7. Conclusion

Resting on the above series of faulty economic assumptions, the

Act is made inherently capable of serious harm to society; indeed, the more the statute is enforced and the more it is complied with, the

greater becomes its harmful effects on competition. The irony is that Robinson-Patman proves to be quite ineffectual in achieving its nominal goals. The next section of this chapter will describe why the Act is unable to "protect" small businesses and has not done so, and will discuss the reasons why Robinson-Patman is not a useful tool for achieving

Proponents of Robinson-Patman do not rely on any substantive

evidence demonstrating direct benefits to the consuming public

from the operation of the Robinson-Patman Act.

Rather,

supporters have largely accepted at face value the personal

perceptions of those who daily experience the risks of the marketplace, and of those who have been disadvantaged in business by lack of bargain

ing power.

Such observations tend to focus on the success

or hardship of particular firms rather than on the condition of

competition generally.

Those in favor of the Act have stated several reasons

why they believe retention of the Act would be in the public.
First, they claim that Robinson-Patman offers protection

interest.

and assistance to small businesses, that the law does so in a manner

that is in accord with the antitrust laws, and that it does not impose additional "regulation" on the private sector. Secondly, they allege

that Robinson-Patman provides a needed supplement to the other antitrust statutes by preventing predatory activities which cannot be reached under these laws. Lastly, they suggest that the Act can significantly reduce the trend toward increased concentration in the economy. It is argued, therefore, that any consumer benefit from an initial lowering of prices which may result from the removal of Robinson-Patman would be outweighed in the long run by less competitive markets and higher prices.

These claimed benefits of Robinson-Patman, if supported by pursuasive evidence, would be worthy of public support.

The Report will, therefore, turn to an evaluation of
the objectives which supporters of Robinson-Patman have
stated the Act is intended to achieve.

1.

Robinson-Patman is an Effort to Inter-
fere with Normal Evolutionary Cycles in
Distribution

Distribution, the business arrangements by which goods get from their producers and manufacturers to the consumer, is a vital sector of our economy. Traditionally, the distribution of consumer goods has been thought of as a three-tiered process, involving the manufacturer of the product, the retailer who sells the product to the consumer, and the wholesaler who acts as the intermediary between the manufacturer and the retailer. The American consumer has a vital

financial interest in the efficiency and effectiveness of these

channels of distribution:

according to government statistics, of

the $283 billion paid by the consuming public in 1967 for purchases of durable and non-durable commodities (at 1967 prices) thirty-four percent, or over $100 billion, went to pay wholesalers and retailers for their services.

298/

Yet, for all its size, surprisingly little attention has been paid in the debate on Robinson-Patman to the fact that distribution is indeed

an "industry" and that "innovation" and technological change in the distribution industrywere significant parts of the maturation of the American economy over the last century. These changes were as significant as the replacement of the handcrafted product by the assembly line or the replacement of the multi-story urban factory by the single story suburban plant. The public, however, does not regard changes in the method of retailing as having the same importance as the sale of a new "product" to them, for example, the introduction into the retail market of color television, or television itself for that matter.

Because of this failure to perceive change in the distribution

sector as innovation, and hence valuable, the Robinson-Patman debate centers exclusively on the issue of whether it is appropriate to protect small businessmen from "large corporation" organizations; no consideration

298/ The Input-Output Structure of the U.S. Economy: 1967, SURVEY OF CURRENT BUSINESS, February 1974, at 32. In 1975, consumer spending on durable and non-durable goods reached $538 billion. National Income Accounts of the U.S., 1929-1975, SURVEY OF CURRENT BUSINESS, January 1976, at 39.

is given to whether such protection would, if successful, serve to inhibit innovation in distribution, or to impede development of more efficient forms of business organization, or to forestall the establishment of new types of retail outlets. Nor is consideration given to the consumers who might benefit from and desire such changes. During the 1920s and 1930s when much of the debate on protecting small businessmen from chains took place, refrigerators began to replace ice boxes as the normal means of household refrigeration. course, everyone perceived the refrigerator as a much desired innovation in keeping consumer perishables cold, and most members of the public and their representatives in government undoubtedly viewed the introduction of the refrigerator as a net gain to society. On the other hand, the introduction of the refrigerator had an extremely adverse effect on one segment of the economy

Of

those who were in the business

of providing ice. Many of these ice companies which were forced out of business by the refrigerator were undoubtedly small local businesses, and the refrigerator manufacturers who in effect replaced them were much larger and generally operated on a nationwide basis. Today, most people would dismiss out of hand the argument that the introduction of refrigerators should have been restricted in

American economy.

order to protect those small businessmen and in order to keep as high as possible the number of small businessmen in the Likewise, few people would have suggested that the introduction of the automobile be abandoned simply to protect the blacksmiths, carriage manufacturers, horse dealers, veterinarians, harness makers, and others who were affected by the coming of the automobile. Such change is (or has been until recently) viewed as

a positive benefit to society.

Because of its immediateness and visi

bility, such change was evaluated on its own terms and not in terms
of the battle between incumbent businessmen and the entrepreneurs who
would replace them if their innovation were to become part of the
accepted pattern of economic life.

In the case of distribution, however, few people are even conscious of the changes in the relative functioning of business intermediaries, e.g., wholesalers with whom the public does not deal. Yet these

operations into one central warehouse, the integration of the ware

housing function into the retailing function or the absorption of the warehousing function by manufacturers

can act to decrease the cost

of interbusiness transactions and increase the ability of manufacturing organizations to be more responsive to the needs of retailers whose sales to the public ultimately determine the demand for the manufactured product.

On the retailing level, there have been many similar innovations: the introduction of the department store in the last century; the introduction of the supermarket in the 1930s; the more recent introduction of the combined food and consumer goods "superstores," fast food outlets, home furnishings "warehouses," and the development of "life style" oriented shops, such as those selling blue jeans. At the same time, the location of primary retail activity has shifted from downtown shopping areas, first to suburban "strip" shopping centers and then to the more recent enclosed suburban shopping "mall." Here too, businessmen