The Khan FTC's Robinson-Patman Act Own Goal
Today's column is tale about how the Biden-Khan FTC conjured up a Robinson-Patman Act revival against all odds, only to snatch defeat from the jaws of victory. Where does that leave the RPA?
Welcome back to Competition on the Merits! I promised an extra column this week because I took some time off in December. So here we are. And luckily the competition and regulatory world keeps giving plenty to write about. As always, please subscribe, upgrade to paid, and pass around to your friends.
Predicting the direction of antitrust politics can be a precarious business.
A decade ago the most progressive and influential antitrust thinkers on the left endorsed the consumer welfare standard and pushed to nudge the antitrust agencies to bring a few more cases on the margins. The Neo-Brandeisians and Hipsters changed all of that in pretty short order. A decade later and a group that adopts a zero-sum view of economic exchange – including the assumption that all mergers are bad for consumers – led the FTC and DOJ. Life comes at you fast. Conservatives have had their own adjustment period – as we have discussed in detail here – with the “new” right seeking more aggressive use of the antitrust laws to rein in Big Tech and monopoly power with a desire to respect market outcomes, encourage innovation, remove government barriers to entry and bureaucratic sludge, and respect the rule of law. A significant challenge, indeed. But you get the point: the political economy of antitrust is a fluid situation.
And so it is with the would-be revival of the Robinson-Patman Act. The recent history of the Robinson-Patman Act and its enforcement goes from de facto repeal to a full-scale bipartisan revival at the Federal Trade Commission, and back. And that’s just in the last month.
But today’s Competition on the Merits is not just about the Robinson-Patman Act and its near renaissance. In today’s Competition on the Merits I’m going to tell you a story about the worst self-inflicted wound an antitrust agency has ever produced. Certainly the worst antitrust “own goal” I’ve seen. Maybe the worst of all time. It is time for the story of how the Biden-Khan FTC killed its prized Robinson-Patman revival to score a few political points.
First, to get something off my chest. COTM readers already know that I think the Robinson-Patman Act is a terrible, horrible, good-for-nothing antitrust law that has no place in modern enforcement. Robinson-Patman Act enforcement harms consumers and especially the poorest among them. Enforcing it is not sound prosecutorial discretion given the FTC’s limited resources and broad mandate. And no, the rule of law does not require FTC Commissioners to spend valuable resources taking actions that make Americans worse off at the cost of using those resources to improve their lives. There is no legal viewpoint – conservative or otherwise – that requires a slavish commitment to bringing Robinson-Patman Act cases no matter their effect. Robinson-Patman Act enforcement by public antitrust enforcement agencies is counterproductive, antithetical to their mission, and bound to make Americans worse off. Sound prosecutorial discretion on behalf of Americans is not a repeal of the Act in defiance of Congress. On top of that – the Robinson-Patman Act is about as close to exercising federal control over grocery prices as you can get. And as a reminder: the American people rejected that idea in the last election when it was proposed by candidate Kamala Harris. OK, I had to do that.
Now let’s get to the own-goal story.
The Robinson-Patman Act Renaissance That Almost Was
This is just one substack column. And so it cannot be an entire history of the Robinson-Patman Act. But if you would like a masterful historical account of the Robinson-Patman Act, please stop what you are doing and read Part I of Commissioner Holyoak’s dissent in the first Biden FTC Robinson-Patman Act case against Southern Glazers. It is a real tour de force, a first-rate historical account of the causes and consequences of the Robinson-Patman Act, and necessary reading for anybody thinking about the topic. We cannot cover all of the history here. But to understand the stakes of the Khan FTC’s own goal here, it is necessary to get our toes wet with the more recent history.
Some brief highlights of that recent history:
The Commission’s early interpretations of the Robinson-Patman Act were that any and all price differentials were per se unlawful, leading to perverse consequences, such as encouraging price-fixing and coordination on prices while discouraging aggressive attempts to enter new markets by lowering prices and discounts.
