The FTC Soda Wars
Resurrecting a long-disused and economically unsound antitrust law will not help poor Americans afford food.
The Federal Trade Commission’s new probe into the pricing practices of Coke and Pepsi is the latest step in the agency’s march away from protecting consumers.
U.S. competition law has for more than 40 years rightly centered on the welfare of consumers. As interpreted by the FTC and in the courts, antitrust action must be triggered by monopoly-inflated prices, a lack of innovation, or some other harm to consumers. Competitor complaints do not an antitrust suit make.
But in a U-turn in the Left’s decades-long war on sugary sodas, the FTC is alleging that Coke and Pepsi prices are too high. Diabetes and obesity be damned, they’ve got price controls to instate.
Putting aside the soda health issue, FTC commissioner Alvaro Bedoya asserted a direct correlation between big-box retailers and people on an Indian reservation in South Dakota who are paying higher prices for their groceries and are not “able to buy fruit for their kids.” Weeks later, Politico reported the FTC’s investigation into Coke’s and Pepsi’s alleged price discrimination when they sell to large retailers, such as Walmart.
To do so, the FTC is pulling the Robinson-Patman Act out of long-term storage. The act was passed in 1936 and imposed a general prohibition on selling “commodities of like grade and quality” to different buyers at different prices.
Back then, the Great Atlantic & Pacific Tea Company (A&P) was the nation’s largest retailer. It revolutionized the way Americans purchased groceries — for the better. A leading scholar on A&P, Marc Levinson, summarizes the connection between scale and consumer benefit in his book on the chain store:
Their basic strategy was so extraordinarily simple it could be captured in a single word: volume. If the company kept its costs down and its prices low, more shoppers would come through its doors, producing more profit than if it kept prices high.
Thanks to chains such as A&P, Americans paid less for their groceries and enjoyed greater variety and nutrition.
Read the full article on the National Review.