As Inflation Rises, Antitrust ‘Reformers’ Target Lower Prices

Biden wants to start enforcing a moribund law that took money out of consumers’ pockets

By Noah Joshua Phillips and Joshua D. Wright. Mr. Phillips is a commissioner of the Federal Trade Commission. Mr. Wright is a university professor and executive director of the Global Antitrust Institute at Scalia Law School. He served as an FTC commissioner, 2013-15. Excerpts:

"Yet President Biden’s July Executive Order on Competition suggests reviving enforcement of a law that took money out of the pockets of American consumers. The Robinson-Patman Act of 1936 sought to protect small retail businesses from larger, more efficient chain stores. As the Justice Department concluded in 1977, the unfortunate result was that American consumers paid more for groceries and household goods.  

That is why the FTC hasn’t seriously enforced the law since the 1970s. The Antitrust Division of the Justice Department has never enforced it. If they did, Robinson-Patman would keep prices high because sellers and large buyers would fear that bargaining over price will result in liability for discounting. But discounting lowers prices and benefits consumers. In 2007, a bipartisan congressionally appointed Antitrust Modernization Committee recommended repealing Robinson-Patman. When Americans are paying nearly 30% more for eggs and meat, now is exactly the wrong time for the government to discourage companies from lowering prices."

"Because lowering prices is the essence of competition, courts are properly skeptical of predatory-pricing claims. (It also doesn’t help that settling these disputes often involves fixing prices.)"

"But a report last year from the House Judiciary Antitrust Subcommittee’s Democratic staff called to create more liability for lowering prices. Other politicians have called for limits on companies’ undercutting rivals. Both proposals would extend antitrust liability and the heavy penalties associated with it to companies that lower prices, without requiring any proof that the prices harmed competition. Consumers want low prices. Antitrust enforcers have better things to do than punish companies for offering prices that are too low."

"would immunize state-backed attempts to permit cartels, such as when dentists get together to bar drugstores from selling teeth-whitening strips."