ROBINSON-PATMAN ACT 49 Stat. 1526 (1936)

The rapid growth of chain stores during the Depression effectively bypassed the price discrimination prohibitions of the clayton act by altering the basic lines of competition which that act addressed. Shortly after the Supreme Court invalidated the national industrial recovery act's codes of fair competition (beginning in schechter poultry corporation v. united states, 1935), Representative Wright Patman introduced a corrective bill into the House designed to regulate chain stores' use of economies of scale. As finally passed, the act amended section 2 of the Clayton Act. Although one section of the new act allowed price discrimination made "in good faith" to match a competitor's price, the act generally outlawed discrimination that "substantially lessened" competition or tended to create a monopoly. Other provisions prohibited the taking or making of allowances or commissions to buyers if not made proportionally. Buyers were also forbidden from "knowingly receiving" or inducing any discrimination. Although the act provided for suits by the Department of Justice and private individuals, the burden of enforcement fell on the federal trade commission. By tightening and narrowing section 2 of the Clayton Act, this legislation protected smaller firms by reducing the competitive advantages of large chains.

David Gordon
(1986)

Bibliography

Hansen, Hugh C. 1983 Robinson Patman Law: A Review and Analysis. Fordham Law Review 51:1113.