Allen Grunes is a Shareholder with Brownstein Hyatt Farber Schreck LLP. Mr. Grunes previously spent more than a decade at the U.S. Department of Justice (DOJ) Antitrust Division, where he led many merger and civil non-merger investigations in radio, television, newspapers, motion pictures and other industries.
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The Robinson-Patman Act lay dormant for many years before being resurrected at the end of the Biden Administration. Although the Act focuses on some real problems faced by small business in the US, it is probably best to let it go back to sleep.
Introduction
The Robinson-Patman Act of 1936 was aimed at “price discrimination.” In the simplest terms, price discrimination is “selling the same kind of goods cheaper to one purchaser than to another.” The Act also prohibits non-price discrimination; in particular, it prohibits discrimination in promotional allowances and services.
The impetus for Robinson-Patman was the appearance of large “chain stores” with significant buying power. These chain stores sold goods to customers at low prices (and thus were popular) but were existential threats to competing small businesses. The chain stores were able to get favorable treatment from their preferred suppliers and therefore had a significant competitive advantage over other, smaller retailers.
The poster child of Robinson-Patman was The Great Atlantic & Pacific Tea Company (A&P). Congressman Wright Patman (the Patman in Robinson-Patman) worked tirelessly to rid the country of chains like A&P, both through antitrust and through punitive taxation. Interestingly, as documented by Marc Levinson, A&P itself survived multiple government studies, investigations and litigation (including a successful criminal prosecution) and continued to grow and innovate despite the attacks. Ultimately, it fell into decline not because of the shadow of antitrust liability, but because it did not adjust to changing shopping habits as Americans left the cities for the suburbs.
Robinson-Patman is flagrantly protectionist. “Its fundamental aim is not to promote competition in order to benefit consumers, but to protect small business from competition.” In this way it departs from virtually all other antitrust laws.
Lack of Enforcement, Limitations and Calls for Repeal
For many years, neither the FTC nor the DOJ enforced Robinson-Patman. During my time at the DOJ Antitrust Division (1995 to 2007), I don’t believe I heard anyone so much as mention Robinson-Patman.
In private litigation, the statute has fared a little better, but not much. The courts pared back the statute and added requirements making it very difficult for a plaintiff to win a price discrimination case. In Brooke Group, for example, the Supreme Court said that conduct by a supplier aimed at disadvantaging a smaller rival did not violate Robinson-Patman unless it also met the requirements for predatory pricing under the Sherman Act. This essentially made Robinson-Patman superfluous in so-called “primary line” price discrimination cases (where the alleged harm is to a smaller supplier). Later, in Volvo, the Supreme Court declined to follow Brooke Group in so-called “secondary line” cases. The classic “secondary line” case is one in which a favored buyer gets price terms from a supplier that are not available to a competing (and usually smaller) buyer. However, the Court in Volvo limited Robinson-Patman in another way, saying there must be a “substantial” diversion of sales from the disfavored buyer to the favored buyer.
There have been calls over the years for the statute to be repealed. In 2007, the Antitrust Modernization Commission (AMC) recommended that Congress repeal the Act in its entirety. As a matter of theory, the Commission noted that the Act was antithetical to core antitrust principles including price competition. As a matter of practice, the Commission noted that the Act had failed to protect the small businesses it was meant to help. And, as a doctrinal matter, the Commission argued that existing antitrust laws could tackle anticompetitive price discrimination without the help of a statute that was explicitly aimed at protecting small businesses that otherwise could not compete.
The AMC Report largely fell on deaf ears. It was a thoughtful, if somewhat conservative, bipartisan effort, but its timing was not good. In 2008, Democrats had majorities in both Senate and House; that year also saw the election of President Obama, whose priorities lay elsewhere. Plus, there are a few iron-clad rules in Washington, DC: Number one is that you stand on the right side if you are on an escalator in a DC Metro station. Number two is that it is much easier to block legislation than to pass legislation. But there is also a corollary: Once a law is on the books, it is almost impossible to repeal it.
The statute has had a few able defenders in over the years. Matt Stoller offered a spirited defense of the statute and Representative Wright Patman in his book Goliath. Stacy Mitchell has been a tireless advocate for small, independent business, a central concern of Robinson-Patman. Professor Jack Kirkwood, whose scholarship has focused on buyer power issues, is not a defender of the existing statute; however, he has suggested ways in which it could be reformed. But by and large, until recently, Robinson-Patman pretty much gathered dust.
