Robinson–Patman Act
Based on Wikipedia: Robinson–Patman Act
The Law That Says Walmart Can't Pay Less Than Your Corner Store
Imagine you run a small grocery store. You order a truckload of Pepsi. Down the road, Walmart orders the exact same products from the exact same supplier. But here's the thing: Walmart pays significantly less per bottle than you do. Not because they're more efficient at stocking shelves or because they negotiated better payment terms—simply because they're bigger.
That's price discrimination. And in America, it's been illegal since 1936.
The Robinson–Patman Act, sometimes called the Anti-Price Discrimination Act, stands as one of the most ambitious attempts in American legal history to level the playing field between giant retailers and the little guys. It's also one of the most neglected laws on the books—a sleeping giant that federal regulators essentially abandoned for decades, only to dust it off again in our current era of corporate consolidation.
The Chain Store Problem of the 1930s
To understand why Congress passed this law, you need to understand the retail landscape of Depression-era America. Chain stores were the disruptive technology of their day—think of them as the Amazon of the 1920s and 30s. Companies like A&P (the Great Atlantic & Pacific Tea Company) were expanding rapidly across the country, and they had a tremendous advantage: buying power.
When you're ordering goods for thousands of stores, you can demand prices that a single shop owner could never dream of getting. Suppliers would sell the same canned goods, the same flour, the same sugar to chain stores at rock-bottom prices while charging independent grocers significantly more.
This wasn't about efficiency. It wasn't about the chain stores being better at logistics or having lower overhead. It was pure leverage. And it was driving small retailers out of business by the thousands.
Senator Joseph Robinson of Arkansas and Representative Wright Patman of Texas—both Democrats representing states full of small-town merchants watching their livelihoods disappear—crafted legislation to stop it. The law they created didn't ban chain stores or limit their growth. Instead, it attacked the mechanism of their advantage: the sweetheart deals they extracted from suppliers.
What the Law Actually Says
The core principle is elegantly simple: if you're selling identical products to competing buyers, you have to offer them the same price.
But the actual implementation gets complicated quickly. The law applies when a sale discriminates in price, involves at least two completed transactions from the same seller to different purchasers, crosses state lines, happens around the same time, involves commodities (physical goods, not services) of like grade and quality, and—crucially—has the effect of substantially lessening competition or tending to create a monopoly.
That last part is important. The law isn't triggered just because prices differ. You have to show that the discrimination is actually harming competition. This becomes the make-or-break point in most cases.
There are also built-in defenses. A seller can justify different prices if they reflect genuine cost differences—maybe it really is cheaper to ship to one customer than another, or one buyer picks up their own goods while another requires delivery. Sellers can also match a competitor's price without violating the law. These escape valves were designed to prevent the law from becoming absurdly rigid.
The Fine Print
The law goes beyond just list prices. It covers "net price," meaning all compensation paid. A supplier can't get around the rules by charging the same sticker price but throwing in free goods, extended credit terms, or promotional services to their favored customers. Every advantage has to be offered equally.
Interestingly, the law includes criminal penalties—though these are rarely if ever invoked. It also contains a specific exemption for cooperative associations, those farmer-owned and consumer-owned enterprises that pool buying power but aren't traditional corporations.
Military exchanges and commissaries—the stores on military bases—are completely exempt. The government apparently decided that supporting the troops trumped fair competition concerns.
The Morton Salt Case: Setting the Standard
In 1948, the Supreme Court heard a case that would define how the Robinson–Patman Act works in practice. Morton Salt, the company with the iconic girl holding an umbrella on its containers, had a pricing scheme for its "Blue Label" salt. Technically, any customer could get quantity discounts. In practice, only five national chain stores bought enough salt to qualify for the lowest prices.
Morton Salt argued this was fair—anyone could get the discount if they just bought more salt. The Supreme Court disagreed, unanimously. The Court looked at the congressional record and found that lawmakers specifically considered it harmful when "a large buyer could secure a competitive advantage over a small buyer solely because of the large buyer's quantity purchasing ability."
The ruling established that volume discounts can violate the law even if they're theoretically available to everyone. What matters is whether they're practically available. A discount that only giants can reach is a discount designed to disadvantage everyone else.
The Gas Station Wars
Sometimes the discrimination happens in creative ways. In Spokane, Washington, during the 1970s, a dozen independent Texaco gas station owners noticed something strange about their competition.
Texaco sold gasoline at one price to retailers and a lower price to wholesalers. This made sense—wholesalers take on more risk and handle more volume. But then some of those wholesalers decided to open their own retail gas stations. Suddenly, these retailers were buying their gasoline at wholesale prices, giving them a massive cost advantage over the independent station owners who had to pay retail.
The independents sued and won $449,000 in damages. Under antitrust law, that amount was automatically tripled to about $1.35 million. Texaco fought the case all the way to the Supreme Court, which unanimously affirmed the verdict in 1990. The message was clear: you can't use your position in the supply chain to undercut your own customers.
The Bookstore Battles
Perhaps no industry illustrates the Robinson–Patman Act's application better than bookselling. In the 1990s, independent bookstores across America were fighting for survival against the rise of the superstores—Barnes & Noble and Borders, with their vast selections and coffee shops and comfortable reading chairs.
But the independents suspected the superstores had an advantage beyond ambiance. In 1994, the American Booksellers Association and independent bookstores filed federal complaints against major publishers including Houghton Mifflin, Penguin USA, and St. Martin's Press. The allegation: publishers were offering better promotional allowances and price discounts to the big chains and buying clubs than to independent stores.
