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This bill would exacerbate the affordability crisis

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by Todd Zywicki, opinion contributor - 04/11/26 11:00 AM ET

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by Todd Zywicki, opinion contributor - 04/11/26 11:00 AM ET

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FILE – The price is displayed on the edge of an empty shelf used to display eggs at a grocery store, Feb. 12, 2025, in Nashville, Tenn. (AP Photo/George Walker IV, file)

As the country enters the home stretch toward the 2026 midterm elections, two political trends are clear. First, affordability ranks as the most urgent economic concern of American families. Second, Washington politicians have record-low ratings in response to the question about whether they care about the needs of ordinary people.

As if to prove the latter point, Washington Democrats have queued up new legislation that would drive up retail prices of groceries, gasoline and other household necessities — the Fair Prices for Local Businesses Act.

Although the proposed legislation is new, its essential feature is an expansion of the Robinson-Patman Act, an old, discredited relic of New Deal economics and special-interest politics. This law fell into desuetude during the Carter administration, only to be resuscitated during Lina Khan’s activist tenure at the Federal Trade Commission.

Enacted in 1936, Robinson-Patman Act made it illegal for businesses to engage in “unlawful price discrimination” — that is, unlawfully offering lower prices to some buyers that are not offered to others. Usually, this means giving discounts to high-volume purchasers that are not offered to smaller buyers.

Differential pricing is routine in competitive markets. Companies placing larger orders often secure lower prices because they reduce suppliers’ per-unit costs and provide predictability in demand. This is not a market failure — it is how markets work. And consumers reap the benefit of these savings through lower prices at the grocery store or gas pump.

As a result, the Robinson-Patman Act does not treat every price difference as unlawful — only those that result in competitive harm that could result in higher prices for consumers over the long run. It only targets situations where sellers offer preferential pricing to some buyers while denying the same terms to others without legitimate justification.

You don’t have to be Warren Buffett to understand that making it risky to offer price discounts to some buyers will lead to higher prices for everyone. But that is precisely what the Fair Prices for Local Businesses Act would do.

It would, for example, expressly restrict practices price-matching (known as the “meeting competition” defense), so that firms could no longer offer to match the prices of their competitors. It would also hold large retailers liable for even unknowing price differentials among suppliers. It would increase damages for violations and expand the law to cover differential pricing for services, not just goods.

Every promotional discount, quantity discount, or short-term price break to keep a loyal customer or support a fledging new enterprise could result in a company being hauled into court by a rival denied the same advantages.

Economists note that, when confronted with potential liability for offering lower prices to some buyers than others, suppliers limit price discounts, avoid tailored deals, and adopt one-size-fits-all pricing strategies that are less economically efficient but easier to defend in court.

Although this would be a boon for plaintiffs’ lawyers and less efficient businesses, consumers and the overall economy will pay the price. In fact, small startups are often the beneficiaries of price breaks, as suppliers seek to ingratiate themselves with promising future customers. That price flexibility could disappear if the Fair Prices for Local Businesses Act is enacted. Moreover, small businesses and their proprietors also buy office supplies, gasoline, and food supplies from Walmart, Costco, Home Depot, and other large retailers; price increases by those outlets could wipe out any speculative benefits they supposedly receive from the law.

Oddly, the bill’s sponsors cite the FTC’s case against PepsiCo for allegedly colluding with Walmart, as a reason to expand the Robinson-Patman Act. But that dubious case, filed just three days before the end of the Biden administration, was recognized at the time as a publicity stunt and was abandoned by the FTC just a few months later as lacking any credible factual foundation. The fact that the sponsors of the Fair Prices for Local Businesses Act tout the PepsiCo case as the type of litigation they want to encourage evidences protecting competition and consumer welfare is not their motivation.

Small businesses today face a myriad of challenges, from tariffs