Washington, D.C. – A bipartisan coalition of 43 members from the U.S. House of Representatives sent a letter yesterday to the Federal Trade Commission (FTC) requesting the agency investigate, and when appropriate bring enforcement actions against economic discriminatory action that violates antitrust laws, including the FTC Act and the Robinson-Patman Act.
“The antitrust laws were designed to protect against anticompetitive economic discrimination and excessive concentration,” the letter wrote. “For example, the Robinson-Patman Act reflects Congress’ determination that discriminatory treatment among competitors is pernicious and should be prohibited. But current enforcement efforts have failed to address these anticompetitive harms, and judges have inappropriately limited the scope of the law despite clear statutory language. Despite Congress’ broad goals in 1936, the FTC has not brought a case under the Robinson-Patman Act in more than 20 years. …We urge the Commission to make enforcement against economic discrimination targeting small and medium-sized businesses a top priority.”
The letter highlights the concerns of the Main Street Competition Coalition about how Main Street businesses like grocers, pharmacies, convenience stores, package stores, restaurants and agriculture producers are increasingly subject to discriminatory terms and conditions because of concentration throughout supply chains. It describes the market power abuses of dominant firms that leave ordinary businesses with less favorable pricing and price terms, less favorable supply, less favorable retail packaging, and the inability to source products in short supply.
The bipartisan coalition was motivated by glaring inequities during the COVID-19 pandemic caused by economic discrimination that had a disproportionate impact on inner-city and rural communities:
“COVID-19 has ravaged America, shuttering many small businesses and highlighting the anticompetitive effects of discriminatory pricing and product supply, especially for small groceries and bodegas. Such effects are passed right onto the consumers as these stores are often the only source for groceries, consumer goods or pharmaceuticals in small towns and big cities. The FTC should use its authority to investigate and bring enforcement actions against discriminatory conduct that violates our nation’s antitrust laws to address economic discrimination that hurt both small business owners and consumers,” said U.S. Rep. Hakeem Jeffries (NY-08), the Democratic co-lead on the letter.
“The Robinson-Patman Act, the Sherman Act, The Clayton Act and Federal Trade Commission Act were all passed to protect small business and encourage competition. This is best for the consumer and for the free market, ensuring that shoppers receive the best prices, and that farmers and ranchers don’t suffer from high levels of concentration,” said U.S. Rep. Louie Gohmert (TX-01), the Republican co-lead on the letter. “To protect the pocketbooks of Americans and the ability for small businesses to flourish on a level playing field, the FTC must enforce the laws on the books and stop allowing big businesses to create monopolies and increase costs.”
Advocates from the Main Street Competition Coalition weighed in about the strong showing of bipartisan Congressional support for the enforcement of antitrust laws that were always intended to level the playing field for all business:
“On behalf of America’s independent community grocers, we thank representatives Jeffries, Gohmert and all 43 members of Congress who signed this letter for their leadership on this important issue. A lack of enforcement of antitrust laws in the grocery marketplace has allowed dominant retailers to exert their immense economic power to secure favorable terms and tilt the competitive playing field against their independent grocer competitors. We hope this bipartisan display of support from Congress will lead to a course correction in how U.S. antitrust laws are enforced,” said Chris Jones, National Grocers Association (NGA) SVP of government relations and counsel.
“Small business motor fuel marketers continue to get the short end of the stick compared to their big box/dollar store competitors.?It’s time for Congress and the FTC to revive the Robinson-Patman Act to help these small businesses compete on a level playing field or else non-enforcement will likely lead to more consolidation and higher prices for consumers,” said Energy Marketers of America (EMA) President Rob Underwood.
“You don’t have to look far to see where industry consolidation through mergers or acquisitions has had an adverse impact on consumers. In health care many physicians are no longer independent, and the cost of drugs is driven upward by an increasing lack of competition in the pharmacy benefit manager market. Community pharmacists for years have been urging for antitrust enforcement and a return to a pro-consumer, pro-small business state. We’re grateful to these policymakers for their support,” said Douglas Hoey, CEO of the National Community Pharmacists Association.
“Beer, wine and spirits retailers are pleased to see that there is growing congressional support for enforcing laws that ensure fairness for small businesses, so they are able to compete and meet the needs of their customers and communities. As some of the last local businesses left on Main Street, beverage retailers support taking steps to prevent the erosion of fair competition in vibrant state alcohol marketplaces. Dominant national consumer goods retailers – many of whom use beverage alcohol to supplement to their larger non-alcohol business – are using their national power in a way that was unanticipated by the Federal Alcohol Administration Act and to disadvantage independent beverage licensees in what are constitutionally intended, state-by-state markets. Without enforcement of laws that promote fair competition, consumers will eventually be faced with fewer places to shop and fewer beverage choices,” said John Bodnovich, executive director of American Beverage Licensees.
“When independent retailers serving local and regional markets disappear because of unfair practices used by mega-buyers, it’s not just consumers who pay the price. Many local and independent grocers served as key customers for small- and mid-size farms, especially those focusing on regional varieties or innovative practices like organic. Leveling the playing field for independent retailers will have upstream benefits for farmers who want to feed their communities,” said Patty Lovera, policy director of the Organic Farmers Association.
Forty-three members of the House of Representatives signed on to the letter, spearheaded by U.S. Reps. Hakeem Jeffries (NY-08) and Louie Gohmert (TX-01). The full text of the letter may be found here and below.
