Robinson-Patman Act
Candlefocus EditorThe act was enacted primarily to protect smaller, independently owned retailers from being undersold by larger corporations that used their deep financial resources to buy goods in bulk at discounted prices, and then sold them back to the public at a discounted rates. By doing this, the large corporations drove their smaller competitors out of business with their discounted prices.
Smaller businesses were not given the same financial advantages as larger businesses, and so the Robinson-Patman Act was designed to protect them from discrimination. The law was designed to allow competitive pricing while still preventing unfair competition. In this way, the act was intended to create a level playing field and ensure that competition between retailers is fair.
However, in the nearly eighty years this law has existed, it has been widely criticized by economists and legal scholars. One of the primary criticisms of the Robinson-Patman Act is that it restricts the ability of businesses to employ different pricing strategies that may be beneficial to both the business and its consumers. The law also has the potential to interfere with a business’s ability to maximize its profits. In addition, the act is often seen as ineffective in preventing price discrimination since it only applies to interstate trade and contains a specific exemption for "cooperative associations."
Overall, The Robinson-Patman Act has been a widely debated and controversial law since its adoption in 1936. While it was intended to protect small businesses from being undersold by larger corporations, critics often point out that the act can interfere with a business’s ability to maximize its profits. While it undoubtedly contains noble intentions, its effectiveness in achieving its goals has been widely debated, making it a sometimes contentious issue in the business world.