The Robinson-Patman Act as a Fair Competition Measure

69 Pages Posted: 7 Feb 2024 Last revised: 9 Apr 2024

See all articles by Brian Callaci

Brian Callaci

Open Markets Institute

Daniel Hanley

Open Markets Institute

Sandeep Vaheesan

Open Markets Institute

Date Written: November 28, 2023

Abstract

The Robinson-Patman Act is the single most unpopular antitrust law among practitioners and scholars in the field. It has been the target of withering criticism for many years. In 1966, Robert Bork disparaged it as “the Typhoid Mary of antitrust.” Others, such as the bipartisan Antitrust Modernization Commission in 2007, offered criticisms with more tempered rhetoric but agreed with Bork that the law, by restricting price discrimination and the offering of other special concessions by manufacturers and wholesalers, raised consumer prices and had no sensible rationale. A near consensus has developed among antitrust lawyers and economists that Congress should scale back or repeal the Robinson-Patman Act entirely and that the Department of Justice and Federal Trade Commission should continue their multi-decade, tacit policy of non-enforcement of the law.

These criticisms fail to grasp the law’s basic function. Business competition is structured by myriad laws, including property, copyright, consumer protection, and antitrust laws. To be sure, if low prices are and should be the only purpose of antitrust law and law in general, the Robinson-Patman Act appears suspect. But Congress expressly rejected the ideology of low prices at any cost. Congress granted workers the right to unionize and receive fair wages, notwithstanding any adverse effects these rights may have on consumers. In a similar spirit, Congress enacted the Robinson-Patman Act to protect suppliers and independent retailers from powerful chains that could use their buying clout to extract special discounts and obtain a critical competitive advantage over smaller rivals. The drafters of the law recognized that not all special pricing concessions are the result of buyer power and therefore allowed firms to show that discriminatory discounts are derived from distributional or manufacturing cost savings. The law is not irrational, let alone “the Typhoid Mary of antitrust.” The Robinson-Patman Act is a sensible and targeted measure against buyer power and in favor of operational efficiency. The law remains relevant in today’s economy because of the growth of large retailers such as Walmart and Amazon and the buyer power of big manufacturers in many industries. After extended non-enforcement by the federal government, the Biden administration’s interest in reviving the Robinson-Patman Act is necessary and timely.

Keywords: antitrust, fair competition, Robinson-Patman, price discrimination, buyer power, monopsony power

Suggested Citation

Callaci, Brian and Hanley, Daniel and Vaheesan, Sandeep, The Robinson-Patman Act as a Fair Competition Measure (November 28, 2023). Temple Law Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4717433 or http://dx.doi.org/10.2139/ssrn.4717433

Brian Callaci

Open Markets Institute ( email )

1440 G Street NW
Washington, DC 20005
United States

Daniel Hanley (Contact Author)

Open Markets Institute ( email )

655 15th St. NW
Suite 800
Washington, DC 20005
United States

HOME PAGE: http://https://www.openmarketsinstitute.org/

Sandeep Vaheesan

Open Markets Institute ( email )

1440 G St NW
Washington, DC 20005
United States

HOME PAGE: http://www.openmarketsinstitute.org/

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