of activity a businessman may engage in lawfully. The Code of Federal Regulations, Title 16, contains many pages of Federal Trade Commission advisory opinions and guidelines concerning the legality of various pricing and promotional allowance practices. Perhaps the most onerous from a business standpoint are the various advertising allowance regulations contained in the so-called Fred Meyer Guides for promotional

advertising allowances. 361/

Of course, once a businessman wants to do something that may be questionable under these guidelines, or indeed feels that these guidelines are unjust and would like to see them changed, he may feel it prudent to petition the agency for clarification or for advice. Such advice may take a long time to fashion, leaving the businessman very much in a quandary as to what to do. In recent testimony before Congress, Federal Trade Commission staff revealed that several requests for clarifications relating to the Fred Meyer Guides filed over two years earlier had not been acted upon. 362 / Also, caution extends to business practices which are subject to outstanding Federal Trade Commission orders, most of which are of infinite duration. In such cases, businessmen may actually feel compelled to request FTC approval before putting into effect a change in their pricing structure. 363/

361/ 16 C.F.R. pt. 240.

362/ Testimony of Bartley T. Garvey, Subcommittee Hearings, pt. 2 at 197.

363/ Testimony of FTC Comm. Mayo Thompson, Before the Joint Economic Committee, November 18, 1974, at 8.

Hence, the Robinson-Patman Act, as it is written and as it is

enforced, is in reality a regulatory statute: it is designed to control the competitive relationships among businesses without an overriding concern for the promotion of consumer welfare; it is administered with

a concern for the continued financial viability of existing firms in the marketplace; and it imposes on individual businessmen

smaller businessmen who do not have corporate counsel

particularly

the burden of

high legal expenses and agency interference in their marketing decisions.

In actual practice, then, the theoretical antitrust concerns of
Robinson-Patman are submerged by other "regulatory" goals.

b.

The "Incipiency" Test of Robinson-Patman, Unlike

That of Section 7 of The Clayton Act, is Ill-Suited

to Achieving Antitrust Goals

One of the basic premises of supporters of Robinson-Patman is that the

Act can serve a useful antitrust role by preventing practices which may result in the establishment of market dominance by one or a very few firms without the necessity of awaiting the actual achievement of such market power. In this respect, Robinson-Patman is meant to serve the same function as Section 7 of the Clayton Act, dealing with mergers. intent of such a statute was concisely expressed in the Congressional record dealing with the 1950 Amendments to Section 7: 364/

The intent here . .. is to cope with monopolistic
tendencies in their incipiency and well before
they have attained such effects as would justify a
Sherman Act proceeding. (Senate Report)

Acquisitions of stock or assets have a cumulative effect, and control of the market . . may be achieved

not in a single acquisition but as the result of a
series of acquisitions. The bill is intended to permit
intervention in such a cumulative process when the
effect of an acquisition may be a significant reduction
in the vigor of competition. (House Report)

Or as one Robinson-Patman sponsor put it: The purpose of Robinson-
Patman is to 'catch the weed in the seed [to] keep it from coming to
flower." 365/

Incipiency statutes serve a useful public function when they are actually able to prevent market dominance by one -- or a very few

364/

Brown Shoe Co. v. United States, 370 U.S. 294, 317 n. 32 (1962). 365/ S. REP. No. 1502, 74th Cong., 1st Sess. 4 (1935).

The

firms, while at the same time not discouraging pro-competitive business activity. The fundamental problem with Robinson-Patman, particularly as applied to the secondary-line cases, is that as a statute which utilizes the presence of price discrimination as the key indicia of an incipient antitrust violation, the Act inherently outlaws a substantial volume of procompetitive price reductions.

Even in its pure form, referring only to injury to competition,

and not to individual competitors, an incipiency test requires that courts decide whether the effect of the questioned action "may be substantially to lessen competition" in the relevant market. As the

Supreme Court has recognized, such a question: 366/

is not the kind of question which is susceptible
of a ready and precise answer in most cases. It
requires not merely an appraisal of the immediate
impact of the [activity] upon competition, but a
prediction of its impact upon competitive conditions
in the future . . . Such a prediction is sound only
if it is based upon a firm understanding of the
structure of the relevant market; yet the relevant
economic data are both complex and elusive.

Because those deciding proceedings brought under an incipiency statute have to make prospective determinations regarding the actual impact of a particular transaction, they must employ logical inferences about the probable effect of the questioned activity on a given market. The degree of speculation inherent in such inferences differs according to the activity subject to statutory scrutiny. Deciding

366/ United States v. Philadelphia National Bank, 374 U.S. 321, 362 (1963).

whether price discrimination is anticompetitive necessarily involves a faulty inferential process while making similar decisions with respect to mergers does not.

A determination that a particular activity is unlawful under an incipiency statute dealing with pricing behavior, such as RobinsonPatman (in contrast to a statute dealing with actual structural changes such as mergers) must result from a cumulation of inferences: First one must infer that the existence of a pricing practice will lead to structural change in the market, i.e., the exit of one or more competitors. Second, one must make the further inference that the structural change resulting from the elimination of one or more competitors will have an adverse impact upon competition in that market.

Testing the validity of such inferences on a case-by-case basis would be inordinately complex, speculative, and time consuming. Moreover, the outcome of such an investigation, requiring the work of many economists, statisticians, and lawyers, could not possibly be known to any of the businesses involved in that marketplace prior to the outcome of the fact-finding proceeding in the case. The business community, however, has an overriding concern in knowing the lawfulness of a proposed pricing activity before it is carried out. The need for such guidelines is greater here than in the case of Section 7; while mergers occur but very infrequently among businesses, prices are set every day and there is much less opportunity to devote a great deal of time to analyzing the societal impact of each price a businessman may wish to charge. Moreover, the maintenance of pricing flexibility is the paramount objective of the antitrust laws.