In a rare moment of restraint, the Federal Trade Commission recently withdrew its lawsuit against PepsiCo for allegedly violating the Robinson-Patman Act (RPA)—a dusty New Deal-era law that punishes companies for giving discounts to large retailers. But while the dismissal is a win for free-market principles, some troubling signals suggest that parts of the agency may want to bring RPA enforcement back from the grave.
The FTC had accused Pepsi of offering lower prices to Walmart that it didn’t offer to smaller stores. But as Market Institute President Charles Sauer points out in RealClearMarkets, this so-called “price discrimination” isn’t unfair—it’s how economies of scale work, and it benefits consumers.
“A larger store like Wal-Mart can take advantage of economies of scale to sell products at a lower price than smaller stores… This arrangement benefits consumers, who pay lower prices, as well as businesses, who earn higher profits.”
The FTC’s new Republican leadership—including Chair Andrew Ferguson and Commissioner Melissa Holyoak—criticized the lawsuit as premature and lacking evidence. Commissioner Mark Meador, however, released a separate statement denouncing the case’s flaws but still calling for a revival of RPA enforcement.
“[Meador] denounced the FTC’s case for ‘the complete lack of intellectual rigor, reckless disregard for sound factual evidence, and nakedly political timing.’ But he also endorsed efforts to ‘revive RPA enforcement.’”
That’s the real danger. As Sauer writes, bringing back aggressive RPA enforcement would reverse decades of bipartisan consensus and punish companies for lowering prices:
“It is harmful to both producers and consumers for the government to prop up companies that would not be able to exist in a free market.”
At a time when inflation is squeezing families and businesses alike, the last thing we need is a return to antitrust policies that treat lower prices as a crime. The FTC was right to drop this case. Let’s hope it doesn’t change its mind.
📖 Read the full article by Charles Sauer at RealClearMarkets here.
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