Commissioner Bedoya calls for increased enforcement and a renewal of "fairness" in antitrust
After decades of dormancy, enforcement of the Robinson-Patman Act may be making a comeback. In his first public remarks as an FTC Commissioner regarding his views on antitrust enforcement, Commissioner Alvaro Bedoya called for a return to the concept of fairness in antitrust, driven in part by renewed enforcement of laws passed under what he called a "fairness mandate," including Robinson-Patman.
Commissioner Bedoya's call for increased Robinson-Patman enforcement fits neatly into the existing framework of the Biden administration's antitrust agenda, launched in July 2021 with the President's sweeping Executive Order (EO). Since that time the administration has reaffirmed its intention to make structural changes to the way that the antitrust laws are enforced, with a focus on addressing perceived overconcentration and unfair competition across the American economy. Marking the one-year anniversary of the EO, Chair of the White House Competition Council Brian Deese highlighted concrete actions taken by multiple federal agencies and previewed "more announcements coming soon." Commissioner Bedoya's comments suggest that the Democratic majority at the FTC view the Robinson-Patman Act as an underutilized tool in the agency's toolbox and intend to wield it more frequently.
What Is the Robinson-Patman Act?
The Robinson-Patman Price Discrimination Act ("the Act") was passed in 1936. As its name implies, the Act prohibits a seller of goods from discriminating among competing customers by giving different prices, terms of sale, or marketing support. The Act covers not just top line wholesale prices, but also rebates, discounts, and other promotional allowances and services that may be offered to customers. Both the statute and Supreme Court case law recognize various legal defenses, for example, if the price differential arises from a good-faith effort to meet a competitor's price or is justified by different costs in the manufacture, sale, or delivery of the goods at issue.
The Act also prohibits certain forms of commercial bribery by limiting the payment of commissions or brokerage fees between buyers and sellers except for services actually rendered. While sellers are most typically the subject of Robinson-Patman Act claims, buyers can also be held liable if they knowingly accept an illegal price.
The Federal Trade Commission shares enforcement jurisdiction with the Department of Justice, though neither has brought a case under the statute since the 1990s. In more recent years, private antitrust litigation has been the typical source of Robinson-Patman cases.
Commissioner Bedoya's call for increased Robinson-Patman enforcement can be seen as part of the trend by the FTC to push back at the efficiency consensus that has dominated antitrust analysis in courts and at the agencies since the '70s and '80s. As Bedoya posited during his remarks: "If efficiency is the goal of antitrust, then why am I charged by statute with stopping unfair methods of competition, and not 'inefficient' ones?" He said that Robinson-Patman enforcement fell out of favor during the mid-'80s because the law was seen as an outlier statute focused on harms to supposedly inefficient small businesses that raised consumer prices. But he pushed back on both propositions as either incorrect or unproven, citing evidence that the debate about the Robinson-Patman Act, like the other antitrust laws before, centered on a desire to protect small business and noting that no empirical study has ever shown that the law actually raises prices for consumers.
What's Coming Next?
More scrutiny of potential Robinson-Patman violations is coming, and in some instances has already arrived. As noted during the address, the FTC has already made violations of section 2(c), the "dummy broker" provisions, a focus of its investigation of the Pharmacy Benefit Management (PBM) industry. Commissioner Bedoya's remarks in particular called out agricultural middlemen-like fertilizer suppliers and meatpackers-alongside grocery wholesalers as examples of businesses whose practices harm rural Americans and small businesses. These industries are likely to be the subject of heightened FTC scrutiny, but no seller of goods should consider themselves immune.
This speech should be a wakeup call for the need to review Robinson-Patman compliance polices in light of the original text and purpose of the statute, and FTC's new more expansive focus on "fairness," as this appears to be a measuring stick that the FTC wants to use going forward. The Agencies may test the limits of precedents that limit the scope of the Act based on principles of economic efficiency and antitrust injury. Practices that once flew under the radar as efficient could attract additional regulatory scrutiny, especially if the practices generate complaints from smaller retailers, and may be subject to a period of uncertainty until the courts can resolve cases brought on the FTC's revived theories.
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