L

The McGuire Act, anybody who asks or tries to compare
McGuire and Robinson-Patman is either ingenuous or, as

I said, an over-zealous advocate.

Any such assertion, however, must be weighed not only against the evidence

of similar purpose contained in the legislative history, but against the admission of similar purpose expressed by that same organization in its defense

of the recently repealed fair trade legislation. 256/

Today there are only two statutes in our antitrust code
that give any protection to small business against the unfair
competition of giants. These are the Fair Trade laws and
the Robinson-Patman Act.

2. Maintenance of Equal Competitive
Opportunity for Small Businessmen

Support for the Act would continue regardless of the legislation's ability to protect small business interests. Without conceding that the Act may be unable to insure the survival of small business, supporters point out that it may nevertheless have the salutary effect of giving a psychoD logical boost to the small businessman faced with competition from larger rivals. Its supporters argue that the existence of the statute may, in many cases, provide the encouragement which is needed if a small businessman is to enter into or remain in the admittedly hazardous occupation of retailing. In response to a question concerning the net benefit of the Act, one Review Group witness testified: 257/

There is a net benefit that a man who is struggling in
business and looks to the Government for help is going
to survive. In essence, that is what we are talking

256/ Prepared statement of the National Small Business Association, Hearings on H.R. 2384 Before the Subcommittee on Monopolies and Commercial Law of the Committee on the Judiciary House of Representatives, 94th Cong., 1st Sess. 153 (1975).

257/ Testimony of Philip 0. Friedlander, DCRG Hearings, Tr. 436.

about, at least our group is.

He may be only one guy employing twenty-five people, but when he's got a problem, he has no place else to go except to get an enforcement under the current statutes, and that is what we are objecting to because they are not being enforced even when the dealer comes to Washington, takes the risk and comes down here and nothing happens.

Similarly, one witness before the 1975 House Hearings testified that the Robinson-Patman Act has the beneficial effect of promising small firms that the federal government is enforcing fairness in the marketplace, giving the small businessman the psychological boost which may be needed to motivate him to enter into or remain in the marketplace. 258/

The survey documents another quasi-sociological
aspect, the value of Robinson-Patman enforcement in
improving morale of small buyers and encouraging them
Even in markets
to assert themselves in bargaining.
where handicaps do not exist, small buyers might be
demoralized by the feeling of unjust handicaps in
bargaining, were it not for the reassurance provided
by the presence of Robinson-Patman enforcement.
demoralization itself might substantially contribute
to socially disfunctional declines in the offerings of
the many varieties and variations to be found among small
firms, when it is often to these very firms that we must
look for innovation and provision of varieties and
variations in product and service alternatives.

This

Robinson-Patman Act supporters urge that the small businessman is as efficient as the large, and needs only an equal opportunity to

compete with large companies. For example, one small business representative testifying before the Review Group quoted from a study of the food distribution industry: 259/

258/ Testimony of Robert C. Brooks, Jr., Subcommittee Hearings, pt. 1 at 49

259/ Testimony of Donald A. Frederick, DCRG Hearings, Tr. 378.

We have been sold a bill of goods. Smallness may appear inefficient when put beside a model of perfect efficiency, but that model exists only in the minds of economists. In the real world, efficiency and competitiveness are products of economic smallness. Compared with the performance of giantism, smallness looks awfully efficient.

Given the equal opportunity to compete, and the chance to demonstrate the efficiency of small business, the small firm needs but a statutory version of the golden rule. This need, according to a

well respected antitrust attorney and author testifying in the Sub-
committee Hearings, is supplied by the statute in its present version, pro-
vided it is vigorously enforced. 260/

Mr. Kintner: And yet, the Robinson-Patman Act basically
provides for equality of opportunity among competing
customers or purchasers of a product. There is nothing
particularly obtuse about that; it is a very simple moral
code, in my opinion, that people should be treated fairly.
In the same way that we have a requirement of equality
before the law, the small businessman ought to be able to
start the race with his bigger competitor on a basis of
equality.

Mr. MacIntyre: Now, speaking of the Robinson-Patman Act--
and I am referring back now to a statement you made on
page 7 of your statement in which you referred to the
"expression of the intent of Congress was to restore as
far as possible equality of opportunity in business by
strengthening the antitrust laws and protecting trade and
commerce against unfair trade practices and unlawful price

discrimination."

I would like to refer again to that phrase and that
quotation, "equality of opportunity." It is your view, as
I judge it from your statement, that the Robinson-Patman
Act was designed to provide that; not to really protect
people against competition, but to provide an equality
of opportunity at the starting point. 261/

260/ Testimony of Earl W. Kintner, Subcommittee Hearings, pt. 1 at 260.
261/
Remarks of Everette MacIntyre, Subcommittee Hearings, pt. 1 at 262.

Mr. Kintner: Absolutely.

There is no purpose in the RobinsonPatman Act to protect the inefficient, ineffectual businessman, large or small, but only to provide businesses with equality of opportunity so that they can start the race, the competitive race, on some basis of equality. 262/

The equity argument is also advanced as the foundation for a corrollary

argument: if a seller is compelled to grant the same price to all purchasers, the net effect will be lowered prices to all purchasers. 263/

A manufacturer may and does set his own price. What we say is make that price available to all. Do not favor large over small customers (unless truly justified by cost savings); do not favor one customer over another. If the manufacturer sells at his lowest reasonable price, then all consumers will benefit through price competition of healthy, vigorous dealers. Independent dealers know how to compete and they are doing so successfully.

3. Prevention of Monopoly in

Distribution

The most important current argument advanced in support of the Act is that it forestalls monopoly in distribution. Proponents of Robinson-Patman state that, if the Act is repealed, large firms would engage in predatory conduct to drive many small firms from the marketplace. The long run effect would be increased concentration in the marketplace and a tendency, once competition from small business is reduced, toward higher prices for the One Congressman described the process during the 1975 House Hearings. 261 [Y]ou see this happening throughout America where that independent is being driven out of business. Yes, the biggie comes on and offers, you know, a relatively low price or whatever goodies it offers,

consumer.

262/ Testimony of Earl W. Kintner, Subcommittee Hearings, pt. 1 at 262. 263/ Testimony of Philip 0. Friedlander, Jr., DCRG Hearings, Tr. 387. 264/ Remarks of Rep. Hanley, Subcommittee Hearings, pt. 1 at 27.

that the independent cannot possibly offer. Once
the biggie kills the independent then it has got the
marketplace to its own and then it can do whatever
it wants.

The consumer is best served, according to this analysis, by a marketplace made up of numerous small competitors.

The goal of the antitrust

laws ought to be to create and maintain such a marketplace. The RobinsonPatman Act, therefore, is a necessary device to assure that as many firms as possible remain in the market. Protecting specific firms is merely a means to a socially desirable end, the protection of competition.

The small business community's belief in the potential for predatory or systematically discriminatory conduct on the part of large business is demonstrably deep-seated. 265/

Large corporate interests engaged in the retail
field will use brute economic power to extract
preferential prices from their suppliers. The
results will be unfair competition between large
and small retailers with the eventual demise of
the latter.

If the retail drug field is characteristic of the
effect of the repeal of this Act, the result will be
the wholesale demise of independent businessmen and
the rapid demise of the independent retail pharmacies,
in both urban and rural areas. The end result in many
areas will be a monopoly situation controlled by some
large out-of-state corporate chain drugstore, little
concerned with serving the community except to the extent
it has a positive effect on their corporate ledger.

265

Testimony of William E. Woods, DCRG Hearings, Tr. 401, 403.