Rum And Coke: The FTC Targets Soft Drinks And Alcohol In The Revival Of Robinson-Patman Act Enforcement- What's Next?

• Published date: 20 June 2023
• Subject Matter: Antitrust/Competition Law, Consumer Protection, Food, Drugs, Healthcare, Life Sciences, Antitrust, EU Competition , Trade Regulation & Practices, Consumer Law, Food and Drugs Law
• Law Firm: K&L Gates
• Author: Mr Christopher Finnerty, Michael R. Murphy, Jack S. Brodsky and Taylor Listau

While government enforcement of the Robinson-Patman Act (the Act) was all but forgotten for nearly two decades, the Federal Trade Commission (the FTC) announced a second investigation over potential price discrimination in just the last sixth months, this time against the largest alcohol distributor in the United States, Southern Glazer's Wine and Spirits (Southern Glazer's). This is just months after the FTC launched a similar investigation into Coca-Cola and PepsiCo.

In its June 2022 Enforcement Policy Statement,¹ the FTC explained that Section 2(c) of the Robinson-Patman Act is one of several legal authorities at its disposal to combat the use of rebate and fee agreements offered by prescription drug manufacturers. While the FTC singled out the prescription drug industry in that policy statement, all eyes were on the FTC to see whether the agency's announcement would have ripple effects across other industries. In just a few months, the answer is clear: yes, and it appears no industry is safe.

WHAT IS THE ROBINSON-PATMAN ACT?

The Robinson-Patman Act was enacted in 1936 to protect individual grocery stores competing with grocery chains by ensuring retailers could all buy on equal terms from manufacturers. The Robinson-Patman Act requires manufacturers to sell the same goods to competing resellers on equal prices and terms:

"Any person engaged in commerce . . . either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality . . . in commerce . . . within the United States.²"

At a high level, the Robinson-Patman Act is intended to provide a level playing field amongst resellers by ensuring that smaller resellers pay the same price as larger resellers.³ The Act applies to both the pricing and any promotional payments or discount programs a manufacturer offers; Sections 2(d) and 2(e).⁴

FTC FORESHADOWED INCREASED ENFORCEMENT OF ROBINSON-PATMAN ACT

To date, other than limited private enforcement, claims of Robinson-Patman Act violations have been nonexistent. The FTC's last case under the Robinson-Patman Act was against the spice company, McCormick, which settled.⁵ Prior to the settlement with McCormick, the agency's most recent case was from 1988 against several book publishers, including Simon & Schuster and Random House, which was ultimately dismissed.⁶

However, in June 2022, the FTC chair, Lina Khan, as well as Commissioner Alvaro Bedoya, foreshadowed increased enforcement under the...