By 1977, when the DOJ issued its well known Robinson-Patman Act report, the consensus view at the federal agencies (the FTC included) and beyond was that Robinson-Patman Act enforcement was pernicious, anti-consumer, and thwarted competition.
For example, as Commissioner Holyoak points out in her dissent (p. 10, n. 82), the FTC’s Bureau of Economics – then led by F.M. Scherer, a name some of you will recognize – had concluded that the Robinson-Patman Act did more harm than good to small businesses:
The 1977 DOJ Report went through great pains to explain why the Robinson-Patman Act was likely to harm small businesses, reduce competition, deter price reductions, and encourage collusion. Here’s one description from Holyoak’s dissent:
Robinson-Patman Act repeal has been advocated in at least 1955, 1969, 1977, and 2007 by the bipartisan Antitrust Modernization Commission. But Congress did not act on those recommendations.
The FTC complaint against Southern Glazers is the first federal agency attempt to bring the Robinson-Patman Act back to life since its settlement with McCormick nearly 25 years ago, and the first litigated case in generations.
It is against that backdrop that then-Chair Khan and the Biden FTC attempted to revive the Robinson-Patman Act. No small feat. Especially when one considers the overwhelming academic consensus that banning price differentials and discounts is likely to lead to significant consumer harm. Combine that consensus view – one that does not really require much more than common sense to understand (i.e., if you impose antitrust liability and raise the costs of discounts, you will get fewer of them) – with the political economy of high prices and concern over grocery bills, and the Khan FTC’s feat of bringing back the Robinson-Patman Act is just as impressive as a matter of politics and public relations as it is short-sighted as a matter of policy. But here we are. And here went the Biden-Khan FTC on its crusade to revive the Robinson-Patman Act at a time when the academic consensus was that doing so would raise grocery prices AND when the political economy was incredibly concerned with high grocery prices.
Do you remember presidential candidate Kamala Harris proposing a federal ban on “price-gouging” in grocery stores and having to backtrack from that proposal because of critiques from her own side that it would raise prices? I do. And price-gouging legislation and federal price controls on groceries are intended to prohibit price increases. Yet, the Robinson-Patman Act attacks discounts. As a political feat this is some pretty adventurous stuff from the Khan FTC. And they would have pulled it off too, if it weren’t for those meddling kids.
FTC v. Southern Glazer’s – On the Way to Bipartisan Robinson-Patman Act Revival
On December 12, 2024, the FTC voted out a secondary-line Robinson-Patman Act case against liquor wholesaler Southern Glazer’s Wine and Spirits with a party line vote, 3-2, with Commissioners Ferguson and Holyoak voting no and issuing separate dissents.
I’ve already recommended Commissioner Holyoak’s dissenting statement in that case, which provides a master class on Robinson-Patman Act history. It also provides an excellent argument that the plaintiff’s burden in a Robinson-Patman Act Section 2(a) case can and should, under standard statutory interpretation principles and existing precedent, require a showing that the allegedly unlawful discounts harm NOT JUST a rival, but also interbrand competition. That is an argument that I am fond of – in part, because I made a version of it in significant detail here. There are important differences in those arguments, to be clear. And you should read Commissioner Holyoak’s statement to understand her nuanced view of the plaintiff’s burden in 2(a) cases. But the overarching idea is that Robinson-Patman Act 2(a) cases neither are nor should be an exception to the notion that the Clayton Act, including the Robinson-Patman Act, are about protecting competition and not competitors.
