Reform of the Robinson-Patman Act: A Second Look

DOI10.1177/0003603X7602100201
Published date01 June 1976
Date01 June 1976
Subject MatterArticle
REFORM
OF THE ROBINSON·PATMAN ACT:
A SECOND LOOK
by
EARL
W.
KINTNER,·
LAWRENCE
F.
HENNEBERGEB-
and
M.mc L.
FLEISCHAKEB-
This year marks the 40th anniversary of the enactment
of the Robinson-Patman amendments to the Clayton Act.!
Throughout its history, and increasingly in recent years,
there have been demands for major revision and even repeal
of this antiprice discrimination law':' Despite such calls for
evisceration or outright repeal, and a reevaluation by both the
legislative and executive branches of the law's position within
the overall scheme of antitrust enforcement,s we (apparently
Arent, Fox, Kintner, Plotkin &Kahn, Washington, D.C.
EDITOR'S
NOTE:
Portions of this article are extracted from the
testimony of
Earl
W.
Kintner
before the Ad Hoc Subcommittee on
Antitrust, the Robinson-Patman Act
and
Related Matters of the
House Committee on Small Business (Nov. 11, 1975); testimony of
Earl
W. Kintner before the Review Group on Regulatory Reform,
Domestic Council, the Executive
Office
of the President (Dec. 9,
1975);
and
E. Kintner, Legislative History of the Antitrust Laws
(to be published in 1976).
115 U.S.C. §§13(1)-(f) (1970). Other Robinson-Patman pro-
visions were not amendments to Section 2 of the Clayton Act,
but
were separately enacted.
:II President
Ford
has called for substantial modification, alleging
that
Robinson-Patman is "discouraging both large and small firms
from cutting prices"
and
making it difficult
"for
them to expand into
new markets and to pass on to customers the cost savings on large
orders." Remarks to the 63d Annual Meeting of the Chamber of
Commerce of the United States 8, April 28, 1975. Hearings on Recent
Efforts to Amend or Repeal the Robinson-Patman Act Before the
Ad lIoe Subcommittee, 94th Cong., 1st
and
2d Sess., pt. 2 (1975
and
1976).
s A special Small Business Committee Ad Hoc Subcommittee on
Antitrust, the Robinson-Patman Act
and
Related Matters was organ-
ized
and
has held hearings in the House of Representatives. Both
the Senate
and
House
Judiciary
Committees
are
also contemplating
hearings as this is written. Hearings were held by the Domestic
Council, Executive
Office
of the President, in December 1975.
203
204
THE
ANTITRUST
BULLETIN
like several
Federal
Trade
Commissioners
and
numerous
Commission staff members)- remain unconvinced
that
the
Act is outdated or anticompetitive, or
that
40
years
of court
and Commission interpretation should be discarded.
This article will review the fundamental policy goals
that
motivated Congress to pass the Robinson-Patman Act amend-
ments in 1936, as well as judicial interpretation and Federal
Trade
Commission enforcement. We will also suggest certain
amendments to strengthen and clarify the law's antiprice dis-
crimination provisions.
ORIGINS
'OF
THE
ROBINSON-PATMAN
ACT
The Robinson-Patman Act Amendments resulted from the
emergence of large retail chains with formidable buying
power, and were an outgrowth of a dissatisfaction with the
ability of the original Section 2 of the Clayton
Antitrust
Act
of 1914 to regulate the competitive advantages extracted by
large chains
and
mass distributors." The growth of the chain
store phenomenon crystallized concern about the perceived
failures of the original Section 2, which appeared to proscribe
price discrimination only when the adverse effects of such dis-
crimination took place on the level of competition of the sup-
plier
granting
the discriminatory
price-the
primary
level
or line,s Although the Supreme Court rejected the narrow
interpretation
that
original Section 2prohibited only discrimi-
natory
pricing which injured competitors of the discriminat-
ing
party," Section 2, by its terms, was not broad enough to
This was the basic
thrust
of testimony by three Commissioners
and
ten staff members before the Ad Hoc Small Business Subcom-
mittee, supra note 3, on
January
26-27,
and
February
2, 1976.
aH.R. Rep. No. 2287, 74th Cong., 2d Sess. 3-4 (1936) (herein-
after
House Report) ;S. Rep. No. 1502, 74th Cong., 2d Sess. 4 (1936)
(hereinafter Senate Report) ;
FTC,
Final Report on the Chain Store
Investigation, S. Doc.
No.4,
74th Cong., 1st Sess. (1935).
6See,
e.g.,
National Biscuit Co. v. FTC, 299 F. 733 (2d Cir. 1924) ;
Mennen
Co.
v.
FTC,
288 F. 774 (2d Cir.), cert. denied, 262 U.S. 759
(1923).
7George Van Camp &Sons Co. v. American Can Co., 278 U.S.
245 (1929).
REFORM
OF
ROBINSON-PATMAN
205
constrict the competitively injurious advantages of the
large
chains and mass merchandisers.
Original Section 2 exempted quantity discounts, and this
exclusion rendered Section 2totally ineffective as a means
of controlling the buying power leverage of the
large
retail
chains." The amorphous "meeting competition" provision of
original Section 2 only accentuated the more significant "quan-
tity
discount" loophole," The net effect of the quantity dis-
count and meeting competition provisos was viewed as prac-
tically nullifying Section 2's ability to control the buying
power of the large retail ehains.l? Thus, the political
and
economic forces which engendered the Bobinson-Patman Act
songht to redress the balance between small independent
businesses and the large retail chains by curbing the dis-
criminatory advantages achieved by the latter.
The Robinson-Patman Act was viewed as both an
antitrust
and small business statute. These dual purposes
are
not in-
consistent.'! A
primary
purpose of the
antitrust
laws is to
encourage smaller businesses to compete with
their
larger
rivals. This purpose was set forth by Congress in the Small
Bnsiness Act of 1953, 15 U.S.C. §631:
The essence of the American economic system of
pri-
vate enterprise is free competition. Only through full
and free competition can free markets, free
entry
into
business, and opportunities for free expression
and
growth of personal initiative and individual judgment
be assured. The preservation and expansion of such com-
petition is basic not only to the economic well-being
but
to
the security of this Nation. Such security and well-being
cannot be realized unless the actual
and
potential capac-
USee, e.g., Goodyear Tire &Rubber Co. v.
FTC,
101 F.2d 620
(6th Cir.), cert. denied, 308 U.S. 557 (1939).
938 Stat. 730 (1914).
10
House Report, supra note 5,
at
7.
11
See in this regard United States v.
Aluminum
Co.
of America,
148
P.2d
416,
428-9
(2d Cir. 1945).

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