Checking in on the Robinson-Patman Act Revival
Is the RPA dead, again, after the Trump FTC dismissed Lina Khan's barebones complaint against Pepsi? What happens to Southern Glazer's? And what is the future of FTC RPA enforcement?
Welcome back to Competition on the Merits.
Last week we covered the imminent and inevitable fall of Humphrey’s Executor and its implications for the future of the FTC, as well some immediate implications for practical life at the new, “Executive FTC.” This week I’ve got a few issues on my mind. Both check in on prior predictions and recent developments on two important issues in the antitrust arena.
The first is checking in on what was once the Robinson-Patman Act Revival after the FTC’s recent dismissal of its inauguration eve suit against Pepsi. The second is updating our views on Trump Administration merger policy in light of recent developments. Trump antitrust officials have been remarkably busy signaling to the world that regular order is back when it comes to merger policy. What should we expect?
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Today we will start with the so-called revival of the Robinson-Patman Act. How’s that going?
We’ve written quite a bit about the RPA revival:
First, we explored the text of the RPA, explaining why secondary-line RPA cases have eluded antitrust law’s consumer welfare revolution, and argued that the plain text of the RPA, common sense, and the Supreme Court’s RPA rulings in recent decades all point to a harmonization of the RPA with the modern antitrust laws.
Second, we debunked a popular but intellectually bankrupt myth propagated by enthusiastic RPA supporters and apologists that there is no economic evidence that RPA enforcement banning discounts to large retailers like Walmart and Costco harms consumers. We presented evidence from industrial organization economics that the very pricing practices the FTC prosecutes and seeks to ban result in enormous benefits for consumers, disproportionately enjoyed by low-income Americans.
Third, we offered a primer on the RPA’s two most common defenses – meeting competition and cost justification – as well as highlighting the perverse economic incentives those defenses create.
Remembering the RPA Revival
Most recently, we discussed the FTC’s filing of the Pepsi case as an own goal, killing the momentum it had created for the RPA revival. For those keeping score at home, when the FTC filed its case against Southern Glazer on December 12, 2024, it marked what looked like a bipartisan revival moment for the RPA despite the 3-2 party line vote with both Republicans (Ferguson and Holyoak) dissenting. Why is that?
Because Chairman Ferguson left open the door for future RPA cases where the favored buyer had market power. In his own words:
We have some quibbles to this position on both legal and economic grounds, but hold those aside for the moment. With Chairman Ferguson suggesting he would support some RPA cases, and the confirmation of Commissioner Meador, a vocal supporter of RPA cases in his own right, the tides were turning in favor of RPA enforcement.
In December 2024, the Democratic majority was looking at a future with a 4-1 vote for at least a subset of some RPA claims. This is maybe the zenith of the RPA revival. But a few things happened on the way to the RPA revival?
First, they rejected Chairman Ferguson’s bipartisan offering in favor of filing a future 4-1 RPA case against Pepsi on the most political terms possible. In fact, Commissioners Bedoya and Slaughter took a shot at Commissioner Holyoak’s integrity. We discussed this in great length here, so we will keep it brief in today’s column and just hit the highlights. On January 17, 2025, the FTC filed the Pepsi RPA case with a 3-2 vote and elicited the following reaction from Chairman Ferguson:
He went on:
So much for the bipartisan revival.
The second development, as you all know, was the firing of Commissioners Bedoya and Slaughter – two presumptive votes in favor of any and all RPA cases.
The third development, just two weeks ago, is the FTC’s dismissal of the Biden Administration’s Pepsi case. As I wrote previously, it was certainly not a foregone conclusion that the Trump FTC would dismiss the Pepsi complaint. At the time, of course, there were 2 Democratic commissioner votes to deal with. But Commissioner Meador’s support for RPA enforcement also created some mystery surrounding whether the votes would be there to dismiss the case.
But the one thing that was certain was that the Democratic commissioners and Lina Khan had made their ownership of the RPA agenda clear by rejecting the bipartisan offer from Chairman Ferguson.
The question remained whether the Trump FTC would take on the cost of dismissing the case. I predicted that they would – and indeed they did just two weeks ago. And so the RPA Revival went out with a whimper rather than a bang.
So is that it?
Our question for today’s column is whether anything is left of the RPA revival after the dismissal of the Pepsi Complaint. I think to answer that question it is important to dig in to what the FTC Commissioners said about that dismissal, and about the remaining FTC RPA case against Southern Glazer’s, in order to understand where the Trump FTC stands on the Robinson-Patman Act. Let’s get into it.
FTC v. Pepsi – Case Dismissed, But Why?
The FTC’s closing statements make their positions clear – and I think it is worth going through them one by one not just for the sake of understanding their views on dismissing the Pepsi RPA 2(d) and 2(e) litigation, but also their views on RPA generally.
Let’s start with Chairman Ferguson and Commissioner Holyoak’s statement. It is relatively straightforward. Chairman Ferguson’s statement describes the decision as motivated by the lack of evidence the FTC had put together during its investigation to support an RPA claim:
Do not miss the footnotes, which refer back to then Commissioner Ferguson’s dissent at the time the Pepsi case was filed, that walk through the various evidentiary deficiencies.
While Chairman Ferguson made clear the Pepsi investigation simply did not uncover facts that would support an RPA complaint under 2(d) or 2(e) of the fact, recall that he also laid out in Southern Glazer’s his view that an RPA claim may be appropriate where the favored buyer has market power.
Commissioner Holyoak joined Chairman Ferguson’s statement. But we also know Commissioner Holyoak’s RPA views in fantastic detail because she authored a monumental dissent in Southern Glazer’s, documenting the history of the RPA, describing her interpretation of the RPA’s plain text, and the conditions under which she might support an RPA claim.
