Once

respect to discriminatory pricing. While this desire
is laudable, I fear the effort comes much too late.
The courts, the Commission and other authorities have
given substance to the language of the Robinson-Patman
Act for almost forty years, and countless ambiguities
have been resolved. Those which remain are far too few
to justify throwing out the vast body of interpretive
law which now provides a common understanding for most
of the provisions of the Act. I do not claim that all
the decided cases can be reconciled, nor do I mean to mini-
mize the difficulty of predicting with certainty the
outer limits of permissible conduct under the law.
a business decision is made to attempt to depart from
price equality, the particular marketing situation involved
may well present the seller with a "maze of technical
requirements." I am still not even certain, for example,
whether a new entrant in a market can, for a while, price
lower there than elsewhere. However, I must ask how many
judicial decisions will be required to explain what it is
to "overtly threaten" under Section 2 of the proposed Reform
Act? Is it akin to conduct which "clearly threatens" under
Section 5? Is a "section of the country" the same as a
"geographical (but not product) market?"

Similarly, the attempt to treat disguised price cutting, such as brokerage and promotional allowances, as overt discounting was criticized as hopelessly complicating the formerly simple definition of "price". 424/ In enforcement in both kinds of cases, at

the outset, it would appear to be an extremely
dubious process to try to identify what in fact
a seller's price is, under the so-called Reform
Statute's definition of terms. By defining
price as including allowances, services, facili-
ties and the like, any attempt to identify a
discriminatory price for enforcement purposes re-
quires calculations--challengeable at every point--
involving, first, a deduction of various promo-
tional allowances from invoice price, then a
coordination of allowances to customer services
provided or performed--and this uncertain amount
added back--together with a further deduction for
whatever value might be deemed to apply to merchan-
dising services or facilities granted by the seller.

Because a net price is virtually impossible to ascertain, when varied and complicated by these

424/ Testimony of Bartley T. Garvey, Subcommittee Hearings, pt. 2 at 165.

kinds of hidden discounts, the Robinson-Patman Act
was, in large part, designed to deal separately
with hidden discounts in the form of promotional
and merchandising grants, and to force discrimina-
tions in price out in the open where they could be
definitively addressed. That approach remains
valid and necessary.

C. Favorable Responses

Many of those who were critical of the draft proposals nevertheless felt that the review of the Robinson-Patman Act prompted by the draft proposals was appropriate. Thus, Commissioner Nye felt that the present statutory scheme should not be "considered set in concrete. 425/ And Commissioner Hanford, while generally opposing the reform statutes,

commented: 426/

The legislative measures submitted to me by
the Subcommittee concerning proposed repeal of
the Robinson-Patman Act have, I think, stimulated
a dialogue which will promote a meaningful inter-
change of ideas in the discrimination area. I am
receptive to well-reasoned arguments for reform
and, therefore, welcome this debate.

Favorable substantive comment came from F. M. Scherer, Director
of the FTC's Bureau of Economics. While objecting to some of the
above-noted definitional problems, Mr. Scherer approved the two pro-
posals' attempt to reach only that conduct which presents a substantial
risk of immediate, adverse impact on market structure, in contrast
to the Robinson-Patman Act's approach of outlawing practices which have
the remote potential of such impact: 427/

The proposal does have some laudable features.
The emphasis in Section 5(a) and (b) on discrimination

425/ Prepared statement of Stephen Nye, Subcommittee Hearings, pt. 3 at 103.

426/ Prepared statement of M. Elizabeth Hanford, Subcommittee Hearings, pt. 3 at 78. 427/ Prepared statement of F. M. Scherer, Subcommittee Hearings pt. 2 at 148.

which is "significant in amount," "part of a pattern
which systematically favors large recipients," and
"clearly threatens to eliminate .

competitors"

would help discourage cases which have only a trivial

adverse impact on competition.

Mr. Scherer also approved of the reform proposals' treatment of cost justification, as being more nearly consistent with economic theory than

the present approach: 428/

The cost justification provisions of Section 7 appear to be a major improvement, permitting the recognition of real efficiencies where they exist without imposing excessively costly accounting burdens upon potential respondents.

There were those who felt that, while the draft proposals accomplished some necessary reforms, even the limited regulation of the Department positions created a danger of discouraging vigorous price competition in the attempt to satisfy those who felt that some regulation of pricing was Thus Professor William F. Baxter of Stanford Law School was

desirable.

wary of any attempt to regulate pricing which is perceived as

predatory: 429/

I guess I have my own doubts whether the
cost of even the more limited statute that the
Justice Department has proposed on primary line
may not in the end turn out to exceed any social
benefits that it produces, but that at least
is a close judgmental question.

The dangers of overreaching, even under the limited proposals, were

again stressed by Professor Baxter:430/

Most certainly you could reach all [predatory pricing] you should reach under the proposed

429/

Testimony of William F. Baxter, DCRG Hearings Tr. 39.

430/ Id. at 58.

statute that the Justice Department has drafted.

I would say about 110 percent.

Objections to and support of the Department of Justice draft proposals, other than technical comments, traced the arguments for and against the Robinson-Patman Act. To the extent that the proposals would decrease the protection of the present statute, the Act's supporters saw the draft as repeal legislation and expressed the appropriate objections. The debate fostered by the reform proposals, therefore, provided a forum both for a refinement of the Robinson-Patman Act analysis and an example of the difficulties attendant upon revising a statute with such difficult goals.

Appendix E: LIST OF WITNESSES

Baker, Donald I.,

Assistant Attorney General, Antitrust Division, Department of
Justice; formerly Professor of Law, Cornell Law School.

Baxter, William F., Professor of Law,

Stanford Law School; Brookings Institution; White House
Task Force on Antitrust Policy (1969).

Bennett, Martin F.

Bison, Henry Jr., National Association of

Retail Grocers of the United States

Campbell, Christian L.,

Attorney, law firm of Sidley & Austin

Elzinga, Kenneth G., Professor of Economics, University of Virginia

Fox, Louis, President, Associated

Wholesale Grocers, Inc.

Frederick, Donald A., National

Council of Farmer Cooperatives

Fricano, John C., member, law firm of Skazzen & Arps; formerly Chief of Trial Section, Antitrust Division, Department of Justice

Friedlander, Philip P., National Tire

Dealers and Retreaders

Jones, William K., James Dohr Professor of Law, Columbia

University School of Law; New York Public Service Commission

Kauper, Thomas E., Professor of Law, University of Michigan Law School; formerly Assistant Attorney General, Antitrust Division, Department of Justice

Kintner, Earl W., member, law firm of Arent, Fox, Kintner, Plotkin & Kahn; formerly Chairman, Federal Trade Commission

La Rue, Paul H., member, law firm of Chadwell, Kayser, Ruggles, McGee & Hastings; chairman Robinson-Patman Act Committee, Section of Antitrust law, American Bar Association

Lewis, John, National Small

Business Association