June 3rd, 2012

An excerpt from Hovenkamp's _The Antitrust Enterprise_

"The constituents of the Robinson-Patman Act had witnessed the rise of the great chain stores and a serious economic depression that gave United States producers significant excess capacity. During a period of rapid expansion of efficient multistore retailer operations and numerous distressed sellers who needed to keep their plants running, these large buyers may have wielded considerable power. By contrast, large chain stores today have become a fact of life, and in most markets competition among them is robust. That is to say, even though large retailers have lower costs and purchase in great quantities, they generally face intense competition from equally large retailers operating in the same markets. Indeed, American retailing operates on some of the lowest margins in the business world.

"This author, as many others, would prefer to see the Robinson-Patman Act repealed. Any social benefit it confers certainly does not match the compliance and enforcement costs associated with it. Furthermore, any legitimately anticompetitive price concessions compelled by powerful buyers could be dealt with under [squiggle]1 or occasionally [squiggle]2 of the Sherman Act. But academics like myself have been calling for repeal for a half century, and Congress has never come close to responding. Instead, the courts could go a long way toward correcting the problem without legislative repeal, merely by reading the legislative history of this statute in the same way they have read the history of the other antitrust provisions. Under that approach a Robinson-Patman Act violation would require proof of an injury to "competition" in the antitrust sense, and this would rarely occur except when price concessions were forced on manufacturers by powerful retailers."

The publishers have been taking a lot of pains to say how the Agency Model was introduced to preserve retail competition and thus benefit consumers and "book culture". I've always suspected the publishers were actually motivated by fear of the kinds of concessions Amazon would extract from them over time, once people got used to Much, Much Cheaper (E)Books. But if publishers were really worried about that, I can't help but wonder why they didn't wait until it developed and then pursued it under Robinson-Patman. Possibly because everyone treats Robinson-Patman, in Hovenkamp's words, "as if it were a kind of bastard child of the antitrust laws".

ETA: Hovenkamp can speak for himself on the subject of the publisher lawsuits -- and has.