Kahn's FTC Reportedly Reviving Price Discrimination Law To Investigate What Big Retailers Pay For Cola

• Jurisdiction: United States,Federal
• Law Firm: MoginRubin
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Author: Mr Jonathan Rubin
• Published date: 28 March 2023

The Federal Trade Commission has reportedly launched an investigation to explore price discrimination in the soft-drink industry, apparently as part of FTC Chair Lina Kahn's effort to reinvigorate use of the Robinson-Patman Act. The Act, a 1936 amendment to Section 2 of the Clayton Act, strengthened the Clayton Act's limitations on price discrimination. In the 1960's, the government brought 518 Robinson-Patman cases against one form or another of price discrimination, but prosecutions fell off precipitously in subsequent decades. The last case brought under the Act was in 2000 in the spice industry and before that in the publishing industry in 1988.

Recently, according to the Wall Street Journal, Politico, and other news outlets, the FTC has contacted Walmart, Costco, and other large retail chains to gather information about their purchases from the Coca-Cola Company and PepsiCo Inc. The issue is whether the retail giants are using their market heft to obtain preferential pricing from the beverage companies, putting smaller retailers at a competitive disadvantage. The FTC has not commented publicly on the reports; the companies have denied any wrongdoing.

The National Grocers Association, a trade group representing the independent supermarket industry, previously called on the FTC to investigate "the unchecked power of big box stores and e-commerce giants" that are "squeezing suppliers" and "forcing higher prices and fewer products on independent grocers and their customers." It is not surprising that such an entreaty would have struck a chord with Lina M. Kahn, FTC Chair, in light of her pre-appointment writings, which extolled the virtues of the Robinson-Patman Act for "enshrin[ing] a key tenet: That preserving fair competition requires that we curb the bullying power of size." It probably comes as something of a surprise to most antitrust practitioners to learn that "curbing the bullying power of size" is a "key tenet" of American antitrust law or competition economics.

As explained by the FTC on its website, "A seller charging competing buyers different prices for the same 'commodity' or discriminating in the provision of 'allowances' ' compensation for advertising and other services ' may be violating the Robinson-Patman Act. This kind of price discrimination may give favored customers an edge in the market that has nothing to do with their superior efficiency. Price discriminations are generally lawful, particularly if they reflect the different...