A couple of weeks ago I posted about a new Federal Trade Commission initiative to toughen the anti-trust laws by proposing to ban all non-comps, even those previously executed.  Now the FTC proposes to begin enforcing the now-obscure Robinson Patman Act.  This Act, in 2007 considered for repeal, prohibits (in theory) unfair price advantages given by manufacturers or suppliers to larger customers.

Not all favorable  prices charged to larger customers were illegal under this Act; only those that tended to lessen competition; a vague judgmental standard if ever there was one.

I have been practicing law long enough to recall with clarity spending a lot of time counselling sellers about how they could not favor the big purchaser with lower pricing, or better payment or delivery terms, or better marketing and promotional support just because that purchaser was buying a zillion dollars of goods.  Were those actions “unfair”?  Often we would counsel that, if the larger purchaser “earned” better treatment, then better treatment from the seller was justified.  Did the purchaser warehouse and support the product?  Did the purchaser take over tasks generally performed by the seller, thus relieving the seller of cost so that a discount or benefit could be afforded to the purchaser in return?

By the way, this was a hard message to sell to the sellers; there was so much efficiency and profit in large orders, and it was so hard for the smaller purchaser to bring suit to enforce the Act, and so hard for the FTC to get interested enough to bring governmental action, that many a client listened to what I had to say, paid my fee and went ahead and continued favoring the big purchasers.

So today, an activist FTC is itself going to undertake the protection of the little guy, claiming that sheer quantity discounts are “unfair” price discrimination.  No doubt the government will start with the largest, most blatant cases, and perhaps those to which the consuming public will be most sensitive (the FTC has been looking hard at the soft drink industry).

It will be interesting to see, if the FTC is successful in preventing sheer quantify discounts, if in fact the retail price of some goods will increase (while small business profits will increase?).  Stay tuned as the FTC takes us down the rabbit hole…