But what is really interesting about the Southern Glazer’s vote is then-Commissioner Ferguson’s dissent. Yes, Commissioner Ferguson votes no on the Khan FTC’s Robinson-Patman Act complaint againstSouthern Glazer’s. But goodness does he leave hope for a bipartisan revival of the Robinson-Patman Act. Here is Ferguson leaving open a window for future Robinson-Patman Actcases that a large truck could drive through:
Ferguson spelled out his own view that the way to thread the Robinson-Patman Act needle is to focus on cases where there is clear buyer power. He appeals to the legal and economic literatures that say one must worry most about anticompetitive effects arising from discriminatory pricing when buyer power is present. Let’s let the Chairman speak for himself:
Hold aside the merits of now Chairman Ferguson’s position for a moment. Nevermind, I cannot help myself. The analytical problem with the conclusion that competitive harm is most likely when there is buyer market power is that when there is market power at both levels of a distribution chain (say a large retailer like Walmart or Costco, as well as a supplier with market power, e.g. Coca-Cola) is also precisely when the potential for pro-competitive effects arising out of vertical restraints is largest! Eliminating double marginalization or aligning promotional incentives through vertical restraints is a powerful explanation of many vertical relationships – including ones involving discounts and promotional commitments – when there margins arising from market power both upstream and downstream. This is one of the most well established points in industrial organization economics. Ferguson’s point that we ought to take a closer look for anticompetitive effects when buyer power is present is a fair one and is economically sound on its own. But it is incomplete. At least two points are missing: (1) we should also be looking for efficiencies more closely under that scenario if we take the economics literature (which he cites for the former point) seriously;; and (2) if there are anticompetitive effects, a plaintiff can bring claims under the traditional antitrust theories and the Robinson-Patman Act is redundant – more efficient for plaintiffs because of watered down burdens; but redundant.
OK, with that tangent aside, let’s get back to the story. We have a 3-2 partisan vote in favor of the first Robinson-Patman Act case in decades with one Republican Commissioner, who is now the Chairman of the Federal Trade Commission, saying, in other words, “OK guys, not this one but we can bring some other Robinson-Patman Act cases in the future.”
That’s a BIG deal. That means in December 2024, there were 4 votes for some major Robinson-Patman Act cases – so long as the favored buyer had market power of some sort. What a tremendous victory for the Khan FTC and their goal of bringing back the Robinson-Patman Act from decades of inactivity and the brink of death. Of course, this turns my stomach. I think this is a bad idea. But we’ve covered that ground. The point here is that the Khan FTC won. 4 votes for Robinson-Patman Act cases involving retailers with arguable market power. They just had to work with their future Chairman to find them and it is 4-1 votes from here into the foreseeable future for Robinson-Patman Act cases with only Commissioner Holyoak dissenting (vigorously and correctly!).
But wait, the Khan FTC victory is deeper than that. On December 10, 2024, President Trump nominated Mark Meador to replace Lina Khan as an FTC Commissioner. We will have plenty of time to discuss the general implications here. Meador is a very smart antitrust lawyer. We disagree on some things. He certainly fits the mold of a “new right” conservative who would like to use the antitrust laws more aggressively than traditional conservatives. But he’s a principled antitrust lawyer who understands the costs of overenforcement as well. The important point about Meador for this column is that he is a Robinson-Patman Act enthusiast. No, he is THE Republican Robinson-Patman Act enthusiast. Here he is drafting a piece on how Robinson-Patman Act enforcement is conservative and a necessary path on the route to truth, justice, and enlightenment.
So what the Democratic majority was looking at as of December 2024 was a 4-1 vote in favor of Robinson-Patman Act cases even after Lina Khan left the building for greener pastures at Columbia University or wherever she decides to go after her landmark and historical (I mean this both as a compliment and a criticism) term. Take stock of that for a second and let it sink in – the Robinson-Patman Act revival was so successful that even after the Khan FTC loses its leader, it can secure a 4-1 vote in FAVOR of Robinson-Patman Act complaints that could not have been spoken about without a derisive chuckle for the last 30 years. From an overwhelming consensus that the Robinson-Patman Act should be repealed to a 4-1 FTC vote with two Republicans in favor of Robinson-Patman Act cases. What a win. Monumental. Historic. Right? RIGHT?
Wrong.
The next chapter in the story is about what the Khan FTC did with that win and how they snatched defeat out of the jaws of victory.
