NACS Advocates for Industry on Supplier Price Discrimination

Convenience stores often pay more to buy certain products at wholesale than other channels sell them at retail.

November 04, 2021

Cans

ALEXANDRIA, Va.—NACS has sent a letter to the House Agriculture Committee for the record on a hearing on supply chain issues. The hearing titled “The Immediate Challenges to our Nation’s Food Supply Chain” took place yesterday.

NACS sees serious issues with the state of the supply chain and how it affects small businesses, particularly how the convenience industry suffers from price and product discrimination imposed by some of its major suppliers.

“For many years, manufacturers and suppliers of a number of goods have separated retailers who sell their products into different channel categories and discriminated among them with respect to both prices and the availability of certain products (in particular, by not making certain product packaging sizes available). The companies making and distributing non-alcoholic beverages, sodas, sports drinks, and the like, have been the most aggressive and consistent at enforcing these distinctions along the lines of retail channels,” stated the letter.

NACS points out that these price differentials are so large that convenience stores often pay more to buy these products at wholesale than their competitors sell them at retail. Convenience retailers also can’t get many sizes of soda, sports drinks, iced tea and other products that manufacturers and suppliers simply refuse to sell them. That is true even though the same sizes of those products are sold by the same manufacturers and suppliers to grocers and others that compete with convenience stores.

“By creating walls between retail channels, suppliers make supply chains more fragile. Their actions not only disadvantage the convenience channel, they make products less fungible when supplies are stressed,” stated the letter.

NACS also points out that price discrimination against the convenience channel hurts competition in the market and hurts consumers in a number of ways. For example, convenience store customers pay more for their beverages than they otherwise would due to this behavior, which has a particularly negative effect on consumers in underserved communities—both rural and urban. In many of these communities, convenience stores are a primary source of food and beverages for residents because those communities have few, if any, grocery stores. Convenience stores fill this gap but, due to price discrimination among channels, they cannot do so at the same price points that are available through other retail channels.

NACS asked the committee to better enforce the Robinson-Patman Act, which was added as an amendment to the Clayton Antitrust Act in 1936.

“Enforcing the Robinson-Patman Act and bringing sense to the competitive landscape around the food and beverage supply chain would provide consumers with better prices and with more choices of products. That is especially true during times when the supply chain is stressed because enforcing antitrust laws would lead to more product fungibility across the supply chain,” stated the letter.

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