Reform or Repeal of the Robinson-Patman Act—Another View

• Author: Edward Wolfe
• Published date: 01 June 1976
• Date: 01 June 1976
• DOI: http://doi.org/10.1177/0003603X7602100202

REFORM

OR

REPEAL

OF

THE

ROBINSON·PATMAN

ACT-ANOTHER

VIEW

A Response

In

Part To Messrs.

Kintner.

Hennebel'Cjer

an.d

Fleischaker

by

EDWARD

WOLFE·

It

is the premise of this article

that

the Robinson-Patman

Act, as

it

now exists, is defective

and

has substantial short-

comings as a

matter

of economic

and

legal policy, legislative

drafting, interpretation,

and

administration. The

Act

tends

to be anticompetitive

and

inconsistent with various public

purposes in a number of respects.

It

is

not

the purpose of

this article to argue this premise. The shortcomings of the

Act have been advanced by too many people for too many

years.'

This article will address itself

instead

to the question of

whether the Robinson-Patman Act should be repealed, whether

it

should be modified,

and

certain specific proposals

for

modi-

fication

-.

This will involvesome review of the

statutory

pur-

pose, theeffects of the Act,other legislative efforts

and

vari-

ous proposals,

but

not the fulllitany which

has

been developed

by others.

•White &Case, New York,New York.

1E.g., Report of The White House Task Force on A.ntitrust

Policy (1968) ("The Neal Report") ;Report of The Task Force on

Productivity and Competition (1969) ("The Stigler Report") ; Sym-

posium on Robinson-Patman

Act-Is

It

in the PublicInterestT

1Proceedings of ABA

Antitrust

Law Section,pp. 60 et seq.(1952);

Proceedings, ABA Section of

Antitrust

Law,

--

ABA

Antitrust

L. J.

--

(April

1976). See also Rowe, Price Discrimination Under

the Robinson-Patman

Act

(1962;1964 Supp.) passim, and authorities

cited therein; Edwards, The Price Discrimination Law (1969).

237

238

THE

ANTITRUST

BULLETIN

PURPOSE

TO

PROTECT

SMALL

BUSINESS

As has often been stated, the Robinson-Patman Act was

the result of the chainstore investigation.

It

was

anti

chain

store legislation,"

and

many of its supporters saw it as the

salvation of the smallbusinessman,

and

particularly the

small grocer. As stated by Mr.

Patman

The

day

of the independent merchant is gone unless

something is done

and

done quickly.He cannot possibly

survive

under

that

system. So we havereached the cross

road;

we must either

turn

the food in groceries' business

of this country

...

over to a fewcorporate chains, or we

have got to

pass

laws

that

will givethepeople,who built

this country in time of peace

and

who saved it in time of

war, an opportunity to exist

....

8

Supporters, according to Congressman Patman, included

"a

million

and

a

half

independent retail dealers." The Act ex-

pressed

"a

concern to assure the survival of small business." 4.

Rowe states

that

the bill wasopposed by every important

segment of business outside the food

industry

with the excep-

tion of theorganized retail druggists.t

These purposes continue to be asserted, bysome, as a

proper

purpose of the Act.6Others vigorously deny the

2E.g., FTC v. Anheuser-Busch, Inc., 363U.S.536,543-44 and

n.7(1960); Rowe, n.1supra

at

3-23.

3Hearings Before theHouseCommittee on the

Judiciary

on

Bills to Amend theClaytonAct,74thCong., 1stSess., 5-6 (1935).

4. Edwards, The Price Discrimination Law, 12 (1959).

SRowe,

n.I

supra

at

22.

6E.g., Messrs. Kintner, et al., in

their

article "Reform of the

Robinson-Patman

Act:

A Second Look," appearing in this issue of

The Antitrust Bulletin, citing the Small BusinessAct of 1953.Note,

however, thepurpose of said Act,as setforth by Congress, speaks

only of protecting small-business concerns "insofar as is possible

...

in order to preserve free competitive enterprise." 15 U.S.C. 631j

Royal Services, Inc.v. Maintenance, Inc., 361

F.2d

86 (5th Cir.

1966); United Statesv. Riley, 340 F.Supp. 1164, 1168(W.D.La.

1972) .Thelanguage of thissectiondoes not

appear

to authorize

activity which may itself be anticompetitive in order to preserve a

small business.

REFORM

OR

REPEAL

OF

THE

ROBINSON-PATMAN

ACT

239

proposition

and

further

deny

that

the Act ought to be con-

cerned with the effects of price discrimination upon buyers.

It

has

been said

that

the decline of smaller firms usually

signals the emergence of socially desirable efficiency in

other

firms

and

the existence of competition among them; in such a

situation the competitive viability of smaller firms can only

be

assured

by

programs

that

keep prices above the levels

that

would be set by the operation of the market. "These

programs

will be

urged

by those who desire to prevent

competition-

usually the smaller firms themselves. Such

programs

are

not

consistent with. . . theprotection

and

enhancement of con-

sumer welfare." 7

In

.short, the objective is inconsistent with

antitrust

objectives."

Whether

or not protection of small business, through re-

strictions on price discriminations, should be a

proper

legis-

lative purpose, the intention to protect such business is one

of thecommonly accepted objectives of theAct.

However, there seems to be little contravention of the fact

that

small business

has

not been preserved in the 40

year

his-

tory

of the Act,"

At

best, the effectiveness of the

Act

in pro-

tecting small business is

very

much open to debate.t?

71976 Budget Overview

Prepared

By

the Federal

Trade

Com-

mission

Office

of Policy

Planning

and

Evaluation, reported

at

BNA

Antitrust

&Trade Regulation Reporter, No. 692(Dec. 10,1974),

E-9.

8As the Federal

Trade

Commission stated in Matter

of

National

Lead Company, 49 F.T.C. 791, 886-87 (1953):

Acompetitive

industry

is a self-disciplined industry. Com-

petition also supplies the needed dynamics. • • •

[T]he

hard

price competition of the marketplaces . . . maynotbegentle-

manly

but

it is usually fair,

particularly

to consumers.

In

such

competition the weak might get

hurt,

but

social security is not

the province of this Commission.The only way to have com-

petition is to compete.

9

"I

do

not

believe enforcement of the Robinson-Patman

Act

has

done much to facilitate the survival ofviable,efficient smallbusiness

firms. Indeed, insome respects it has been counter-productive." State-

ment of F.M. Scherer, Director,

Bureau

of Economics,

Federal

Trade

Commission, in Hearings, "Recent Efforts to Amend or Repeal the

Robinson-Patman Act," Before the Ad Hoc Subcommittee on Anti-