Robinson-Patman Act Repealed!

Josh Wright —  26 May 2006

Ok, not really. But the Antitrust Modernization Committee voted overwhelmingly in favor to repeal the Act (HT: Antitrust Review). Apparently, nine Commissioners voted in support of a the statement: “that Congress should repeal the Act in its entirety” on the grounds that: (1) the Act does not serve any purposes not already served by the Sherman Act, and (2) the Act is a net cost to consumers and competition. Though I doubt that Congress will accept the AMC’s invitation to act on behalf of consumers and repeal the Act, this the right result.

I have written previously (and in this paper) on the role of antitrust regulation of business practices facilitating price discrimination in the wake of Independent Ink. My views are consistent with the AMC’s position that price discrimination alone should not give rise to antitrust scrutiny because the Sherman Act is sufficient to cover all practices that harm competition:

“The court could have rid antitrust law of the inference that price discrimination is anticompetitive in any manner. Benjamin Klein and John Wiley, Jr., for example, have argued that (70 Antitrust LJ 599 (2003)) price discrimination should be a defense. This sounds right to me. This does not mean that all such practices would be immune from antitrust liability totally. Practices that facilitate price discrimination may be happen to injure competition for other reasons, i.e. a tying arrangement may foreclose a rival from sufficient distribution as to achieve minimum efficient scale for a significant period of time, thus raising barriers to entry. But price discrimination adds nothing to that analysis on its own.”

This conclusion obviously also applies to the Act, which allows condemns pricing behavior without proof that competition has been injured or consumers are any worse off. For this reason, there is near uniform consensus has been a significant cause of consumer welfare losses. Though I suspect the Act will stick around for awhile (though perhaps without criminal penalties?) — it has survived other calls for repeal — the AMC’s conclusion may be influential at the agency level and otherwise.

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  1. TRUTH ON THE MARKET » An Antitrust Trifecta - August 1, 2006

    […] 1. Hanno on Peggy Zwisler’s article in 20 Antitrust 40-43 (2006): Volvo Trucks v. Reeder-Simco: Judicial Activism at the Supreme Court. Hanno takes some issue with the characterization of the Robinson-Patman Act as being aimed exclusively at protecting competitors, rather than competition, as many of its critics (like me) would have it. Hanno notes: “That view, however, is not universally shared. While the legislative history clearly shows that the Act was intended to protect small businesses from chain stores, there is also ample evidence that only equally efficient disfavored purchasers should be protected from price discrimination. That doesn’t cure the many ills of the Robinson-Patman Act, but it goes a long way toward harmonizing the Act with the goals of antitrust as we understand them today. Andrew Gavil provides an excellent summary of the legislative history supporting the “equally efficientâ€? reading in “Secondary Line Price Discrimination and the Fate of Morton Salt: To Save it Let it Go,â€? 48 Emory L.J. 1057 (1999).” […]

  2. TRUTH ON THE MARKET » The Unconvincing Antitrust Case Against Wal-Mart - July 10, 2006

    […] This isn’t really about antitrust, is it? There is good reason that modern antitrust focuses on efficiency and consumer welfare rather than the egalitarian concerns that Lynn expresses regarding the relationship between manufacturers and retailers. Antitrust economists, and not just Chicago-types, support an antitrust policy based on maximizing efficiency. Some argue about what weights should be attached to consumer versus producer surplus, but very few if any would support the type of regime Lynn advocates in this essay. Case in point, the Antitrust Modernization Committee’s recommendation to repeal the Robinson-Patman Act which openly and plainly purports to defend the populist notions described by Lynn. […]