At the Cato Institute’s New Challenges to the Free Economy (from Left and Right) conference, former FTC Commissioner Joshua Wright warned that a return to the enforcement of the Robinson-Patman Act (RPA) of 1936 would be bad news for consumers.

The FTC has not brought a claim under the antiquated law since the 1990s and not vigorously enforced it for much longer. But in recent weeks Commissioner Alvaro Bedoya has echoed FTC Chair Lina Khan in calling for its revival, something that the latter pushed for in her famous paper, Amazon’s Antitrust Paradox.

The problem, per Wright, is that this law’s return would constitute a regression away from using the consumer welfare standard being the lodestar of antitrust, back to the “big is bad” impulses of the early to mid-20th century. It would amount to enforcing rules that “certainly resulted in higher prices,” prioritizing small competitor companies over customers.

What is the RPA? On its face, the RPA outlaws price discrimination to different buyers of the same “commodity.” In practice, the law was introduced to hack away at large grocery chain stores that were revolutionizing the retail market in the early 20th century. Lawmakers were concerned that A&P and other chains were hurting the prospects of traditional “mom and pop” stores. The RPA attempted to correct for the economic advantages these chains had in buying commodities directly from wholesalers with bulk discounts. By forcing wholesalers to charge the same price to all buyers, the aim was to prevent a wholesalers’ lower price to one retailer allowing the latter to undercut its competitive rivals in the final market.

The law stipulated:

It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality… and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition…

As Professors Roger D. Blair and Christina DePasquale explain, in reality, price differences between buyers were often due to “service costs, selling costs, purchase volumes, [and] wholesale functions performed by the buyer.” Price differences, in other words, often reflected phenomena that resulted in higher firm productivity or economies of scale. By inhibiting more efficient firms from receiving wholesale discounts, the RPA therefore denied retail consumer savings in the form of lower prices. As antitrust law evolved towards an emphasis on consumer welfare, the RPA was thus regarded as a relic of a bygone era — an attempt to keep alive small businesses by raising prices on consumers.

So why the mooted revival today? Well, many modern trustbusters explicitly reject the consumer welfare standard in favor of more structural conceptions of what markets should look like. And there are new boogeymen in town that are revolutionizing retail and generating panic: big tech platforms. It’s quite easy to see that the RPA would be used in the crusade against large online e‑commerce retailers, such as Amazon.

Last year, a Columbia Law Review article outlined how “building a prima facie RPA case [against Amazon] would not be difficult.” Suppose Amazon and a small local store buy Product X from a wholesaler, who charges different prices for the item based on the volume being sold. In this simplified situation, the local store would be able to claim that it is being treated adversely in comparison to its competitor, in violation of the RPA.

As Jeffrey Westling has explained, this could result in cases against businesses such as Amazon or, say, Walmart:

Rather than going after the wholesaler, the FTC could in theory bring a claim against an online marketplace for receiving lower prices from the wholesaler: The law contains a provision under which a buyer could be held liable for receiving lower prices if the buyer induces that lower price. The Supreme Court, however, has made clear that inducement constitutes a violation of the act when the buyer correctly anticipates that it will disrupt competitive processes in the secondary market. This means a buyer can violate the act for simply seeking out lower prices when buying goods for retail.

Yes, there are affirmative defenses that can be used to protect against such charges: if it can be shown the price difference was justified by different costs, for example, or was a concession to meet a competitor’s price. But enforcement of the act puts the onus on businesses to prove their innocence by showing that, say, production and shipping in bulk lowered costs. The mere threat of legal action would no doubt chill certain retailers from even seeking to obtain the lowest prices possible from sellers, to the detriment of retail customers.

Enforcing the RPA appeals to those who want to curb Big Tech companies, then, as cases utilizing it can be a lot simpler than having to provide detailed analysis of competitive effects of mergers or other conduct. But the fundamental economics behind the RPA remains unsound. It is a bad law that was effectively suspended because it acts to protect small competitors, not customers. If enforced again it would no doubt smother efficiencies once more, resulting in higher prices for customers.