The Biden-Khan FTC’s Own Goal
A few things happened here that are important to understand. But perhaps the most important is to understand that Chairman Ferguson offered the Khan FTC, including Democratic Commissioners Bedoya and Slaughter, a path forward on Robinson-Patman Act cases. He did so at significant risk to himself. It was costly. Not only did he put himself out there in disagreement with his Republican colleague Commissioner Holyoak, but also with legions of traditional conservatives who hold the view that Robinson-Patman Act enforcement is neither conservative, nor productive, antitrust enforcement. The point is – this was a move by Ferguson extending an olive branch of sorts to his Democratic colleagues. So, what did they do with it?
First, they attacked his colleague, Commissioner Holyoak, and her integrity, arguing that her intellectual disagreement over interpretation of the Robinson-Patman Act equated to working for the defense bar:
This is really beyond the pale. The disrespect speaks for itself. Using this sort of invective over good faith differences in views about the Robinson-Patman Act is worse than inappropriate. Commissioner Holyoak is owed an apology.
Second, Commissioner Bedoya published a letter to the editor in the NY Times in January 2025 – yes, after the election – claiming credit for the Southern Glazer’s prosecution and ignoring Chairman Ferguson’s olive branch. The Robinson-Patman Act revival was about Khan and Bedoya. The Robinson-Patman Act was an extension of the Biden agenda. He mentioned not a word about bipartisan willingness to support the cases.
Third, Commissioners Bedoya and Slaughter published a snarky and intemperate “open letter” in response to the announcement that President Trump had appointed Ferguson as the new FTC Chairman. The letter both chastised Ferguson and questioned his commitment to the FTC’s mission.
But those are minor items compared. The play before the play before the play that results in the own goal. They are important for context and understanding how we got there. But they are not the coup de grace. The next Robinson-Patman suit is.
Fourth, the FTC filed another Robinson-Patman Act case on January 17, 2025, just days before President Trump’s inauguration and the end of the Khan FTC’s control of the FTC. Specifically, the FTC filed a Section 2(d) case against Pepsi alleging violations of the Robinson-Patman Act. The investigation had been public for a long period of time and was well known to be underway. The FTC could have easily waited until Ferguson was the Chairman and voted the case out when he felt it was appropriately vetted and prepared – and probably with a 3-1 bipartisan vote over the presumptive dissent from Commissioner Holyoak. Perhaps it would even result in a 4-1 vote, if it came after Mr. Meador’s inevitable confirmation. But the path to bipartisan revival of the Robinson-Patman Act was right there to be had. But that is not what happened.
Instead, I want you to read Chairman Ferguson’s reaction to the Pepsi RPA Complaint:
This was a 4-1 vote to bring a Robinson-Patman Act Section 2(a) case down the road instead of rushing a half-baked 2(d) case before January 20. The Khan FTC went with the second option. Here is more from Chairman Ferguson:
Read that last sentence again. And ask yourself what the odds of bipartisan support for a Robinson-Patman Act case is during Chairman Ferguson’s term as FTC Chairman? It is not zero. Things change. Sometimes damage like this can be undone over time. But Robinson-Patman Act cases were not an agenda item that would have been on top of Chairman Ferguson’s list. He had expressed willingness to work with his Democrat colleagues to find a good case and identified the criteria and evidence necessary for him to vote in favor of one. They were not difficult criteria: buyer market power. But now the ask is to commit precious and scarce FTC resources to identify and litigate these cases over other FTC priorities when the FTC Democrats have smacked away the olive branch offered by Ferguson and loudly announced that the Robinson-Patman Act agenda belongs to the Biden-Khan FTC, to the Democrats, and Republican support is neither wanted not welcomed.