Chair Lina Khan
Commissioner Rebecca Slaughter
Commissioner Noah Phillips
Commissioner Christine Wilson
Federal Trade Commission
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580
Dear Chair Khan and Commissioners Slaughter, Phillips, and Wilson:
We write to request that the Federal Trade Commission investigate and address economic discrimination against some competitor businesses. The anticompetitive effects of discriminatory pricing and product supply directed to certain businesses (sometimes but not always small and medium-sized businesses) ripple through the entire supply chain—harming consumers as well as independent producers. We urge the FTC to use its authority to investigate and bring enforcement actions against discriminatory conduct that violates the antitrust laws, including the FTC Act and the Robinson-Patman Act.
Small and medium-sized businesses provide critical competition on price, quality, service and convenience. They are also a bedrock of communities from rural America to the inner city. For example, they are often the only sources of groceries, consumers goods, or pharmaceuticals in many small towns and urban centers. These businesses are also an essential source of jobs in these communities, as well as entrepreneurship and a means to building wealth through business ownership. The same is true of independent producers such as farmers and ranchers.
As a result of concentration throughout the supply chain, however, small and medium-sized businesses are increasingly subject to discriminatory terms and conditions, including less favorable pricing and price terms, less favorable supply, less favorable retail packaging, and sometimes an inability to access products in short supply that are available to their competitors. Farmers and ranchers also suffer from high levels of concentration. Today, just a handful of firms compete to buy and sell agriculture products. This results in unreasonable producer demands and it drives down the prices paid to farmers and ranchers to anticompetitive lows. Because large suppliers capture those profits and price discrimination among retailers reduces price competition in the retail market, consumers do not always experience lower retail prices as a result of lower producer prices.
The COVID-19 pandemic has highlighted the effects of economic discrimination. Some businesses have been able to get more consistent supplies of consumer products. Sometimes this has been based on the size of those businesses while at other times it has been based on pernicious distinctions among retail channels of trade. Throughout the crisis, dominant companies and certain sectors have received preferential treatment in supply shortage scenarios, meaning they get access to critical goods and services while other firms do not. These product shortages occur in part because concentration makes the supply chain less resilient and more vulnerable to disruption. When one firm experiences a shock it ripples throughout the chain. Supply disruptions are not equally distributed—lower income and rural consumers face the worst impacts.
The antitrust laws were designed to protect against anticompetitive economic discrimination and excessive concentration. Congress recognized the benefits of independent business and the threats posed by economic discrimination when it enacted laws like the Robinson-Patman Act, the Sherman Act, The Clayton Act, and Federal Trade Commission Act.
For example, the Robinson-Patman Act reflects Congress’s determination that discriminatory treatment among competitors is pernicious and should be prohibited. But current enforcement efforts have failed to address these anticompetitive harms, and judges have inappropriately limited the scope of the law despite clear statutory language. Despite Congress’s broad goals in 1936, the FTC has not brought a case under the Robinson-Patman Act in more than 20 years. Nor has the FTC brought an enforcement action against economic discrimination using the other antitrust laws.
America is facing many economic challenges and the FTC has many competing priorities. We urge the Commission to make enforcement against economic discrimination targeting small and medium-sized businesses a top priority.
About Main Street Competition Coalition
The Main Street Competition Coalition is a coalition of main street businesses and agriculture producers that are committed to promoting competition and reviving and reforming the Robinson-Patman Act. We advocate for antitrust policies that ensure a level playing field for the benefit of both business and consumers. For more information about the coalition, visit www.mainstreetcompetition.com.
About National Grocers Association
NGA is the national trade association representing the retail and wholesale community grocers that comprise the independent sector of the food distribution industry. An independent retailer is a privately owned or controlled food retail company operating a variety of formats. The independent grocery sector is accountable for about 1.2 percent of the nation’s overall economy and is responsible for generating more than $250 billion in sales, 1.1 million jobs, $39 billion in wages and $36 billion in taxes. NGA members include retail and wholesale grocers located in every congressional district across the country, as well as state grocers’ associations, manufacturers and service suppliers. For more information about NGA, visit www.nationalgrocers.org.
About National Community Pharmacists Association
Founded in 1898, the National Community Pharmacists Association is?the voice for the?community?pharmacist, representing?nearly 19,400 pharmacies?that?employ 215,000?individuals nationwide. Community pharmacies?are?rooted in the communities?where they are located?and?are among?America’s most accessible health care providers. To learn more, visit www.ncpa.org.
About Energy Marketers of America
The Energy Marketers of America (EMA) is a federation of 47 state and regional trade associations representing energy marketers throughout the United States. Energy marketers represent a vital link in the motor and heating fuels distribution chain. EMA members supply 80 percent of all finished motor and heating fuel products sold nationwide including renewable hydrocarbon biofuels, gasoline, diesel fuel, biofuels, heating fuel, jet fuel, kerosene, racing fuel and lubricating oils. Moreover, energy marketers represented by EMA own and operate approximately 60,000 retail motor fuel stations nationwide and supply heating fuel to more than 5 million homes and businesses.
About American Beverage Licensees
American Beverage Licensees is the preeminent national trade association for beverage alcohol retailers. Direct retail beverage alcohol sales in the United States generate more than 2.03 million well-paying jobs. ABL’s thousands of on-premise and off-premise licensee members are independent and often family-owned establishments. The beverage retailing industry pays over $27.9 billion in federal taxes and $20.0 billion in state and local taxes. To learn more about ABL, visit www.ablusa.org.
About Organic Farmers Association
The Organic Farmers Association formed in 2016 to provide a policy voice for domestic certified organic producers using a farmer-led national policy platform and facilitating collaboration among organic farmer organizations.