Last week, the proposed merger between Kroger and Albertson’s is in the hands of the court system, there are actions lawmakers who care about low-priced food can take to limit the future influence of the Big is Bad narrative from driving up the cost of living. Rather than relying on courts to strike down bad cases or trusting that the agency will continue to ignore them, lawmakers should repeal bad laws, like the Robinson-Patman Act, before it’s too late.
The Attorney General for Colorado wasn’t the only government entity to raise concerns. The Federal Trade Commission (FTC) also filed a complaint against the proposed Kroger and Albertson’s merger. The complaint focuses some on consumer impacts, but a significant portion of the complaint is focused on labor, specifically union labor. The movement away from a consumer focus in the grocery market may not end with mergers. A lesser-known law, the Robinson-Patman Act, was sidelined for its concern of competitors over consumers. While it is currently an unused tool in the FTC’s toolkit, it may not stay that way for long.
Politico has reported that the agency plans to use this law to go after soda producers and liquor distributors. While cases have yet to be filed, consumers should be concerned because it was negative impacts on their welfare that led to the bill being sidelined.
The Robinson-Patman Act prohibits different pricing for different buyers for the same commodities. This Act fell out of favor following a 1977 report from the Department of Justice, which concluded that “Unfortunately, Robinson-Patman, so just in principle, cannot be supported as a net benefit to American society because its real effects as an economic regulatory statute are on balance more costly than beneficial to society.”
More recently, in 2007, the Antitrust Modernization Commission recommended repealing the Robinson-Patman Act based on its protection of “competitors over competition.”
Even measuring the Act according to the intended purpose of protecting small businesses is a failure. As noted in an analysis by the Mercatus Center, a 1990 study found that most of the businesses subject to Robinson-Patman Act complaints were small and medium-sized. Meaning the very firms the Act was intended to protect are the victims of its faulty enforcement.
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Tirzah Duren is the Vice President of Policy for the American Consumer Institute, a nonprofit educational organization. For more information about the Institute, visit TheAmericanConsumer.org or follow us on X @ConsumerPal.