Robinson-Patman, on the other hand, has remained with us.

reason for this is that its basic protectionism is concealed:

The

the Act

is one of the antitrust laws, and is claimed to rest on the principle of "equality of opportunity." Indeed, the evidence before the Review Group shows that the presence of Robinson-Patman does serve in spirit to make more concrete the concept of fairness in business dealings. The Act may also serve to give businessmen a psychological boost in their struggle to remain competitive with other enterprises in their market, and to provide

a degree of bargaining strength in negotiations with their suppliers. Unfortunately, Robinson-Patman, so just in principle, cânnot be supported

as a net benefit to American society because its real effects as an

economic regulatory statute are on balance more costly than beneficial to society.

B.

The Basic Goals of Robinson-Patman Cannot Be Achieved

By Statute; But The Law Imposes Great Costs on Society

The simple truth is that Robinson-Patman is a false promise: it provides little, long-run protection to small businessmen.

It is just not possible to legislate equality in a free market system. The basic force in changing the structure of the American marketplace is the consumer. It is the consumer who decides the type of retail establishment with which he or she wishes to deal. The consumer makes the choice as to whether he or she wishes the personalized service and convenience of a small establishment, providing special goods with special know-how, or the lower prices, relatively less service, and greater inconvenience of a larger store. This Report has shown that in the highly dynamic distribution sector, there are many reasons why some businessmen fail

and others succeed.

New types of establishments arise, populations shift in age and location, and changes in the overall economic picture may make the public more or less willing to pay for the ambience of a serviceoriented establishment. Also, new products are developed, new methods

of distribution come into play, and businessmen serving once useful

functions find they are no longer needed. In this environment, it is even futile to rely on a law prohibiting non-cost

highly deceptive

justified price differences for commodities of like grade and

quality, as a device for insuring equality of competitive

opportunity.

The author of a voluminous study of the impact of Robinson-Patman also concluded that the goal of guaranteeing small businesses a mythical "equality of opportunity" as opposed to that of preserving competition in the marketplace was both an inappropriate aim of a price discrimination statute and impossible to achieve through the mechanism of prohibiting certain price discriminations: 402

tends

To the present writer it appears that, even in the
of the powerful buyer, the objective of preserving equal
opportunity is an inappropriate focus for a law of price
discrimination. The pursuit of equality through the
price discrimination law, even in this limited field
to give the law an unfortunately pervasive control over
price relationships. Moreover, the definition of equality
as the equivalent of equal buying prices distorts the
concept of equal opportunity. A powerful buyer may
obtain advantages not only by paying lower prices but
also by receiving more generous credit, obtaining quicker
deliveries, obtaining preferential access to scarce goods,

and in many other ways. Piecemeal legislation addressed
to particular types of advantage is not a satisfactory way
of assuring equality, if, indeed, equality is to be assured
by law.
To keep public control over business activity
within reasonable limits and at the same time to cope
more effectively with the greatest disparities of bar-
gaining power, the focus of public policy should be
shifted from efforts to control market behavior to
efforts to prevent undue concentrations of power.
Section 2 of the Clayton Act [Robinson-Patman] cannot
fill the need created by underuse of Section 7 of the
Clayton Act and Section 2 of the Sherman Act.

In return for this illusory "protection" the small businessman, and American business in general, is placed under a series of legal restrictions and administrative agency rules and guidelines that can genuinely be described a "regulatory." Moreover, the evidence also indicates that for several reasons, it is the small businessman, not the large businessman who runs afoul of Robinson-Patman and must bear the expense of litigation with the Federal Government.

Perhaps, though, the protectionist heritage of Robinson-Patman and its unsuitability to the task of protecting the small businessman might be overlooked if the statute did promote and preserve competition in the marketplace and there were no less anticompetitive alternatives such as enforcement of the Sherman Act. Of course, public policy is deeply concerned by increases in market concentration.

The reason

for this is simple. There is a belief that in many markets increased concentration means increased pricing inflexibility, price fixing, and the erection of barriers to entry which forestall new competitors and thus eventually lead to the decline of innovation in the protected,

incumbent industries.

The perversity of Robinson-Patman is that it achieves for many sectors of the American economy precisely those ill effects of con

centration about which the American public is rightly concerned. As has been stated, Robinson-Patman really serves as "fair trade" at the manufacturer level. By promoting "pricing caution," RobinsonPatman encourages the maintenance of uniform list prices in oligopolistic manufacturing industries. At the same time, by discouraging bargaining on part of the buyers, Robinson-Patman decreases the possibility that a retailer will receive a lower price, pass it on to the consumer, and thus initiate a competitive struggle in the retailing sector which will ultimately result in more efficient operation and lower prices for the consumer. Robinson-Patman has served to encourage the notion that businessmen may talk about price, or indeed even fix prices, if the purpose of such activities is to increase compliance with the Robinson-Patman Act. Of course, businessmen who intend to fix prices will fix them, but it is certainly contrary to the public interest to retain on the books a law that encourages businessmen to take the fatal first step of discussing prices with competitors by seducing them with the notion that if they do engage in actual price fixing, Robinson-Patman may get them off the hook. Finally, by preventing promotional price cuts Robinson-Patman discourages entry into new markets and competition for new customers. Indeed, the evidence shows that Robinson-Patman may protect actual monopolies against new entry and cause the reduction of the number of competitors in a market by making litigation expenses prohibitive. Likewise, RobinsonPatman serves to hurt the small businessman when it prohibits suppliers

from helping small retailers meet their competition from competitors' products when it cannot be positively shown whether the competing large retailer is simply lowering the price on its own, or is actually receiving a special allowance from its suppliers.

In return for the Robinson-Patman Act's fostering the effects of concentration in markets, little actual increase in competition can be attributed to the Act. Moreover the evidence available shows that there appears to be no significant effect on the number of small businesses due to Robinson-Patman, or because of the even more protective "fair trade" laws, although there are doubtless individual businessmen who would not be in existence today but for Robinson-Patman.

Perhaps, the most fitting contrast of small business attitudes

towards Robinson-Patman with the actual effects on small businessmen

of its repeal was given by one Rhode Island hardware dealer when
surveyed about the effects on him of the end of that state's fair
trade laws: 403/

Although I had actively fought the repeal of
the state's Fair Trade law, the actual repeal of
the law had made no difference to my operations.
The dire consequences of the repeal of Fair Trade,
which I had predicted, did not materialize because
of a substantial increase in retail business in
the state. I feel that small retailers were not
hurt by the repeal of the Fair Trade law and in
no way wish to see Fair Trade back on the books

403/ A. HOURIHAN & J. MARKHAM, THE EFFECTS OF FAIR TRADE REPEAL: THE CASE OF RHODE ISLAND III-13, 14 (1974).