Resurrection
The statute was dusted off at the end of the Biden Administration. In December of 2024, the FTC sued the largest U.S. distributor of wine and spirits, Southern Glazer’s Wine and Spirits, LLC, alleging the company violated the Robinson-Patman Act, “harming small, independent businesses by depriving them of access to discounts and rebates, and impeding their ability to compete against large national and regional chains.” In what is perhaps an attempt to square the circle, the FTC press release adds: “This loss of competition ultimately harms consumers on choice and price.” (Parenthetically, that may be more than mere wishful thinking; an empirical analysis of the US liquor industry suggests that buyer-induced price discrimination can, and in fact has, harmed consumers.)
In a separate statement, Commissioner Alvaro Bedoya nodded to some of the social concerns motivating Robinson-Patman that still exist: “In Representative Patman’s view, as well as others in Congress, protecting a level playing field for small business was critical to the economic life of rural America. . . . Representative Patman and his colleagues were right. As the FTC abandoned the law Congress passed to help small businesses and small towns across America, there has been a parallel decline in economic activity and well-being in those communities.”
The Future?
The FTC’s current Chairman, Andrew Ferguson, dissented from bringing the Southern Glazer’s case, but left the door open to possible Robinson-Patman enforcement in the future.
Ferguson was skeptical that the FTC could meet its burden of proving that “substantial” sales were diverted. He also was skeptical that the FTC could prove that discriminatory sales took place in “interstate commerce,” given the unique (and localized) nature of the three-tier alcohol distribution system. However, he left the door open to bringing a Robison-Patman case in a context more closely aligned with the original Congressional intent: “The Commission should focus its enforcement efforts on price discrimination in the heartland of the concern that animated the Act’s passage—large retailers with buying power. This is not such a case.”
To be sure, Ferguson is sound in his legislative history. The statute was aimed primarily, if not exclusively, at large retailers. Ferguson also clearly felt he was following in the footsteps of the Supreme Court’s Volvo decision, in which the Court differentiated Robinson-Patman from other antitrust laws and refused to read a “harm to competition” requirement into the statute in secondary-line cases.
Interestingly, though, Ferguson departs from Volvo in one important respect. In that case, the Supreme Court did not require proof that the favored retailer had any real market power. After reviewing the economic literature, Ferguson suggests in his dissent that an appropriate case would require a showing of substantial retailer market power: “A sensible enforcement policy would focus on secondary-line cases in which the favored purchaser enjoys substantial market power—precisely the situation where competition is most at risk.”
Reading a market power requirement into the statute is a plausible way to harmonize Robinson-Patman with the antitrust laws generally but also narrows its reach still further. And it raises a few questions.
Finding the right case seems daunting. It may be that there are, or may be, a very small handful of factual scenarios involving anticompetitive price discrimination by retailers with market power that Sections 1 and 2 of the Sherman Act cannot successfully reach. But the FTC’s current litigation against Amazon suggests that, in most cases, Section 2 will be sufficient. Firms with monopoly or monopsony power are likely to engage in a variety of harmful behavior, potentially including price discrimination.
And then there are the practical difficulties of attaching a Robinson-Patman claim to other claims. In the run up to the FTC’s successful litigation to block Kroger’s acquisition of its rival Albertsons, there were objections that the merger would harm independent grocers (essentially a Robison-Patman claim). The FTC declined to bring such a claim, which would have complicated the action significantly. There is a tension between attacking a merger because it is bad for consumers and attacking the same merger because it is bad for others in the supply chain and smaller competitors. I think the FTC wisely decided not to pursue such a claim.
Finally, in his dissent, Ferguson cites with approval Professor Jack Kirkwood’s 2015 article in which Kirkwood lays out the necessary conditions for a Robinson-Patman case based on harmful buyer power.
In the same article, however, Kirkwood talks about what is wrong with Robinson-Patman in its present form. One big problem is that the Act includes a statutory “meeting competition” defense. The “meeting competition” defense allows a seller to grant a discriminatory price or promotional benefit to a large buyer if the seller believes in good faith that a competing seller is making a comparable offer. Kirkwood writes that “[t]his provision, designed to protect innocent sellers, frequently protects large, aggressive buyers.” This statutory flaw may help explain why there have been no successful Robinson-Patman cases brought against the modern-day equivalents of A&P.
In sum, one has to wonder why such a narrowly focused statute, which was not successfully employed even against its intended targets, now should be revived.
None of this is to say that there is anything wrong with the pivot to Main Street conservatism that is going on in antitrust right now. Only that I don’t think it is necessary to dust off Robinson-Patman.