Swaths of America have been hollowed out. Some people look at boarded-up shops in small towns and some urban centers and think: They just couldn’t compete. As an antitrust enforcer, I have a different reaction: Maybe we missed something.
For decades, our government stopped big retailers from pressuring suppliers for secret deals that were denied to smaller rivals. This was done under a law called the Robinson-Patman Act. It was, at one point, the most frequently enforced antitrust law at the Federal Trade Commission. But starting in the 1980s, as part of a philosophical shift that embraced the idea that unfettered markets can resolve all ills, officials hit the brakes and eventually stopped enforcing the law altogether.
Consumers know what happened next. From the early 1980s to today, big-box store chains flourished while over 100,000 small retailers closed shop. These closures particularly affected low-income communities and created food deserts — areas where healthy, affordable food is hard to find. Forty years ago, the term “food deserts” didn’t exist. Now it is almost a synonym for rural and inner-city America.
Last month the commission, which I serve on, voted to bring its first Robinson-Patman action in more than two decades. We filed suit against Southern Glazer’s Wine and Spirits, the nation’s largest distributor of alcohol, alleging that the company systematically forced small grocery and liquor stores to pay higher prices than big-box retailers such as Costco and Walmart — differences that cannot be attributed to the lower cost of buying in bulk. (Southern Glazer’s called the commission’s lawsuit “misguided and legally flawed” and said the company’s “pricing and discounting structure does not violate” the Robinson-Patman Act.)
When I was sworn in at the Federal Trade Commission almost three years ago, I took a special interest in Robinson-Patman. People said the law protected the inefficient, but that bore little resemblance to my visits to the corner stores of New York and Washington, D.C., and the independent grocers in my wife’s home state, Louisiana.
One day I came across the 2021 congressional testimony of R.F. Buche, a fourth-generation independent grocer in South Dakota. He talked about how the failure to enforce the law was hurting his customers in Indian Country.
I decided to visit his store, Buche Foods. It is the only full-service grocer in Pine Ridge, a community of 3,000 in one of the poorest counties in the nation. Yet the store was vibrant. Signs were in English and Lakota; school pride gear lined the walls.
In the manager’s office, Mr. Buche brought out a list of grocery essentials: eggs, lettuce, cereal. Next to each item was the cost to his wholesaler and the sale price at the nearest big-box store, 50 miles away. His customers had to pay 30 to 50 percent more for these items than those at the big-box store.
This had nothing to do with buying in bulk, Mr. Buche explained. Even when his wholesaler bundled smaller orders to approximate the volume of the big boxes, it still couldn’t gain access to those lower prices. “Twenty years ago, if you shopped our coupons, we could meet or beat the big boxes,” he added. “Not anymore.”
I traveled to North Tulsa, Okla., to visit Oasis Fresh Market, the first grocery store to open in that community in 15 years. Unlike Pine Ridge, which is minutes from the Badlands, this store is in the shadow of the once-thriving business district known as Black Wall Street. Their experiences — from the customers to the owners — were familiar. Oasis Fresh Market is an independent grocer serving a predominantly low-income community, where the average resident’s life span is years shorter than the national average. If either store goes under, area residents would need to travel long distances to obtain even basic grocery items.
And like Mr. Buche, Aaron Johnson, the founder of Oasis, rattled off the premiums he had to pay that big-box stores do not.
I also talked to the bulk purchasers, whose job it is to secure the best prices for independent grocers. In a boardroom near Salt Lake City, the chief executive of a wholesaler serving a range of independents broke down in tears of frustration while he explained that no matter what he did, no matter how big his order sizes, he simply couldn’t get the same prices from suppliers as buyers from big-box stores.
“It makes no sense that places where food is grown and where the most people live have trouble finding access to the central food items and products,” said an Alabama grocer, Jimmy Wright, in one of our recent commission meetings.
Critics of the commission’s efforts to revive Robinson-Patman have created a myth that the law will raise prices — even though there is no empirical research in the 88 years of the law’s existence that shows that. The reality is that Robinson-Patman was passed so that small retailers and their customers could have access to the same low prices as their bigger competitors.
A majority of Americans think that our economy is rigged against them and in favor of the wealthy. Maybe that’s because when powerful companies break the law, prosecutors give them the benefit of every shadow of every doubt — and when those companies’ interests run up against the rule of law, those rules are set aside or broken.
The point of Robinson-Patman is that the same rules should apply to everyone. It is time to enforce the law again.
Alvaro Bedoya is a commissioner of the Federal Trade Commission. This article originally appeared in The New York Times.
