The Robinson-Patman Act bans certain discriminatory discounts on price as well as the provision of or reimbursement for certain promotional services. Its original intended targets were large retail chains that leveraged their large size and dominant market position to secure favorable exchange terms from suppliers relative to their smaller competitors.
RPA enforcement has long been out of favor because it focuses on the protection of competitors rather than the promotion of competition. Recently, however, the Biden administration FTC, under new chair Lina Khan, has signaled renewed enthusiasm about enforcing the RPA’s mandates. Khan’s FTC has the support of the Biden administration, which produced an executive order in July 2021 citing the RPA as a solution for improving “farmers’ and smaller food processors’ access to retail markets.”
A new brief published by the Mercatus Center critically appraises the potential consequences for consumers and competition of stricter and more zealous RPA enforcement by today’s FTC. The brief, coauthored by Alden Abbott and Satya Marar, also assesses the justifications provided by proponents of renewed RPA enforcement and evaluates suggestions for alternative, pragmatic reforms to address the ability of small businesses and entrepreneurs to compete effectively.
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