A bipartisan coalition from the U.S. House of Representatives sent a letter last week to the Federal Trade Commission requesting the agency investigate and, when appropriate, bring enforcement actions against economic discriminatory action that violates antitrust laws, including the FTC Act and the Robinson-Patman Act.
“The antitrust laws were designed to protect against anticompetitive economic discrimination and excessive concentration,” the letter wrote. “For example, the Robinson-Patman Act reflects Congress’ determination that discriminatory treatment among competitors is pernicious and should be prohibited. But current enforcement efforts have failed to address these anticompetitive harms, and judges have inappropriately limited the scope of the law despite clear statutory language. Despite Congress’ broad goals in 1936, the FTC has not brought a case under the Robinson-Patman Act in more than 20 years. …We urge the Commission to make enforcement against economic discrimination targeting small and medium-sized businesses a top priority.”
The letter highlights the concerns of the Main Street Competition Coalition about how Main Street businesses like grocers, pharmacies, convenience stores, package stores, restaurants and agriculture producers are increasingly subject to discriminatory terms and conditions because of concentration throughout supply chains. It describes the market power abuses of dominant firms that leave ordinary businesses with less favorable pricing and price terms, less favorable supply, less favorable retail packaging and the inability to source products in short supply.
The bipartisan coalition was motivated by glaring inequities during the COVID-19 pandemic caused by economic discrimination that had a disproportionate impact on inner-city and rural communities.
“COVID-19 has ravaged America, shuttering many small businesses and highlighting the anticompetitive effects of discriminatory pricing and product supply, especially for small groceries and bodegas. Such effects are passed right onto the consumers as these stores are often the only source for groceries, consumer goods or pharmaceuticals in small towns and big cities. The FTC should use its authority to investigate and bring enforcement actions against discriminatory conduct that violates our nation’s antitrust laws to address economic discrimination that hurt both small business owners and consumers,” said U.S. Rep. Hakeem Jeffries (NY-08), the Democratic co-lead on the letter.
“The Robinson-Patman Act, the Sherman Act, The Clayton Act and Federal Trade Commission Act were all passed to protect small business and encourage competition. This is best for the consumer and for the free market, ensuring that shoppers receive the best prices, and that farmers and ranchers don’t suffer from high levels of concentration,” said U.S. Rep. Louie Gohmert (TX-01), the Republican co-lead on the letter. “To protect the pocketbooks of Americans and the ability for small businesses to flourish on a level playing field, the FTC must enforce the laws on the books and stop allowing big businesses to create monopolies and increase costs.”
Advocates from the Main Street Competition Coalition weighed in about the strong showing of bipartisan Congressional support for the enforcement of antitrust laws that were always intended to level the playing field for all business:
“On behalf of America’s independent community grocers, we thank representatives Jeffries, Gohmert and all 43 members of Congress who signed this letter for their leadership on this important issue. A lack of enforcement of antitrust laws in the grocery marketplace has allowed dominant retailers to exert their immense economic power to secure favorable terms and tilt the competitive playing field against their independent grocer competitors. We hope this bipartisan display of support from Congress will lead to a course correction in how U.S. antitrust laws are enforced,” said Chris Jones, National Grocers Association SVP of government relations and counsel.
“Small business motor fuel marketers continue to get the short end of the stick compared to their big box/dollar store competitors. It’s time for Congress and the FTC to revive the Robinson-Patman Act to help these small businesses compete on a level playing field or else non-enforcement will likely lead to more consolidation and higher prices for consumers,” said Energy Marketers of America (EMA) President Rob Underwood.
“You don’t have to look far to see where industry consolidation through mergers or acquisitions has had an adverse impact on consumers. In health care, many physicians are no longer independent, and the cost of drugs is driven upward by an increasing lack of competition in the pharmacy benefit manager market. Community pharmacists for years have been urging for antitrust enforcement and a return to a pro-consumer, pro-small business state. We’re grateful to these policymakers for their support,” said Douglas Hoey, CEO of the National Community Pharmacists Association.
“Beer, wine and spirits retailers are pleased to see that there is growing congressional support for enforcing laws that ensure fairness for small businesses, so they are able to compete and meet the needs of their customers and communities. As some of the last local businesses left on Main Street, beverage retailers support taking steps to prevent the erosion of fair competition in vibrant state alcohol marketplaces. Dominant national consumer goods retailers – many of whom use beverage alcohol to supplement to their larger non-alcohol business – are using their national power in a way that was unanticipated by the Federal Alcohol Administration Act and to disadvantage independent beverage licensees in what are constitutionally intended, state-by-state markets. Without enforcement of laws that promote fair competition, consumers will eventually be faced with fewer places to shop and fewer beverage choices,” said John Bodnovich, executive director of American Beverage Licensees.
“When independent retailers serving local and regional markets disappear because of unfair practices used by mega-buyers, it’s not just consumers who pay the price. Many local and independent grocers served as key customers for small- and mid-size farms, especially those focusing on regional varieties or innovative practices like organic. Leveling the playing field for independent retailers will have upstream benefits for farmers who want to feed their communities,” said Patty Lovera, policy director of the Organic Farmers Association.
Forty-three members of the House of Representatives signed on to the letter, spearheaded by Jeffries and Gohmert. The full text of the letter may be found here: https://ci.criticalimpact.com/user/31823/image/Final_Letter_to_FTC_Chair_Khan_3.30.22.pdf.