US antitrust authorities are looking to the past to set their course for the future. The latest antitrust tool to be called back into service by the Federal Trade Commission is the Robinson-Patman Act, which targets price discrimination in the sale of goods for retail markets. Recently appointed FTC Commissioner Alvaro Bedoya hinted at this possibility in a September speech that criticized the emphasis that courts and enforcers place on efficiency over fairness in antitrust jurisprudence.

Revival of the RPA reflects the current administration’s increasing focus on protecting small businesses in retail marketplaces characterized by powerful buyers and sellers, particularly with the increasing shift to online retail platforms. Renewed enforcement of the RPA would also be a striking about-face for the agencies, who have abandoned RPA enforcement for decades and actively intervened in private cases to support a narrow application. The FTC’s renewed interest can also have a follow-on impact on private enforcement efforts.

While the exact form of any enforcement remains to be seen, companies should dust off their compliance policies to make sure they are up to date on potential exposure. Here’s what you need to know.

1 The RPA was designed to protect small businesses from large “power buyers”

Intended to protect small grocers from large chains, the RPA was passed in 1936. At the time, Congress was worried that large retailers or “power buyers” would use their market power to extract concessions unavailable to smaller competitors from sellers.

To address this concern, the RPA prohibits sellers from charging competing buyers different prices for the same goods or otherwise discriminating in the provision of allowances. The FTC’s website posits that price discrimination risks giving “favored customers an edge in the market that has nothing to do with their superior efficiency.”

2 The RPA has broad coverage but notable defenses

Now that FTC Commissioner Bedoya has hinted at the possibility of the RPA’s revival, companies operating in the U.S. should refresh their memories on the RPA and seek antitrust advice as needed to ensure compliance obligations are met. For starters, consider:

• What types of transactions are covered? The RPA applies to commodities sold for use, consumption, or resale within the U.S. The RPA does not apply to services.
• Who does the RPA apply to? The RPA targets both sellers who engage in a range of price discrimination, and buyers who induce a seller to discriminate or knowingly obtain a discriminatory price.
• What type of conduct does the RPA capture? The RPA makes it unlawful for sellers to discriminate between buyers, both:

• Direct: charging different prices for sales of “like grade and quality” goods, where it threatens to adversely affect competition (e.g. lost sales to favored purchasers or substantial discounts over time).
• Indirect: through payment of commissions or providing different levels of support to competing purchasers in the resale of their goods (e.g. preferential marketing funds), even if there is no harm to competition.

• Do any defenses exist? Depending on the claim, companies have several affirmative defenses they can establish to avoid liability for direct price discrimination, but bear the burden to show these apply.

• Cost justification: the lower price offered is justified by the difference in the seller’s costs.
• Meeting competition: the price was lowered in good faith to meet, but not undersell, a competitor’s lower price.
• Changing conditions: the price was lowered in response to changes in the market, such as the obsolescence of seasonal goods.
• Functional availability: the lower price would have been available to the plaintiff and other competing purchasers.

• What are the potential penalties? Penalties can vary depending on who challenges the conduct. Private litigants and state attorneys general can seek treble damages. While the FTC is limited to seeking injunctive relief, a successful case lays a strong foundation for follow-on litigation. In theory, the DOJ could also seek criminal penalties that include fines of up to $5,000, one year in jail, or both.

Notwithstanding the hurdles that U.S. antitrust enforcers may face if they revive the RPA, companies across the supply chain in the sale of retail goods should take note of this development and review their pricing practices under the RPA. Companies should also note parallels in state legislatures – despite the criticism of the RPA, Minnesota House bill HF4142 would enact a state-law equivalent of the RPA.

3 Lessons from the RPA’s checkered past

Over time, the RPA has attracted significant criticism from scholars and enforcers alike for, among other things, protecting competitors instead of competition and failing to prioritize consumer welfare. In 1977, the DOJ called for Congress to repeal the RPA, blaming the law for discouraging price competition and encouraging information-sharing. In 2015, the FTC filed an amicus curiae brief highlighting inconsistencies between RPA and antitrust jurisprudence that highlights the efficiencies that can be driven by price discrimination.

Together with recent criminal and merger control enforcement efforts focused on labor markets, a revival of the RPA would reinforce that U.S. antitrust authorities are concerned with the monopsony effects of large buyers in addition to more traditional concerns with sellers. Indeed, by reviving the RPA, the FTC may be looking to target large online retailers with “unprecedented buying power” – a concern the RPA was designed to address.

If the FTC takes this route, it is questionable whether renewed enforcement will be effective. Private RPA litigation has continued to develop the case law for the statute. Courts may question why the FTC has reevaluated its previous positions regarding the RPA’s interpretation, especially when the Supreme Court has stated that it “would resist interpretation geared more to the protection of existing competitors than to the stimulation of competition.”

4 The agencies’ expanding toolkit

Commissioner Bedoya’s hint of potential RPA enforcement aligns with similar announcements from US antitrust enforcers who are eager to expand their antitrust toolkits by reviving unused authorities. For example, the DOJ’s head of criminal antitrust enforcement said in June that the Antitrust Division must “be willing to utilize all of the statutory tools Congress put at our disposal,” announcing their intent to revive criminal prosecutions for monopolization offenses using section 2 of the Sherman Act. Chair Lina Khan also explained in September that the FTC would “reactivate [its] standalone Section 5 enforcement program” for unfair methods of competition under Section 5 of the FTC Act. Contrary to recent policy statements that limited enforcement to conduct that otherwise violates the antitrust laws, the revival of “standalone” section 5 offences could be used to expand beyond existing practices that “contravene the spirit of the antitrust laws and those that, if allowed to mature or complete, could violate the Sherman or Clayton Act.”

The current discussion of reviving the RPA therefore is only one tool in the dusty toolkit of antitrust statutes that the agencies are seeking to revive in novel contexts as they reorient antitrust policy to emphasize fairness considerations and expand enforcement.