Joe Biden Calls for the FTC to Resurrect the Robinson Patman Act. It's a Very Bad Idea
02/15/2023Gary Galles
As former Federal Trade Commission (FTC) chairman Timothy J. Muris has recently noted, “President Biden rejects the economics-driven antitrust policies of the past 40 years.” In contrast, President Joe Biden “promised to return to earlier antitrust traditions.” Unfortunately, “those traditions were abandoned for good reason: they harmed consumers.”
An important illustration Muris uses is the 1936 Robinson-Patman Act (RPA), which used to be a lynchpin of antitrust enforcement. After “withering” and “devastating” academic and legal criticisms that “excoriated” FTC enforcement, the agency began moving away from the act half a century ago. However, despite the fact that, in the words of Richard Posner, “The Robinson-Patman Act . . . is almost uniformly condemned by professional and academic opinion, legal and economic,” both the FTC chair, Lina Khan, and the FTC’s newest commissioner, Alvaro Bedoya, have endorsed it.
So what does the RPA prohibit? Among other restrictions limiting the means of creating economies of scale and extending such savings to consumers (i.e., to keep more efficient, larger producers and suppliers from outcompeting smaller ones to the detriment of buyers), it outlaws price discrimination between customers not based on provable cost differences, “where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly.” Its most important application was to large-volume discounts, particularly involving large chain stores that were revolutionizing product distribution—the RPA was commonly called the “anti-chain store act,” and A&P, the largest chain store when the RPA was adopted, was the main target.
https://mises.org/wire/joe-biden-calls-ftc-resurrect-robinson-patman-act-its-very-bad-idea