We sort of knew both of these things before the Pepsi dismissal. The star of the game here really is Commissioner Meador’s statement. You should read the whole thing. That Commissioner Meador joins his Chairman in his desire to dismiss the politically motivated RPA case on the eve of President Trump’s inauguration, in a case where the Democratic majority has insulted the integrity of his colleague, Commissioner Holyoak, is no surprise. And not necessarily helpful in predicting future cases. We do know that Commissioner Meador is an ardent supporter of RPA enforcement. Here is what I wrote last time around:
With Commissioner Holyoak presumptively against most RPA enforcement claims based upon her views, and Chairman Ferguson open to claims where buyer power (and perhaps, proof of consumer harm?) are present, the conditions under which Commissioner Meador would vote to support an RPA claim are pretty darned important as a practical matter.
To his credit, his Pepsi dismissal statement sheds some light on exactly those conditions. After ensuring that readers understand that he, like Chairman Ferguson, views the RPA as a “validly enacted law” that should be enforced at times, he turns to distinguishing Pepsi from those cases where enforcement is appropriate. He spends time highlighting the shortcomings of the Pepsi complaint, joins the Chairman in criticizing the former Democratic majority, but then we get to the punchline. But amid the explanation of the deficiencies in the Pepsi complaint, one might miss the $64,000 sentence– or $61,000 for favored purchasers (sorry, a little RPA humor) – tucked right in the first paragraph:
“Clear consumer harm” that enforcement can remedy is a requirement. To be sure, that sentence is consistent with Mr. Meador’s short piece on RPA here. But having the clear statement from the Commissioner is helpful.
Is the RPA Dead? Again?
So let’s get a sense of where things stand in the RPA Revival – at least at the FTC – at current?
Chairman Ferguson is open to bringing RPA cases where buyer power is present, at least in part because of his view that buyer power is a proxy for the threat to competitive harm
Commissioner Meador is enthusiastic about future RPA enforcement but has committed to supporting cases where there is “clear evidence of consumer harm”
Commissioner Holyoak reaches a similar conclusion – RPA cases cannot be supported unless there is harm to interbrand competition through the lens of the exclusionary conduct framework.
Each Commissioner has stated they would support RPA enforcement at least under some conditions. That does not sound like the Death of RPA to me. But so long as the conditions require harm to competition in a manner similar to the Sherman Act and other portions of the Clayton Act, a position I have argued is demanded by the plain text and common sense, those conditions are going to be hard to satisfy in practice unless those other antitrust laws are also violated.
And of course, the FTC is not the only game in town. Private enforcement of the RPA continues apace, and perhaps itself has been reinvigorated by the recent interest and enthusiasm by the public enforcement agencies.
So is the RPA Revival over? No. I don’t think so. I think this FTC will be very careful about bringing another RPA case. And I think these written statements provide guidance as to what cases we might see, if any, in the future. But the agreement among the Commissioners that any such case must involve “clear evidence” of consumer harm and buyer power suggest two things about future cases: (1) they will be aimed at buyers rather than manufacturers or wholesalers; (2) RPA claims will supplement other traditional antitrust claims under the Sherman Act or Clayton Act – that is, if you’ve got proof of market power and harm to competition, why limit yourself to the RPA?.
Why Not Dismiss Southern Glazer’s?
The Pepsi dismissal and the conditions of a desirable RPA case identified above to beg the question: why not dismiss the RPA case against Southern Glazer’s as well? The case does not have the political salience of Pepsi. It was not filed on the eve of a new Administration taking over. It does include personal attacks on Republican Commissioners. In other words, it appears to have plenty in common with the Pepsi complaint.
Specifically, Chairman Ferguson has concluded that the buyers at issue in Southern Glazer’s do not possess market power.
He also concluded that the FTC is unlikely to prevail because the defendant is likely to prevail on a cost justification defense and because the case is a waste of FTC resources.
Those facts are likely unchanged since December 2024 when the complaint was filed. Indeed, if anything, the FTC’s resource constraint has shifted inward since that time. And certainly, the buyer in the case has not acquired market power in the interim months.
Without buyer market power, and with no apparent evidence of harm to competition in the record – it is a fair question to ask whether the Southern Glazer’s complaint satisfies the criteria the Commissioners have identified for legitimate RPA complaints. It appears that the Complaint does not allege facts that would satisfy the criteria identified by either Chairman Ferguson, Commissioner Holyoak, or Commissioner Ferguson.
The political salience of Pepsi is an obvious distinguishing factor. But one wonders if that is enough to keep the complaint and litigation alive (the FTC has prevailed on a motion to dismiss) given scarce resources at the FTC. It is always a costly thing with staff to kill ongoing litigation. Perhaps that is another practical distinction between Pepsi and Southern Glazer’s. That matters. But do those pragmatic factors make enough of a difference to save the Southern Glazer’s complaint when, while it does not suffer quite the same evidentiary shortcomings as the Pepsi complaint, it does not satisfy the Commissioners’ own RPA criteria? Stay tuned.
COTM readers know that I am voting for a collision with the RPA and the Supreme Court, where I believe the Supreme Court will harmonize the secondary-line RPA competitive injury requirement with the consumer welfare standard guiding the rest of the antitrust laws. Read the full argument here. The sooner the Supreme Court or Congress ends the RPA adventure, the sooner consumers can avoid the pernicious harm that it causes to society, including our poorest. Part of me is rooting for Southern Glazer’s to create that collision. But I’m not sure any FTC wants to be the one that supervises the loss of a statutory authority. So while I root for that train wreck, the wiser bet would be that the FTC finds a way out of the litigation via settlement or dismissal.
Thank you, Competition on the Merits readers, as always. Next time, let’s talk about whether or not normal order is coming back to merger enforcement. And as always, subscribe, upgrade to paid and send to your friends.