Robinson-Patman Act - Assignment Example

Robinson-Patman Act Number: Lecturer: Robinson-Patman Act Before the enactment of Robinson-Patman Act of 1936, price discrimination was thought to be rampant in the United States of America. Robinson-Patman Act 1936, also known as Anti-Price Discrimination Act, is a United States of America federal law enacted to prohibit anticompetitive practices. It is meant mainly to producers of goods and services engaging in price discrimination. The enactment was informed by the then chain stores practices which allowed them to purchase goods and offer services at lower prices than other retailers.

The enactment was an amendment to the Clayton Antitrust Act which prevented unfair price discrimination for the first time. It required that the seller offer the same price terms to customers at a certain given level of trade. It is meant to cub discrimination on the sale of goods to equally-situated distributors when the effects of such sale are aimed at reducing competition (American Bar Association, 2002, p. 463). Large stores and wholesalers can undercut small stalls selling similar products and services in such a way that can attract customers to buy from them.

This can force such small retailers to go out of business; hence the Act can stem the vice of undercutting other small general business. Wholesalers and chain stores have to operate under the same business environment with the small retailers so as to offer the same prices to the end users of the products. Without the law, competition will be lessened and monopolies created in the line of commerce hence injuring small retailers and granting huge benefits to the large stores. This law applies to goods and services of the same grade, calibration, and quality (American Bar Association, 2002, p. 495). Such big multinationals like Pepsi and its competitor Coca Cola are the two major soft drink manufacturers in the world.

They enjoy wider market coverage around the world which can be considered to be monopolies in some cases, especially if one of them operates, and the other is not in that market. Their market positions have been considered harmful as they enjoy huge capital outlay and wider market coverage. These enable them to cause undesirable competition to small manufacturers. They yield harmful price controls which they can manipulate markets in their favor to reduce competition by reducing prices at will across their products; soft drinks, juices, bottled water, sports drinks, and snacks.

Such antitrust law as Robinson-Patman Act is meant to prevent such multinational from creating restraints on trade and commerce and reducing competition. They are subject to federal law preventing them from unilateral decision-making and can only reduce prices or engage in any activity in trade after wider consultation from all stakeholders (American Bar Association, 2002, p. 513). Works CitedAmerican Bar Association. (2002). ABA Section of Antitrust Law, Antitrust Law Developments (5th ed., Vol. 1). Chicago, Illinois: American Bar Association.