03/28/2024 | Press release | Distributed by Public on 03/28/2024 15:04
"The RPA is an effective tool to promote fairness and competition and protect small businesses."
"By enforcing the RPA, the FTC can prevent dominant market players from further eroding the economic and social benefits that independent stores provide to their communities."
Letter follows a recent FTC report that found that giant grocery chains took advantage of supply chain disruptions during the pandemic to hike up prices to increase their profits.
Washington, D.C. - Today, United States Senator Elizabeth Warren (D-Mass.) and Representative Mary Gay Scanlon (D-Penn.) led a group of 14 lawmakers in a letter to Federal Trade Commission (FTC) Chair Lina Khan urging the agency to revive enforcement of the Robinson-Patman Act (RPA), a critical tool to promote fair competition in the food industry.
In the letter, the lawmakers note that the RPA is still the law of the land and call on the FTC to investigate potential RPA violations and, when merited, bring lawsuits under the RPA to protect consumers, small businesses, farmers and workers. This letter follows a recent FTC report that found that giant grocery chains took advantage of supply chain disruptions during the pandemic to hike up prices to increase their profits.
"The FTC should use the RPA to combat price discrimination and concentration. Congress enacted the RPA to address these exact problems in the food and retail industry. The RPA is an effective tool to promote fairness and competition and to protect small businesses. The FTC should also use the RPA to combat creative, subtler forms of price discrimination that have emerged in recent years, namely slotting fees and volume-based rebates. These practices harm small retailers and producers and may exclude new entrants from the food retail market," the lawmakers wrote.
Today, the food industry is more consolidated than when Congress adopted the RPA. Currently, four food retailers account for over a third of national grocery sales. Grocery suppliers are also highly concentrated-four firms controlled more than 60 percent of sales in most grocery categories in 2019, and some categories are almost entirely controlled by a single food company. Because of this concentration, dominant retailers can extract more favorable prices and terms from suppliers, beyond what might be justified by economies of scale. Suppliers are often forced to make up their losses by charging higher prices to independent, smaller grocery stores.
Congress passed the Robinson-Patman Act to create a level playing field for retailers by ensuring that both small and large firms pay the same price for comparable products. The RPA prohibits sellers from engaging in price discrimination and prevents sellers and buyers from skirting around the price discrimination ban by giving more favorable commissions, brokerages, processing fees, handling fees, or other similar schemes to certain buyers. Strong enforcement of the RPA in the years after its passage succeeded in promoting competition between small and independent retailers and larger chain stores. However, misguided theories of antitrust popularized in the 1970s and 1980s led to the RPA's disuse, and the law has essentially laid dormant for the last 40 years. Despite this shift by enforcers and courts, the RPA is still law, and all the precedents that enabled the prior era of successful RPA enforcement still stand.
As a champion for American consumers and a secure and healthy economy, Senator Warren has engaged in oversight of corporations for unfairly increasing prices for consumers. She has also been calling for more competition and stronger enforcement of antitrust laws to bring down prices for families:
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