At the tail end of the Biden Administration, the U.S. Federal Trade Commission authorized two Robinson-Patman Act lawsuits – dealing with liquor and soft drink distribution discounts – that likely will harm American consumers while wasting scarce government prosecutorial resources if pursued. The new FTC leadership may wish to consider withdrawing these cases and deemphasizing the RPA, in order to most effectively advance competition and consumer welfare.
The Robinson-Patman Act: An Anti-Discounting Law
Simply put, the RPA, enacted by Congress in 1936, discourages discounts in the sale of goods. The bipartisan Congressional Modernization Commission explained in its 2007 report to Congress that this law responded to the concern of depression-era small businesses – such as “mom and pop” grocery stores – that they were losing share to larger supermarkets and chain stores and in some cases being forced to leave the market. Small businesses complained that they could not obtain from suppliers the same price discounts that larger businesses demanded and received.
The RPA prohibits sellers from offering different prices to different purchasers of “commodities of like grade and quality” where the difference injures competition. Competitive harm that affects rivals of the original seller is known as “primary line discrimination,” while competitive harm to the purchasers that compete with the buyer that receives the discriminatory discount is dubbed “secondary line discrimination.”
Other RPA provisions promote the goal of equal pricing by flatly barring discriminatory commissions and promotional programs.
As a law inserted into the larger Clayton Antitrust Act, the RPA can be enforced by the two federal antitrust agencies, the U.S. Department of Justice and the Federal Trade Commission. Firms that fall victim to RPA violations can also bring private antitrust lawsuits to recover triple damages for the economic harm they sustain.
Analysis of RPA enforcement reveals that it discourages successful firms from engaging in vigorous competition that benefits consumers. In addition, small and medium-sized businesses, the very firms that the RPA was supposed to benefit, often have fallen victim as defendants in RPA litigation. What’s more, as the 2007 CMC Report to Congress explains, sellers may respond to enhanced enforcement by refusing to deal with small purchasers. According to a detailed review of scholarly findings, “[e]
conomics and history make clear that the [RPA’s prohibitions] . . . would raise prices for consumers and reduce overall economic welfare.”
In short, the RPA is an anomaly, out-of-step with general antitrust principles that favor vigorous competition and consumer welfare promotion. The bipartisan CMC examined the evidence and recommended in 2007 that Congress repeal the law.
In recent decades judicial decisions have made it a bit harder to win RPA cases by establishing a greater emphasis on showing “competitive injury” (related to consumer welfare) and by expanding the scope of RPA defenses.
Recognizing the law’s deficiencies, the federal antitrust agencies dropped RPA enforcement, the DOJ in 1977 and the FTC in the 1990s. Nevertheless, the law never became a dead letter. It remained on the books. The risk of costly private RPA suits still had to be factored into business planning.
And under the Biden Administration, the threat of FTC RPA enforcement returned with a vengeance.
FTC RPA Enforcement Returns Under Biden
In a July 2021 Executive Order on Promoting Competition, President Biden cited the RPA as a solution for improving “farmers’ and smaller food processors’ access to retail markets.” The Biden-era FTC promised to revive RPA enforcement, stressing that it planned to use it to promote “fairness” for small businesses.
This was an unusual policy shift, considering that the post-pandemic economy was already plagued by cost of living woes at a time when most Americans had come to shop at big-box retailers and supermarkets. Smaller retailers and boutiques continue to thrive by servicing different customer segments or offering unique products and user experiences.
Despite substantial reporting about FTC investigations, however, the FTC waited until near the end of the Biden Administration before filing two separate RPA lawsuits, involving the distribution of alcoholic beverages and soft drinks. Neither of the FTC’s RPA complaints alleges that consumers are injured through higher prices, less innovation or choice, or reduced product quality as a result of the alleged price discrimination.
Southern Glazer’s
On December 12, 2024, a divided FTC voted 3-2 along party lines to file a federal court lawsuit against Southern Glazer’s Wine and Spirits, LLC, the largest U.S. distributor of wines and spirits. The FTC complaint alleges that Southern’s discounting practices violate the RPA by discriminating against small independent businesses, to the detriment of competition. The FTC requests that the court order Southern to charge the same net prices to all competing purchasers. Unfortunately, the FTC’s suggested remedy would likely raise prices and harm consumers.
Republican Commissioner (now Chairman under President Trump) Andrew Ferguson dissented, arguing that the FTC was unlikely to prevail under its theory of the case, due to a lack of evidence, and was imprudently using scarce Commission resources.
Commissioner Melissa Holyoak’s dissenting statement asserted that the FTC’s complaint condemns innocuous or even procompetitive conduct and that the mere presence of discounting does not prove harm to competition. She found no violation of the RPA’s terms, properly construed.
Pepsico
The FTC authorized a federal court suit against Pepsico, Inc. on January 17, 2025, once again by a partisan 3-2 vote. The FTC alleged that the second-largest food company in the world has engaged in illegal price discrimination by providing one customer – a large, big box retailer – with unfair pricing advantages, while raising prices for competing retailers and customers.
Commissioner Ferguson’s dissent found the complaint politically motivated, lacking in evidence, and legally deficient on its face. He did, however, suggest that he could support a future RPA case where the FTC has solid evidence of a violation, and the beneficiaries of the alleged discrimination enjoy market power sufficient to threaten competition in the relevant market.
Commissioner Holyoak’s dissent argued that the complaint totally failed to allege an actual violation of the RPA, stressing the majority’s mischaracterization of the facts.
What Comes Next
The change in administrations does not automatically kill the Southern Glazer’s and Pepsico cases. They will continue to be litigated unless and until a majority of sitting commissioners votes to file motions of voluntary dismissal with the courts. Following Chair Khan’s departure on February 1, the FTC is deadlocked 2-2 on these cases. The expected confirmation of Trump nominee Republican Mark Meador as a new FTC commissioner will eventually create a 3-2 Republican majority. Nevertheless, because Meador has stated his support for RPA enforcement, the demise of these prosecutions is far from certain.
The strongest argument for the FTC’s not pursuing RPA current or future RPA cases rests on the efficient allocation of scarce agency resources. Chairman Ferguson noted in his Southern Glazer’s dissent that the FTC cannot categorically refuse to enforce a law passed by Congress. Nevertheless, he added that “[t]he Commission exercises its discretion poorly by bringing this case[,]” since “it would be an imprudent use of the Commission’s enforcement resources even if it were likely to prevail.”
The threat of possible FTC RPA prosecutions likely will lead many firms from pursuing efficient discounting practices that benefit consumers and drive vibrant competition in distribution. This is a real loss to the economy. Reallocating those resources to non-RPA antitrust matters, which are clearly subject to a judicial consumer welfare standard, is far more likely to benefit competitive forces and the American economy.
For these reasons, the FTC may wish to state publicly that it will prioritize non-RPA investigations, given its limited resources. This could be justified as a sound exercise of prosecutorial discretion designed to ensure that limited FTC funds are best used to promote the public interest.