U.S. House Committee Calls on FTC to Address Channel Price Discrimination

The convenience retail industry is victim to market power abuses of dominant firms.

April 01, 2022

Soda Can Packaging

WASHINGTON—A bipartisan coalition from the U.S. House of Representatives sent a letter to the Federal Trade Commission (FTC) requesting the agency investigate, and where appropriate, bring enforcement actions against economic discriminatory action that violates antitrust laws, including the FTC Act and the Robinson-Patman Act.

Channel price discrimination has a major impact on the convenience retailing industry, specifically because it can exacerbate supply chain issues, especially when it comes to packaged beverages.

The Robinson-Patman Act was added as an amendment to the Clayton Antitrust Act in 1936. It bans certain discriminatory prices, services and allowances in dealings between merchants. The Robinson-Patman Act has been largely unenforced for decades, but President Biden’s July 2021 Executive Order on Competition directs federal agencies to enforce antitrust laws.

“The antitrust laws were designed to protect against anticompetitive economic discrimination and excessive concentration,” the letter states. “For example, the Robinson-Patman Act reflects Congress’ determination that discriminatory treatment among competitors is pernicious and should be prohibited. But current enforcement efforts have failed to address these anticompetitive harms, and judges have inappropriately limited the scope of the law despite clear statutory language. Despite Congress’ broad goals in 1936, the FTC has not brought a case under the Robinson-Patman Act in more than 20 years. …We urge the Commission to make enforcement against economic discrimination targeting small and medium-sized businesses a top priority.”

The letter describes market power abuses of dominant firms that leave ordinary businesses with less favorable pricing and price terms, less favorable supply, less favorable retail packaging and the inability to source products in short supply.

The bipartisan coalition was motivated by inequities during the COVID-19 pandemic caused by economic discrimination that had a disproportionate impact on inner-city and rural communities.

“COVID-19 has ravaged America, shuttering many small businesses and highlighting the anticompetitive effects of discriminatory pricing and product supply, especially for small groceries and bodegas. Such effects are passed right onto the consumers as these stores are often the only source for groceries, consumer goods or pharmaceuticals in small towns and big cities,” said U.S. Rep. Hakeem Jeffries (NY-08), the Democratic co-lead on the letter.

Last month, NACS filed comments with the FTC on channel price discrimination.

“Over many decades now, retailers in the convenience store channel have noticed that competitors in other channels, be it big box, grocery or dollar stores, are often able to offer these beverage products at retail at a lower cost than convenience retailers can obtain them wholesale,” wrote NACS.

Doug Kantor, NACS general counsel, argued in a letter to the editor published in the December 31, 2021, edition of The Wall Street Journal, that an old antitrust rule can spur retail competition and help eliminate price discrimination in the supply chain that favors certain retail channels over others when it comes to packaged beverages.

The Main Street Competition Coalition, which is committed to increasing competition in retail and wholesale markets and giving consumers real choice, praised the efforts of the congressional coalition. NACS is a founding member of the coalition.