Don’t believe it is that bad. Keep reading. Yet again, the Khan FTC in its last gasp with majority control accuses the Republicans of something that lives between disingenuousness and dishonesty. Khan, Bedoya, and Slaughter allege that their colleagues’ legal and economic objections to the FTC’s half-baked Robinson-Patman Act 2(d) theory are a pretext, cover for their naked policy preference to close the investigation. Here are Khan, Bedoya and Slaughter making those allegations themselves:
You can get away with a lot of things in Commissioner statements and disagreements on particular matters so long as you stick to the substance and process. I’ve done most of them. But accusing your colleagues of dishonesty and lack of commitment to the agency mission is simply not one of the things you can do and remain collegial in any meaningful sense. To be blunt about it – these are not the sort of exchanges that a Commissioner forgets.
Now read the last sentence of Chairman Ferguson’s statement in Pepsi again:
“[T]his is the single most brazen assertion of raw political power I have witnesses during my time as Commissioner. And it deals a mighty blow to the prospect of bipartisan Commission support for renewed enforcement of the Robinson-Patman Act – bipartisan support that emerged just weeks ago.”
This is how you score an own goal. From a 4-1 vote in favor of select Robinson-Patman Act cases to something entirely different. What is the score now?
What is clear after the combative and accusatory response by Khan, Bedoya, and Slaughter are the following:
The Robinson-Patman Act agenda belongs to President Biden, Lina Khan, and the Democrats – and they are not interested in bipartisan support. In fact, their Republican colleagues have been tagged as disingenuous or dishonest in their engagement on the substantive issues surrounding the Robinson-Patman Act.
The Robinson-Patman Act agenda was so important to the Biden Administration and Lina Khan that they eschewed bipartisan support in the future to force a losing case down the throat of the Trump Administration.
The Robinson-Patman Act agenda remains an extension of the proposed Biden-Harris grocery price controls and are an immensely unpopular attempt to insert the federal government into the grocery business.
The Trump Administration has promised to reduce bureaucratic nonsense in markets and will have a difficult time selling intervention aimed at low cost providers of goods that Americans rely upon, like Costco, Walmart, and Target.
There is plenty that is unclear, too. These things can change. Perhaps fences are mended and the FTC brings an RPA case that Chairman Ferguson supports. But that priority has moved to the back of the line. At best. Could the FTC bring a Robinson-Patman Act case without the support of the Chairman? When Mr. Meador is confirmed there will be a presumptive majority (three votes) on just about any Robinson-Patman Act case where Meador, Slaughter, and Bedoya are eligible to vote. Of course, that would put Meador in the untenable position of potentially voting against his Chairman. Unlikely. Perhaps very unlikely. But stranger things have happened at the FTC. Perhaps we see more cases down the road.
For now though, the hopes of a bipartisan Robinson-Patman Act revival are dead. To be clear, that is how I like them. But also unresolved is the question of what the Ferguson FTC does with the dog of a Robinson-Patman Act case against Pepsi that the Biden Administration has left it with. It is not as simple as dismissing the case, given the current 2-2 deadlock at the Commission until Mr. Meador is confirmed. But even after his confirmation, his potential recusal in Robinson-Patman Act matters will depend on analysis by the Office of Government Ethics and the FTC. For now, both Southern Glazer’s and Pepsi continue to make their way through litigation using significant FTC resources while it is not clear either case could generate three votes of support in the Trump FTC. To be fair, it is unclear there are three votes to shut them down in the Trump FTC as well. And so it goes.
But the understanding that Pepsi and Southern Glazer’s belong to the Biden-Khan FTC are not going anywhere. The Khan FTC insisted upon that understanding. And insisted upon rejecting bipartisan outreach for a short run political win. It was not the first time the Khan FTC had chosen to cut corners and grab at short run success at the cost of lasting change. Let them reap the political consequences of the same. And in this case – if it means the death of Robinson-Patman Act– all the better as consumers will win too.
As always, please subscribe, upgrade to paid and circulate to your friends. Next week we will get to a retrospective (with some data!) on the Biden Administration merger enforcement record. Have a great weekend.