The cases had teeth. Seven publishers eventually entered consent decrees—legal agreements to stop the discriminatory pricing. Penguin didn't just promise to reform; it paid $25 million to independent bookstores after continuing illegal practices even after the initial complaints.
Then the independents went after the chains themselves. In 1998, the American Booksellers Association (representing 3,500 bookstores) and 26 individual stores sued Barnes & Noble and Borders in Northern California. The allegation was that the chains had pressured publishers into offering preferential treatment—using their buying power not just to negotiate better deals, but to coerce suppliers into discriminating against smaller competitors.
The Long Sleep
Despite these high-profile cases, something strange happened to the Robinson–Patman Act starting in the 1980s. The federal government essentially stopped enforcing it.
The Federal Trade Commission (FTC) shares responsibility for antitrust enforcement with the Department of Justice, but the Robinson–Patman Act sits in an odd position. It amends the Clayton Antitrust Act of 1914, but it's never quite been considered part of the "core" antitrust laws. The FTC handles it; the Justice Department ignores it entirely.
In the late 1960s, facing industry pressure, even the FTC stopped enforcing the law for several years. What enforcement remained came almost entirely from private lawsuits—individual businesses suing their competitors or suppliers. The mid-1970s saw an unsuccessful attempt to repeal the Act altogether.
The FTC briefly revived its interest in the late 1980s with cases against publishers accused of discriminating against bookstores, but enforcement declined again through the 1990s. From the Reagan era through the Trump administration, the federal government treated the Robinson–Patman Act as essentially a dead letter.
Why the neglect? The law is undeniably complex. Even consumers with legal training struggle to understand how it applies. And unlike laws against obvious wrongs like fraud or theft, the Robinson–Patman Act requires understanding market dynamics and competitive effects. It's not immediately obvious why different prices for identical goods should be illegal—after all, negotiating discounts seems like normal business behavior.
But critics argue that this neglect had real consequences. Some point to the rise of "food deserts"—areas where residents lack access to affordable, healthy food—as a direct result of unenforced price discrimination laws. When chain stores can extract lower prices from suppliers, they can undercut local groceries. When the local groceries close, and the chains don't find those neighborhoods profitable enough to serve, residents are left without options.
The Awakening
In 2022, something shifted. FTC Commissioner Alvaro Bedoya publicly endorsed reviving Robinson–Patman Act enforcement to curb price discrimination. The timing wasn't coincidental—Americans were watching prices surge across the economy and asking hard questions about whether concentrated corporate power was to blame.
Under Chair Lina Khan, the FTC signaled a new willingness to use old tools against modern market abuses. Commentators speculated that the Robinson–Patman Act would become a weapon against the unfair use of market power by giants like Amazon and Walmart.
In April 2024, sixteen members of Congress wrote to the FTC urging revival of enforcement. The law that had gathered dust for four decades was suddenly relevant again.
Then came the cases.
In December 2024, the FTC sued Southern Glazer's Wine & Spirits, one of the largest liquor distributors in the country. The allegation was exactly what the Robinson–Patman Act was designed to prevent: Southern Glazer's charged small stores more than it charged large chains for the same products. The same bottles of whiskey and vodka cost more if you ran a neighborhood liquor store than if you were a major retailer.
Just over a month later, in the closing days of the Biden Administration, the FTC filed an even more ambitious lawsuit—this time against PepsiCo itself. The soft drink giant was accused of the same fundamental sin: charging small retailers more than large ones for identical products.
The Current Battlefield
The PepsiCo case didn't survive the change in administration. In May 2025, the FTC voted to dismiss it. But the Southern Glazer's case is proceeding, potentially setting up a landmark test of whether the Robinson–Patman Act still has force in an economy dominated by corporate giants.
More than twenty states have their own price discrimination laws similar to Robinson–Patman, providing additional venues for enforcement even when federal action stalls. The law's critics—and it has many, particularly among free-market economists who see all price discrimination as efficient market behavior—argue that it's outdated and harmful to consumer welfare. Supporters counter that decades of non-enforcement have contributed directly to the concentration of retail power in fewer and fewer hands.
The debate echoes the original 1930s argument: Is it fair for size alone to determine price? Should a supplier be able to reward volume, even when that reward systematically advantages the biggest players and drives competitors out of business?
The Bigger Picture
The Robinson–Patman Act is part of a family of American antitrust laws stretching back to the late 19th century. The Sherman Antitrust Act of 1890 went after monopolies and cartels. The Clayton Act of 1914 targeted specific anticompetitive practices. Robinson–Patman, coming in 1936, addressed price discrimination specifically.
Later additions include the Celler–Kefauver Act of 1950, which closed loopholes that allowed monopolistic mergers, and the Hart–Scott–Rodino Act of 1976, which required large companies to notify the government before merging. Together, these laws form America's toolkit for preventing excessive concentration of economic power.
But a toolkit is only as useful as its users make it. For decades, the Robinson–Patman Act sat unused while the economy it was meant to regulate transformed around it. Chain stores gave way to big-box retailers, which gave way to e-commerce giants. The mechanisms of price discrimination evolved, but the fundamental dynamic remained: the biggest buyers could extract the best prices, making it ever harder for smaller competitors to survive.
Whether the law's recent revival will prove lasting or temporary remains to be seen. What's clear is that the questions Senator Robinson and Representative Patman asked in 1936—about fairness, about power, about what kind of market economy Americans want to live in—remain as urgent as ever.
The truckload of Pepsi still arrives. The question is whether everyone has to pay the same price for it.