Enforcers Can Protect Small Businesses by Reviving and Expanding the Robinson-Patman Act
Washington, D.C. — As antitrust enforcers accelerate efforts to end the corporate abuse of small businesses, the American Economic Liberties Project today released a new report, “Price Discrimination and Power Buyers: Why Giant Retailers Dominate the Economy and How to Stop It.” Accompanied by a shorter explainer, the report argues for the resurrection and expansion of the Robinson-Patman Act, legislation that was once widely known as the “Magna Carta of small business” but has not been enforced for decades. The report examines the abandonment of the Robinson-Patman Act, the rise of giant power buyers like Amazon and Walmart, and the ways its revival could level the playing field for small business today.
“Reviving the Robinson-Patman Act is an essential part of reviving Main Streets across the nation,” said Katherine Van Dyke, Senior Legal Counsel at the American Economic Liberties Project. “The power buyers of today—like Walmart, Amazon, major grocers, and PBMs—pose the same threats as Standard Oil and A&P did 100 years ago. They weaponize their power to disadvantage rivals and harm suppliers and consumers. Their tactics are illegal, and enforcers should use Robinson-Patman Act to protect small businesses, as Congress intended when it passed the law over 90 years ago.”
The Robinson-Patman Act prohibits price discrimination, which is the charging of different prices to different buyers for the same product. It also prohibits buyers from knowingly inducing or receiving discriminatory prices. Originally called the Wholesale Grocer’s Protection Act, it was passed in 1936 to protect smaller grocers from the increasingly dominant chain store A&P. Indeed, the Robinson-Patman Act was, per the Supreme Court in 1960, designed to “to curb and prohibit all devices by which large buyers gained discriminatory preferences over smaller ones by virtue of their greater purchasing power.” Yet this is exactly what we see today.
Although the Robinson-Patman Act is still law, it has not been enforced for nearly 40 years. The Department of Justice and the Federal Trade Commission ceased enforcing the Robinson-Patman Act in the 1970s claiming, without any real evidence, that the law harmed consumers. As a result, small businesses are now paying wholesale prices that are higher than the retail prices offered by power buyers like Amazon and Walmart, in flagrant violation of the law and without recourse, pushing them out of the marketplace and eviscerating the mom-and-pop stores that are cornerstones of communities.
But with the Biden administration empowering a new era of antitrust regulation, there are signs of progress. In a unanimous vote in June, the Federal Trade Commission advanced a policy statement to resurrect the use of the Robinson-Patman Act to take on the cartel that controls insulin. The FTC has also begun a study on the practices of large retailers and producers of food and consumer packaged products, centering on whether those firms are charging different prices to small firms compared to big ones, or giving preferential access to supplies in shortage to big customers versus small ones.
Read “Price Discrimination and Power Buyers: Why Giant Retailers Dominate the Economy and How to Stop It” here.
Read the corresponding explainer document here.
Learn more about Economic Liberties here.