Robinson-Patman Act Prohibits Price Discrimination to Protect Small Retailers from Chain Store Power

Congress passed the Robinson-Patman Act (RPA), co-sponsored by Senator Joseph T. Robinson (D-AR) and Representative Wright Patman (D-TX), prohibiting anticompetitive price discrimination by producers. The law responded to the growing power of chain stores like the Great Atlantic & Pacific Tea Company (A&P), which used their massive bargaining power to secure discriminatory volume discounts from suppliers, crushing independent retailers and wholesalers. A 1934 FTC report found that the Clayton Act’s safe harbors for quantity discounts created ‘difficulties of enforcement’ against chain stores. The RPA strengthened Section 2 of the Clayton Act by making it illegal to charge different prices to different buyers when such discrimination would harm competition or tend to create a monopoly. The law aimed to protect small businesses—the economic backbone of American communities—from being destroyed by predatory pricing practices of large corporations. FTC enforcement of the RPA peaked in the early 1960s with dozens of annual cases. However, by the late 1960s, responding to industry pressure, federal enforcement effectively ceased. The DOJ announced in 1977 it would stop enforcing the RPA entirely, arguing it resulted in ‘higher prices’ and ‘inefficiencies’—adopting the Chicago School view that protecting competitors, not competition, harmed consumer welfare. The FTC’s last enforcement action occurred in 2000. For over 20 years, the law remained virtually unenforced, allowing massive retailers like Amazon and Walmart to extract discriminatory pricing that decimates independent businesses—precisely the abuse the RPA was designed to prevent.