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The latest Prompt takes a look at the antitrust issue of price discrimination. Affordability is on the mind of voters. Sen. Grassley, along with five other senators, recently encouraged the DOJ and the FTC to investigate Robinson-Patman theories of harm, particularly in grocery store supply chains.
What would you do if you received such a letter from the Hill and you were at either agency today?
The Prompt
Answering antitrust challenges one question at a time
The Chamber has assembled a range of preeminent experts in the field of antitrust from across a wide political spectrum to offer timely views on key questions of antitrust law and policy. This group brings together senior enforcers spanning seven administrations, from both the Antitrust Division at the Department of Justice and the Federal Trade Commission.
Most responses seemed skeptical that the Robinson-Patman Act's ("RPA's") practical effect on affordability and competition could outweigh its role in entrenching less efficient competitors:
"I would explain that affordability is a real issue and that antitrust has been effective at lowering prices. This was not a priority of the last administration, which went out of its way to suggest that lower prices should not be the focus of antitrust law. On Robinson-Patman, I would explain, as Mike Scherer did in Congressional testimony in 1975, that it hurts consumers."
"I would respond by saying that of course we will investigate any evidence of unlawful conduct that harms competition and consumers. If I'm feeling masochistic, I would go on to say that while my agency will enforce the Robinson-Patman Act against conduct that meets those criteria, protecting 'small and medium-sized businesses' from legitimate competition that does not harm consumers is inconsistent with my agency's mission as I understand it. I would then prepare to be hauled before the Senator's committee. But hey, that's part of the job."
"I would consider whether the facts and the theories of harm are consistent with the agencies’ mission to protect consumers and competition. If so, I would consider reaching out to interested parties to better understand the facts and concerns."
"I would respond promptly and respectfully with a letter, indicating that my agency is always inviting members of the public to come forward when they believe the law is being violated."
"Before launching any investigation, I would propose to have front office staff from the agencies meet with the Capitol Hill staff of the six senators to review the extensive historical record of agency investigations of RP theories of harm. The agencies have closely examined RP for more than seven decades, and both economic theory and data analyses indicate that the Act and vigorous enforcement of the Act tend to reduce price competition and to elevate price. If the requesting Senators are seeking to insulate small business from the rigors of price competition or otherwise to protect inefficient or high-cost business, then RP has the potential to be a useful tool. But if the Senators are using 'affordability' to mean lower prices, the effect of an RP investigation is likely to be counterproductive."
"It’s laudable to focus on consumer affordability as an enforcement priority. But there are much better uses of the agencies’ limited enforcement resources than the Robinson-Patman Act."
"Regarding RPA, I would politely thank the Senators for their letters, and respond that Administration antitrust enforcers are closely monitoring the grocery sector and, if anticompetitive behavior is found, will take any appropriate enforcement actions that would promote affordability by enhancing competition and benefiting American consumers. I would not mention that RPA at all in the response. My personal view is that RPA suits never would qualify as “appropriate enforcement actions” that are pro-competitive and pro-consumer. Indeed, they would undermine affordability for consumers. If push came to shove in a congressional hearing on RPA, I would not be afraid to make that point."
However, one contributor did not register the same degree of RPA skepticism:
"RPA is an important arrow in the antitrust quiver, especially for enforcement in consumer-facing markets. But RPA has been long dormant, and changes in the food and beverage sectors will force a refresh on existing law and standards. For example, consolidation has spurred purchasing economies, shifts in bargaining power between suppliers and distributors, and complex discounting practices. New enforcement actions would be the 'test' cases to determine if RPA has some staying power."
