Reforming The Robinson-Patman Act

The flaws in the Robinson-Patman Act are well known. It protects competitors at the expense of consumers and rarely stops the buyer-induced discrimination it was meant to prevent. This article proposes reforms that would greatly reduce both problems and explains why adopting those reforms would be preferable to repealing the Act altogether.

By John B. Kirkwood^[1]

I. INTRODUCTION

The Robinson-Patman Act has two fundamental flaws. First, it is a protectionist statute. Passed during the Great Depression, its aim is not to promote competition in order to benefit consumers, but to protect small businesses from competition. Its principal goal is to prevent large buyers from inducing discriminatory price cuts and using the resulting advantage to undermine smaller rivals, depriving them of sales and profits. This behavior, however, frequently benefits consumers because a large buyer normally undercuts its rivals by lowering prices, increasing services, or otherwise making its product more attractive to consumers.^[2]

Second, the Act typically fails to prevent the very buyer-induced discrimination it was passed to prevent. In part, that is due to the Act’s technical and jurisdictional requirements. But the main reason is the Act’s meeting competition defense, which allows a seller to grant a discriminatory price or promotional benefit to a large buyer if the seller believes in good faith that a competing seller is making a comparable offer. This provision, designed to pro