It has long been my impression that antitrust enforcement is all but dead in the United States.
A letter sent this week to the Federal Trade Commission (FTC) by a bipartisan group of 43 congressmen and endorsed by organizations include the National Grocers Association BB #:163424 and the Organic Famers Association suggests that I was right.
“The FTC has not brought a case under the Robinson-Patman Act in more than 20 years,” said the letter. “We urge the Commission to make enforcement against economic discrimination targeting small and medium-sized businesses a top priority.”
The Robinson-Patman Act of 1936 “protects small businesses from being driven out of the marketplace by prohibiting discrimination in pricing, promotional allowances, and advertising by large franchised companies,” according to Britannica.com.
The most visible antitrust issues in the recent past have had to do with technology. But it will be of interest to see how this new stance will affect retail grocery.
“Antitrust laws have not been enforced by regulators in decades,” said the NGA in a March 28 press release.
On March 28, two small grocers testified in front of the Federal Trade Commission and the Antitrust Division of the Department of Justice about unfair practices in retail grocery.
“Independent grocers don’t shy away from a challenge,” Tom Charley, co-owner of Charley Family Shop N’ Save BB #:201555 in Greensburg, PA, said in his oral statement. “But I want to address a challenge that’s gotten bigger over the years. That’s a few enormous, dominant retailers using their power to get around the rules designed to protect competition.”
Another NGA release explains: “Antitrust laws that prohibit exclusionary conduct and price discrimination have not been enforced by regulators in a generation. It is nearly impossible for aggrieved private parties to bring cases in court because the burden of proof is all but impossible to overcome. Therefore, dominant firms can use their size and influence to tilt the playing field in their favor without fear of consequence.”
The NGA contends that during the pandemic, suppliers gave preferential treatment to large purchasers, cutting supplies of paper goods, canned goods, and cleaning supplies to small and medium-sized wholesalers.
What’s wrong with that? It’s against the law—specifically the Robinson-Patman Act.
But as Brittanica says, “Claims of price discrimination and predatory pricing are hard to prove. The Robinson-Patman Act has 10 basic requirements that must be established for an effective claim of discrimination. These include, among others, evidence of intent, interstate commerce, goods of ‘like grade and quality,’ and adverse effects on competition. As a result, the Robinson-Patman Act is complex, difficult to apply, and open to multiple interpretations.”
How hard is it to enforce this law? “A U.S. court dismissed a lawsuit against Amazon.com Inc on Friday [March 19] that accused the company of antitrust violations for barring third-party sellers from offering better deals for their products elsewhere,” according to Reuters.
The court didn’t bother to explain why it dismissed the case.
Nevertheless, the antitrust landscape has changed with the coming of the Biden administration. In a July 2021 executive order, the president instructed antitrust agencies to increase enforcement, citing rising prices and competition in labor markets.
The FTC’s review powers have been expanded, complicating merger clearances. Furthermore, “the long-standing view that most vertical mergers pose no threat to competition in being abandoned,” according to the website for the legal firm Skadden, Arps, Slate, Meagher & Flom.
It isn’t true, of course, that bigger is necessarily better. The next few years may answer the question of whether it is inevitable.
