A 1930s-era antitrust law designed to protect small retailers should be repealed, a government-appointed panel of US antitrust experts recommended on Tuesday. The commission, which has been meeting and deliberating for three years, said lawmakers should put an end to the Robinson-Patman Act, which requires suppliers to sell to all retailers at the same price.
Critics says the act works against the interests of consumers by discouraging legitimate discounting. "The act has really outlived its usefulness and is better put to rest," said Jonathan Jacobson, an antitrust lawyer with the firm Wilson Sonsini Goodrich & Rosati and a member of the commission.
Repeal of the Robinson-Patman Act was the biggest change recommended by the commission, which was tasked with a review of the Sherman Act and other US antitrust laws to see if they were in line with the modern economy.
Overall, the commission concluded that the antitrust laws are fundamentally sound and flexible enough to deal with relatively new industries such as computer software.
It said "differential treatment is unnecessary, whether in the form of immunities, exemptions, or special industry-specific standards." The experts also backed away from a proposal voiced by some antitrust scholars in recent years that Congress should rescind provisions in the antitrust laws that give state prosecutors added enforcement authority.
The Department of Justice's Antitrust Division said it was reviewing all of the commission's recommendations. The division, in a statement, commended the commission for its main conclusions that the core antitrust laws are sound and appropriately safeguard the competitiveness of the US economy.
When it came to the Robinson-Patman Act, however, the commission recommended repeal. Congress passed the act in 1936 with the idea of levelling the playing field between small businesses and chain discount stores.
Enforcement of the act has been in decline since the 1990s as the statute has come under increasing criticism from economists. Critics say the act actually hurts small businesses because some suppliers choose to avoid selling to them altogether to avoid running afoul of the law. "It makes price competition more difficult and complicated," Jacobson said.
In addition, the commission recommended that Congress pass a law allowing "indirect" purchasers of a product to seek price-fixing damages in federal court.
Customers who believe they overpaid for a product at retail because of price-fixing are barred from seeking damages in federal court because of a 1977 Supreme Court ruling that held only "direct" purchasers have standing to sue.
The two-tier system distinguishes direct purchasers, say computer makers buying processor chips, from indirect purchasers, such as buyers of computers containing the chips.
In the wake of the 1977 ruling, dozens of states have passed different statutes allowing indirect purchasers to sue for damages in price fixing cases, sometimes leading to multiple, conflicting damage awards.
"Right now the situation is such that the uninjured recover and the injured don't in many cases," said Deborah Garza, who chairs the commission and is partner at Fried, Frank, Harris, Shriver & Jacobson LLP's Washington office.
The commission also recommended that the two agencies that share responsibility for reviewing mergers - the Justice Department and Federal Trade Commission - act more quickly to decide which agency will review a particular deal.
Further, the commission suggested that the two agencies study and report to Congress on the possibility of developing a centralised international pre-merger notification system. "This is one of the recommendations we got from the business constituency," Garza said in a telephone briefing. "They thought they would prefer the one-stop shop."