In a 3-2 vote, the Federal Trade Commission (FTC) took action Dec. 12 to restore enforcement of the Robinson-Patman Act, an antitrust law that will level the playing field for small and medium-sized businesses.
The FTC sued the largest U.S. distributor of wine and spirits – Southern Glazer’s Wine and Spirits LLC (Southern) – contending the company violated the Robinson-Patman Act, harming small, independent businesses by depriving them of access to discounts and rebates, and impeding their ability to compete against large national and regional chains. This loss of competition ultimately harms consumers on choice and price.
The FTC’s lawsuit aims to ensure that small, independent retailers served by Southern have access to the same discounts, rebates and pricing as the large chains they compete against, except to the extent that differential pricing is justified by actual cost differences, changed conditions or a good faith effort to meet a competitor’s equally low price, according to an FTC news release.
The lawsuit seeks to obtain an injunction prohibiting further unlawful price discrimination by Southern against these small, independent businesses. When Southern’s conduct is remedied, large corporate chains will face increased competition, which will safeguard continued choice that can create markets that lower prices for American consumers, the release stated.
According to the National Grocers Association (NGA), incoming FTC Chair Andrew Ferguson acknowledged in his dissent the commission’s overdue use of the act.
The Robinson-Patman Act prohibits price discrimination when competing buyers purchase goods in similar quantities or volumes. Enforcement of this antitrust law is a step toward ensuring that all retailers and wholesalers have equal access to discounts, enhancing retail price competition and expanding opportunities for all American consumers to enjoy lower prices, no matter where they shop.
According to NGA, after the Department of Justice and FTC abandoned Robinson-Patman Act enforcement based on flawed theories that it would harm consumers, big retailers seized the opportunity to gain and use their market power to strong-arm suppliers into granting exclusive, favorable terms – deals that smaller competitors cannot access. By leveraging these advantages, power buyers insulate themselves from competition, drive rivals out of the market and ultimately contribute to higher prices for consumers.
One 2021 market study found that 69 percent of all U.S. grocery sales are attributable to the top four largest grocery retailers. NGA has long advocated for Robinson-Patman Act enforcement, contending that it will help lower the cost of food for Americans by extending discounts to more retailers, thereby bolstering competition between national chains and independent grocery stores.
[RELATED: Time To Remind Policymakers What Independent Grocers Mean Back Home]
“After years of steadfast advocacy efforts by our members and partners, we applaud this historic vote by the Federal Trade Commission to enforce the Robinson-Patman Act for the first time in decades,” said NGA President and CEO Greg Ferrara.
“Although not a unanimous decision, commissioners from both parties signaled they are serious about enforcing this crucial law, particularly in cases of buyer power abuses. This sends an unambiguous message to power buyers that they aren’t above the law.”
Although the FTC’s enforcement action is confined to the alcohol marketplace, the revival of the Robinson-Patman Act sends a clear message to the entire retail industry that antitrust laws designed to protect competition and consumers should be followed and taken seriously.
“Grocery consolidation has made it extremely challenging for independent, family-run supermarkets to compete, as national chains have been allowed to illegally demand special pricing and treatment from suppliers for decades” said Chris Jones, NGA’s chief government relations officer and counsel.
“By enforcing Robinson-Patman, the FTC is simply upholding good law, honoring Congress’ intent to level the playing field between local Main Street businesses and powerful Wall Street interests.”
To learn more about NGA’s advocacy efforts on antitrust enforcement in support of independent grocers, visit its website.