives on the Federal Trade Commission, argued recently in The New York Times that the agency should expand enforcement of the often ignored Robinson-Patman Act to protect small retailers and especially small, independent grocers.
Congress enacted Robinson-Patman in 1936 out of alarm that small retailers had to compete with the Great Atlantic and Pacific Tea Company’s (A&P) stores and other national chains that had greater efficiencies and could therefore offer consumers lower prices and more choices. Robinson-Patman is not quite a zombie law, unenforceable like the Texas law mandating that cars have windshield wipers but not mandating windshields. But it is a law that courts and regulators have ceased to rigorously enforce because of judicial precedent—based on decades of experience in one case after another that often found this statute at odds with the main body of antitrust law. Courts often find there are no competitive and consumer benefits to keeping out the most efficient actors in the marketplace.
As this law fell by the judicial wayside in the 1980s, Walmart, Costco, and Target brought more choice and lower prices to consumers. The downward pressure on inflation from these big box stores was soon dubbed “the Walmart effect” by economists. There is no denying that effect has been a boon for millions of American consumers.
The real pain for all consumers (and workers and taxpayers) comes from the continuous harassment of business by the FTC. The agency’s fervent opposition to mergers has frozen business activity and prevented new efficiencies that drive economic growth. I hope that Andrew Ferguson and Mark Meador, Donald Trump’s FTC Chair and new commissioner, realize the dangers of enforcing Robinson-Patman, passed in a fit of New Deal-era hubris.
Above all, I hope they recognize that the great danger is this—a Robinson-Patman revival would put pricing in the hands of federal regulators who represent the behemoth that already controls almost 25 percent of the American economy. That’s the monopolist to be truly worried about.
Bork makes a good case for allowing differential pricing, especially on volume to different customers. The costs involved in making many small orders versus making fewer large orders makes an efficiency in the large order purchasers. This cannot be overcome by the smaller retailer, no matter what they do because to change the line requires downtime and capital costs in excess of making one large run.