Robinson-Patman Act

As companies get bigger, they get more powerful. For instance, they can buy in bulk, Costco style, getting each unit of good for cheaper than your neighborhood Mom 'n' Pop store.

Congress saw this exact thing happening, and they didn’t like it. They liked their Mom 'n' Pop shops, and saw what suppliers were doing as price discrimination, and anti-competitive practice. Supplying goods to some firms at a discount would make the other firms go out of business, which means less market competition. American likes competition; that’s what market mechanisms are all about. Low prices, innovation to boot, the works.

The Robinson-Patman Act (no relation to vampire Robert Pattinson) was passed by Congress in 1936 as federal law. The law zeroed in on anti-competitive price discrimination practices by producers who supply things to firms. This act was meant to help out the little guys against the big box stores that dominate the market today.

For instance, Morton Salt got in trouble with the Supreme Court in 1948 for offering discounted salt to stores that bought an amount that only a handful of national chains could reasonably buy. All thanks to the Robinson-Patman Act. Still, it’s clear that big box chain stores are winning in the long run.