AMC: Summary of Robinson-Patman Hearings

Aug 10 2005

The Antitrust Modernization Commission held hearings in Washington on July 28, 2005, regarding the Robinson-Patman Act. This is a summary by David Balto and Chris Sharp (intern)of Robins Kaplan Miller & Ciresi. A AAI working group submitted comments to the AMC that can be found at or at

Antitrust Modernization Commission Hearing - July 28, 2005 Robinson-Patman Enforcement

The Antitrust Modernization Commission held a hearing on Thursday, July 28, 2005, to discuss the state of the Robinson-Patman Act and what, if any, changes in enforcement policy are necessary. Four panelists testified: J.H. Campbell, Jr. on behalf of the National Grocers Association; Harvey Saferstein of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo P.C.; Bruce Spiva of Tycko, Zavareei & Spiva LLP, on behalf of the American Booksellers Association; and Professor Herbert Hovenkamp of the University of Iowa.

Generally speaking, Campbell, Spiva, and Saferstein all argued that the Robinson-Patman Act is necessary to preserve a competitive marketplace. In their capacity as industry representatives, Campbell and Spiva expressed particular concern over the impact of power buyers, and the continued ability of power buyers to obtain more favorable treatment in terms of price, packaging options, payment terms, and promotional opportunities from suppliers. Both emphasized that, while power buyers may offer lower prices, the subsequent decrease in competition harms the consumer through decreases in product diversity, customer service, and, particular to independent bookstores, innovation of product due to the dramatic reduction in decision-makers selecting new titles and authors as booksellers consolidate. Saferstein’s testimony focused on the need for Robinson-Patman to continue essentially in its present form, at least until further study reveals that another course is justified. In particular, he rejected the notion that the Act should require a showing of general injury to competition, predicting that such a requirement would make lawsuits under Robinson-Patman virtually impossible; this sentiment was echoed by Campbell and Spiva.

Professor Hovenkamp testified that Robinson-Patman should be repealed, while conceding that political realities may make such a move impossible. He did admit, however, that Robinson-Patman is effective in preventing a power-buyer from forcing a supplier to lower prices against its best interest Short of repeal, Hovenkamp advocates that a showing of injury to competition should be required, both to prevent frivolous cases and to make Robinson-Patman Act enforcement consistent with basic antitrust principles. He argued that the costs of compliance are unjustified because the Act essentially duplicates the limits imposed on anticompetitive behavior by Sections One and Two of the Sherman Act. Further, he noted that the Act benefits special interests such as small or independent retailers rather than consumers, placing it out of lockstep with the general aims of antitrust law.

Hovenkamp and Saferstein agreed, and Campbell and Spiva offered no opposition to, the notion that a strong cost justification defense for suppliers makes the Act operate more efficiently. Further, all panelists agreed that the criminal provisions of Robinson-Patman Act are completely unutilized and unnecessary.

After each panelist gave a brief summary of his prepared statement, the witnesses fielded questions from the commissioners. Questioning commenced with Sandy Litvak, the lead questioner for the hearing, and continued with the remaining commissioners. Hovenkamp faced the most questioning, given that his advocacy of repeal set him apart from the other panelists. The questioning focused most on the general efficacy of the Act, the impact of power buyers on the marketplace, the effectiveness of the current scope of the Act, and whether enforcement of the Act does in fact offer a benefit to the consumer. Notwithstanding the questioning on the role of power buyers, several of the commissioners asked questions revealing skepticism that the Act encourages pro-consumer behavior, and a number of the questioners appealed hostile to the suggestion by Campbell and Spiva that product diversity matters to the consumer as much as price.

During questioning by Litvak, Campbell seemed to suggest that the National Grocers Association does not oppose price differentiation, but rather the non-disclosure of price differentiation, which Campbell said is a common occurrence. Spiva similarly testified that the largest booksellers frequently collect income from suppliers—typically unknown and unavailable to independent bookstores—that effectively constitutes a rebate. An example given of this income was “placement fees” that publishers pay for books to get favorable shelf placement in retail stores. Later, Campbell observed that suppliers further discriminate against smaller buyers by making certain packaging of products attractive to consumers, particularly bulk packaging, available exclusively to the largest retailers. Overall, both Spiva and Campbell expressed through their answers to various questions that the primary concern of smaller retailers is having complete knowledge of how large buyers acquire their prices and benefits from suppliers. By having complete knowledge, Spiva and Campbell assert, small retailers can attempt to change their practices accordingly to get similar deals from suppliers.

A series of questions indicated what could be described as fairness and democracy concerns the commissioners have with the aim of Robinson-Patman. Commissioner Jacobson asked Campbell if seeking a better deal from your supplier than other rival buyers are getting is in fact the kind of competition that drives the economy, and identified this as an issue that troubles “many” other commissioners as well. Campbell responded that what makes for a successful marketplace is equal availability of opportunities. In the same vein Commissioner Kempf rhetorically asked whether small stores, with poor quality and high prices, are in fact “a façade of competition,” whereas power buyers are merely businesses that have done better at providing a good selection and low prices, thus attracting customers. Kempt further asked Campbell whether emphasizing diversity and choice in antitrust enforcement, rather than consumer welfare based mostly on price, merely led to sustaining businesses that consumers do not want to patronize. Campbell reiterated his belief that the market should be accessible to competitors large and small.

Another area of inquiry was whether empirical proof exists that monopolistic penetration of market by power buyers leading to a dearth of competitors will ultimately result in higher prices. Commissioner Carlton asked the panelists whether any knew of such a study. Spiva replied that book prices have actually increased because of the constant pressure from the large stores to discount prices, and the desire of publishers to preserve their profits in the face of the discounting. Campbell said that National Grocers Association market studies reveal that prices are higher when there are fewer competitors in the market. Hovenkamp and Saferstein knew of no such studies.

Campbell expressed that the National Grocers Association wants Robinson-Patman to apply to services purchased, not just goods. Hovenkamp and Saferstein were skeptical that this would be worth the costs associated with attempting to compare services, and Spiva refused to take a position on the issue. However, Commissioner Warden asked Saferstein whether it might be possible for the Act to be applied to certain “commodified” services, such as credit card processing, while excluding more subjective professional services. Saferstein did not take a position, but was clearly intrigued by the idea.

Based on the questioning, it appears somewhat unlikely that the Commission will advocate a total repeal of the Act. However, a recommendation of change is probable, including a repeal of the criminal provisions of Robinson-Patman and a stronger price justification defense for suppliers. The most major alteration likely to be considered is a required showing of injury to competition in order to allege a Robinson-Patman violation. It is not clear whether such a showing will be recommended. The apparent belief, however, of some commissioners that: (1) price is by far the greatest concern of the consumer, and (2) Robinson-Patman does not tend to put downward pressure on price, may foretell a recommendation that a showing of injury to competition be required to allege a violation.

Several commissioners openly were skeptical of the product diversity arguments made by Spiva and Campbell as a reason for preserving Robinson-Patman. Commissioner Warden labeled Spiva’s assertion that independent bookstores in the aggregate lead to more variety of products “anecdotal,” nothing that he has never failed to find what he wanted at Borders or Barnes & Noble. In order for the Commission to recommend stronger enforcement of price discrimination through the Robinson-Patman act, or even mere status quo of the current statute construction and enforcement, it appeared that there must be a stronger case that RP enforcement benefits consumers, preferably in a tangible, financial way.

David Balto, Robins Kaplan Miller & Ciresi

Chris Sharp, Summer Associate, Robins Kaplan Miller & Ciresi George Washington School of Law Class of 2007