Can Fairness Fix the US Economy?

Last month, the FTC revived long-dormant antitrust laws against the nation’s largest wine and spirits distributors. of lawsuit Liquor wholesale giant Southern Glazer’s Wine & Spirits is accused of cutting sweet deals with major chains while jacking up prices for small grocers, corner stores and independent liquor stores. are.

On the surface, this lawsuit could restore much-needed competition to the retail alcohol industry. But it’s also about something bigger: the FTC’s attempt to restore fundamental principles of fairness to our economy. For decades, large retailers have been allowed to dominate through sheer size, exploiting that power to shore up their powerful suppliers and defeat smaller competitors. By reinstating the Robinson-Patman Act, the FTC will undo the damage and do more to level the playing field, protect small businesses, and prevent economic power from being concentrated in the hands of a few dominant players. It shows a bold move.

Few people have heard of the Robinson-Patman Act, a New Deal-era law that prohibits price discrimination. Price discrimination occurs when manufacturers sell the same product to retailers at different prices, often under pressure from retail giants. But the FTC’s decision to end its enforcement decades ago caused a seismic shift in the United States. This has given giant chains like Wal-Mart free rein to squeeze suppliers with unfair discounts. Walmart’s expansion went unchecked. Manufacturers consolidated and closed factories. The job is gone. Thousands of small businesses were destroyed, leaving hollowed-out Main Streets and food deserts. Other than the collapse of American manufacturing, few economic forces have done more damage to the American landscape over the past 50 years.

The full implementation of Robinson Patman’s new implementation will mean not just survival, but opportunity and growth for independent stores everywhere. More competition means lower prices, more shelf space for cool new products, and new wealth for towns and cities. Fairness as a guiding principle in regulation means a better deal for everyone.

The FTC’s attack on this type of corporate injustice seems novel. Because within the framework of recent history, that’s exactly what has happened. The Robinson-Patman Act was passed in 1936. Just as the grocery chains Kroger and Great Atlantic & Pacific Tea Company (known as A&P) are rapidly expanding across the country, they are using their newfound scale and power to bully manufacturers and farmers into unsustainable prices. This was around the time I was trying to sell it. Low price. As Congress explained when it passed, this law ensures economic democracy and fairness by giving small businesses the same deals and opportunities as chain stores.

The FTC zealously enforced this law for decades until the Reagan administration swept it under the rug, along with most other antitrust enforcement. This law helped foster an open and diverse retail economy. Even in the early 1980s, small independent grocers dominated the market. more than half It topped all grocery sales and flourished alongside large chain stores in communities across the country.

But by the beginning of the Reagan era, the law had been replaced by a wave of policymakers who abandoned most attempts to impose limits, replacing fairness with an economic philosophy that championed corporate bigness and shareholder wealth. It became a punching bag for him.

These policy decisions gave Walmart the freedom to bully with impunity, starting a chain reaction of consolidation across food retail. The rise of Wal-Mart sparked a wave of mega-merger supermarkets. Today, the industry is almost 500%. more focused I’m tired of being bullied by Walmart, the big chains, and consumer goods companies. started buying each other In the same way. Since the 1990s, the five major consumer goods companies alone – Unilever, Procter & Gamble, Nestlé, ConAgra, and PepsiCo – have acquired more than 150 other branded goods companies, creating a vast conglomerate that dominates the shelves of major retailers. Created a product conglomerate. All the big suppliers and megastores have realized that they can get away with this kind of corporate bullying. That includes what the FTC now claims is the nation’s largest alcoholic beverage supplier.

The lawsuit against Southern details what corporate unfairness looks like in practice. Southern is the nation’s largest wine and spirits distributor. The company sells alcoholic beverages throughout the country and accounts for one in three bottles of wine or spirits sold in the United States. In many states, the company holds exclusive rights to essential brands such as Patron, Jim Beam, Jameson and Josh Sellers, leaving stores with no choice but to do business with Southern.

Southern has national contracts with some of the industry’s largest chain retailers, from large specialty stores like Total Wine and Vinny’s to supermarket mega-chains Kroger and Albertsons to big box stores like Walmart and Costco. There is. The FTC argues that Southern sells crates of wine and liquor to large chain stores because the price per bottle is significantly lower than to small, independent stores, and that small stores sell crates of wine and liquor to large chain stores. He claims to be at a disadvantage. As the FTC states in its complaint, “Southern’s pricing practices are exemplary violations of the Fair Prices Act.”