Washington, D.C. — Following news that Senator Chris Murphy (D-CT) introduced the Fair Prices for Local Businesses Act, a bill that would modernize and strengthen the Robinson-Patman Act and stop dominant “power buyers” from using their size to extract discriminatory prices, the American Economic Liberties Project released the following statement.

“For too long, monopolistic retail giants have weaponized their market power to demand special deals that aren’t available to local pharmacies, bookstores, and grocers trying to compete,” said Katherine Van Dyck, Senior Legal Fellow at the American Economic Liberties Project. “By eliminating a loophole that has allowed power buyers to operate outside the bounds of Robinson-Patman, and by expanding it to cover essential services like delivery apps and credit card fees, Senator Murphy’s bill levels a playing field that has been tilted toward monopolies for decades. These are common sense updates to ensure that the rules of fair competition apply to the 21st-century economy.”

“The power buyers of today pose the same threats as those of nearly a century ago,” added Van Dyck. “They use their power to squeeze out rivals, exploit suppliers, and gouge consumers. Their tactics hollow out the Main Streets of America, make healthy food inaccessible, and are flagrantly anticompetitive. This bill gives enforcers and small businesses the tools to stop them and revive local economies.”

The Robinson-Patman Act (RPA) was passed in 1936 to prevent large chain stores from using their purchasing power to demand lower prices than their smaller competitors, but it has gone largely unenforced since the 1980s. As a result, small businesses today often pay higher wholesale prices than the retail prices charged by power buyers, pushing them out of the marketplace. Over the last 40 years, without RPA enforcement, the American retail marketplace has rapidly consolidated. Today, among supermarkets, 60% of sales occur at just five chains, with Walmart alone controlling 21% of the market. In the world of books, Amazon accounts for over half of all print book sales and over 80% of e-book sales. 

With fewer firms dominating retail, small businesses, workers, and consumers are all feeling the heat. Not only do colossal middlemen price gouge small businesses and consumers, but firms dependent on power buyers are forced to restrain wage growth to break even: underenforcement of the RPA may account for about ten percent of wage stagnation over the past four decades. RPA underenforcement has further contributed to increased consolidation and economic inequality, a decline in business formation and consumer choice, the disenfranchisement of workers, increased fragility in our supply chains, and increased polarization and threats to our democracy.

Senator Murphy’s bill updates the law in key ways. 

It expands the law to cover services, not just physical commodities. For independent restaurants and retailers, the most predatory price discrimination often occurs through digital services, such as delivery app commissions, point-of-sale systems, and credit card swipe fees. By updating the definition of “purchase” to include these services, the bill ensures that dominant platforms cannot charge small businesses higher rates for the same essential infrastructure they provide to larger competitors at a discount.

The bill also removes a loophole for retailers with more than $100 million in annual sales, including giants like Walmart, Amazon, Costco, Kroger, Home Depot, CVS, Walgreens, and Target. These firms have the scale and sophistication to demand preferential treatment or take their business elsewhere. Carbonated beverage giant Pepsi has even said in SEC filings that losing Walmart “would have a material adverse effect” on its business. That type of market power requires legal restraints to ensure fair competition. 

Additionally, to ensure small businesses can seek justice, the bill sets minimum damages equal to the cost of the price discrimination, tripled under the Clayton Act. This provision mandates that courts assume damages at least equal to the higher prices a plaintiff had to pay, removing the need for the complex, expensive economic modeling that currently prevents private plaintiffs from bringing cases.

​​Read Economic Liberties’ practice guide, “Taking on Power Buyers: Expedient, High-Impact Enforcement of Federal and California Price Discrimination Laws” here.

Read our fact sheet on the Robinson Patman Act here.

Read Katherine Van Dyck’s white paper on power buyers here.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; international trade arrangements that promote balanced trade and benefit workers, farmers and small businesses; and wealth is broadly distributed to support equitable political power.