Press Release: 2024-03-29
Warren, Scanlon, Lawmakers Urge FTC to Revive Enforcement of Robinson-Patman Act to Promote Competition, Lower Food Prices
“The RPA is an effective tool to promote fairness and competition and protect small businesses.”
“By enforcing the RPA, the FTC can prevent dominant market players from further eroding the economic and social benefits that independent stores provide to their communities.”
Letter follows a recent FTC report that found that giant grocery chains took advantage of supply chain disruptions during the pandemic to hike up prices to increase their profits.
Washington, D.C. - Today, United States Senator Elizabeth Warren (D-Mass.) and Representative Mary Gay Scanlon (D-Penn.) led a group of 14 lawmakers in a letter to Federal Trade Commission (FTC) Chair Lina Khan urging the agency to revive enforcement of the Robinson-Patman Act (RPA), a critical tool to promote fair competition in the food industry.
In the letter, the lawmakers note that the RPA is still the law of the land and call on the FTC to investigate potential RPA violations and, when merited, bring lawsuits under the RPA to protect consumers, small businesses, farmers and workers. This letter follows a recent FTC report that found that giant grocery chains took advantage of supply chain disruptions during the pandemic to hike up prices to increase their profits.
“The FTC should use the RPA to combat price discrimination and concentration. Congress enacted the RPA to address these exact problems in the food and retail industry. The RPA is an effective tool to promote fairness and competition and to protect small businesses. The FTC should also use the RPA to combat creative, subtler forms of price discrimination that have emerged in recent years, namely slotting fees and volume-based rebates. These practices harm small retailers and producers and may exclude new entrants from the food retail market,” the lawmakers wrote.
Today, the food industry is more consolidated than when Congress adopted the RPA. Currently, four food retailers account for over a third of national grocery sales. Grocery suppliers are also highly concentrated—four firms controlled more than 60 percent of sales in most grocery categories in 2019, and some categories are almost entirely controlled by a single food company. Because of this concentration, dominant retailers can extract more favorable prices and terms from suppliers, beyond what might be justified by economies of scale. Suppliers are often forced to make up their losses by charging higher prices to independent, smaller grocery stores.
Congress passed the Robinson-Patman Act to create a level playing field for retailers by ensuring that both small and large firms pay the same price for comparable products. The RPA prohibits sellers from engaging in price discrimination and prevents sellers and buyers from skirting around the price discrimination ban by giving more favorable commissions, brokerages, processing fees, handling fees, or other similar schemes to certain buyers. Strong enforcement of the RPA in the years after its passage succeeded in promoting competition between small and independent retailers and larger chain stores. However, misguided theories of antitrust popularized in the 1970s and 1980s led to the RPA’s disuse, and the law has essentially laid dormant for the last 40 years. Despite this shift by enforcers and courts, the RPA is still law, and all the precedents that enabled the prior era of successful RPA enforcement still stand.
As a champion for American consumers and a secure and healthy economy, Senator Warren has engaged in oversight of corporations for unfairly increasing prices for consumers. She has also been calling for more competition and stronger enforcement of antitrust laws to bring down prices for families:
- On February 28, 2024, Senator Warren joined Senator Bob Casey (D-Pa.) in introducing the Shrinkflation Prevention Act to crack down on corporations that deceive consumers by selling smaller sizes of their products without lowering prices.
- On February 15, 2024, Senators Warren, Baldwin, Casey, and U.S. Representative Jan Schakowsky (D-Ill.) reintroduced the Price Gouging Prevention Act of 2024, which would protect consumers and prohibit corporate price gouging by authorizing the FTC and state attorneys general to enforce a federal ban against grossly excessive price increases.
- In December 2023, Senator Warren urged the FTC to block the Kroger-Albertsons merger, which would give the five largest food retail companies control of 55 percent of all grocery sales, allowing them to further control and ultimately raise consumer prices, while also reducing job competition, decreasing wages, and decreasing the bargaining power of organized labor.
- In November 2023, Senator Warren called out TransDigm for its refusal to provide cost and pricing information needed to prevent price gouging of taxpayers and the Department of Defense.
- In the past few years, Senator Warren has urged the Biden administration to closely scrutinize other potentially anticompetitive mergers that could lead to higher prices for consumers and accelerate industry consolidation. She has led letters about the proposed mergers of Frontier and Spirit airlines, JetBlue and Spirit Airlines, Sanderson-Wayne, WarnerMedia-Discovery, and Amazon-MGM.
- In March 2022, Senator Warren introduced the Prohibiting Anticompetitive Mergers Act to help stomp out rampant industry consolidation that allows companies to raise consumer prices and mistreat workers. The bill would ban the biggest, most anticompetitive mergers and give the Department of Justice and Federal Trade Commission the teeth to reject deals in the first instance without court orders and to break up harmful mergers.
- In February 2022, at a hearing, Senator Warren called out corporations for abusing their market power to raise consumer prices and boost profits.
- That same month, Senator Warren requested the Department of Justice to take aggressive action against corporations violating antitrust laws to hike prices for consumers.
- In January 2022, Senator Warren questioned Federal Reserve nominee Lael Brainard about market concentration and price gouging driving inflation.
- At a January 2022 hearing, Senator Warren pressed Fed Chair Jerome Powell on the role of corporate concentration in driving up prices for consumers during his renomination hearing to be Chair of the Board of Governors of the Federal Reserve System.
- In a New York Times op-ed published in April 2020, Senator Warren urged Congress to focus on cracking down on price gouging in its ongoing effort to address the impact of the coronavirus pandemic.
- In March 2020, Senator Warren joined her colleagues in urging the FTC to use its full authority to prevent abusive price gouging on consumer health products during the COVID-19 pandemic.