Freedom from the Robinson-Patman Act Is Never More Than One Generation Away from Extinction

Lawrence O’Brien, well-known confidant and aide to the Kennedys at the height of their 1960s power, titled his political autobiography No Final Victories. What is true in the grand world of politics is certainly true in the smaller realm of political economy: No victories are final, as the recent attempted revival of the Robinson-Patman Act reveals.

The act was passed in 1936 and never repealed. Robinson-Patman contains several passages, the first of which prohibits sales of “commodities of like grade and quality” at different prices to different buyers where the effect “may be substantially to lessen competition,” unless justified by “differences in the cost of manufacture, sale, or delivery” or to meet competition.

Enforcing the Robinson-Patman Act was the center of the Federal Trade Commission’s (FTC) competition universe until the 1970s, when an overwhelming consensus rejected competitor-protection policy in favor of using antitrust laws to favor competition and consumers. The new consensus prevailed until the Biden administration when the FTC filed its first Robinson-Patman cases in decades, and many across the political spectrum — from Senator Elizabeth Warren (D., Mass.) on the left to Senator Charles Grassley (R., Iowa) on the right — have joined the call for renewed enforcement. These revivalists even attempt to claim “affordability,” as the author of a guest New York Times essay last summer argued that mayoral candidate Zohran Mamdani’s proposal for government-sponsored grocery stores would be unnecessary were Robinson-Patman used instead.

As I detail in a new report for the Competitive Enterprise Institute, these and other revivalist justifications are wrong — wrong on why Robinson-Patman became law, wrong on how it was enforced, and wrong on what revival would mean today. The law originated from the desire of wholesalers to protect themselves against competition. One hundred years ago, most consumers purchased goods, especially groceries, from small, neighborhood retailers. Wholesalers who connected those stores to the manufacturers who made the goods were the most important players of the day in the retail sector, especially politically.

New retailers arose: chain stores, led by America’s largest retailer for more than 40 mid-century years, the Great Atlantic & Pacific Tea Company. The A&P and other chains undersold their smaller rivals, also offering improved quality. Through greater use of data and by achieving larger scale — in part through vertical integration that bypassed wholesalers and other middlemen — the chains better satisfied consumers, causing a fierce political reaction from incumbent retailers and wholesalers.

Those incumbents used the National Recovery Administration (NRA), President Franklin D. Roosevelt’s first attempt to end the Great Depression, to thwart the A&P and other chains. NRA codes tried to prevent retailers from bypassing the dominant wholesalers and prohibited other conduct New Dealers thought unfair. In June 1935, only 15 days after the Supreme Court found the NRA unconstitutional, Congressman Wright Patman (D., Texas) introduced a bill to reenact the NRA codes, written by the leading wholesaler trade association and titled “The Wholesaler Grocers Protection Act.” Senator Joseph Robinson (D., Ark.) quickly cosponsored.

This original version faced strong opposition, including from the Roosevelt administration. The sponsors had to modify the bill, adding various defenses to justify price differences, with some of the key language ambiguous. As a leading history of New Deal economic policy by Ellis W. Hawley concluded, the result was a “vague law,” the “actual effects of which would depend on its administration and interpretation.”

Those who would revive Robinson-Patman ignore this history, as well as what happened next. The FTC aggressively enforced the new statute, often acting as if the original proposal had passed. The act was interpreted to discourage some firms from cutting prices, while encouraging direct competitors to discuss their prices with each other — practices that today would be evidence of potential illegality. Other Robinson-Patman follies became legendary, including raising costs through confusing and byzantine interpretations that encouraged retailers’ trucks to return empty to their warehouses after dropping off supplies, rather than stopping at nearby suppliers to restock. The distorted enforcement also discouraged small firms from forming co-ops to compete with bigger ones and deterred buyers from lowering distribution costs in a vain effort to protect the old wholesaler model.

Robinson-Patman fell from favor in FTC enforcement for two primary reasons. First, by the 1960s, the battle over chain stores was long over — the chains and consumers had won. Buyers voted with their feet, and, after World War II, shopping centers had become ubiquitous, populated by national and regional chain stores selling clothing and other goods. Second, the well-known flaws of Robinson-Patman led the antitrust community to conclude, based on firsthand experience, that the decades-long centrality of the act must end. The many contemporaneous lawyers, businessmen, and academics, and eventually even some agency officials, did not doubt that the evidence they saw with their own eyes was conclusive. The act’s protectionist enforcement was inconsistent with the lofty goals of the rest of antitrust law to protect competition and its main beneficiaries: consumers.

Some argue that despite its flaws and protectionist origins, Robinson-Patman should be enforced merely because it exists. However, there are more than 1,500 federal criminal laws alone, many more than can be enforced sensibly. Governments must choose how to allocate their enforcement resources.

Of course, just as seller power can harm consumers, so can buyer power. But the Robinson-Patman Act was not focused on buyers and does not require buyer power as a prerequisite for liability, unlike other antitrust statutes. We should proscribe problematic buyer power as we do with problematic seller power under statutes that already address such conduct.

Nevertheless, this sensible approach is no longer the consensus, with too many endorsing a Robinson-Patman revival. As we approach that act’s 90th anniversary and America’s 250th, the return of a statute long abandoned shows that each generation must be prepared to refight even the most obvious of past victories.