The 1936 Robinson-Patman Act And Its Effects On Competition
The Robinson-Patman Act of 1936 was passed in response to the belief that large corporate entities were taking advantage of their size and power to stifle competition and create anti-competitive behavior. The Act made it illegal for corporations to sell goods at a lower price in certain markets in order to undercut competitors. It was intended to protect small businesses from being put at a disadvantage in competition and to promote fair competition in the marketplace. What The Robinson-Patman Act Does The Robinson-Patman Act prohibits companies from engaging in the following activities:
- Discriminatory pricing – Selling goods at different prices to different buyers, when the difference in prices is not based on differences in cost or services.
- Discriminatory promotional allowances – Offering promotional allowances or other incentives to certain buyers, but not to others.
- The lowering of prices to certain buyers – Selling goods to certain buyers at a lower price than to others.
The Act also requires companies to maintain accurate records of their sales and pricing practices. Effects Of The Robinson-Patman Act The Robinson-Patman Act has had a significant impact on the way companies do business. The Act has been successful in promoting fair competition and preventing large companies from taking advantage of their size and market power to stifle competition. The Act has also been criticized for its potential to reduce competition in the marketplace. Critics argue that the Act’s restrictions can make it difficult for companies to compete effectively in the marketplace and can lead to higher prices for consumers. Conclusion The Robinson-Patman Act of 1936 was passed in response to concerns about anti-competitive behavior in the marketplace. The Act has been successful in promoting fair competition and preventing large companies from taking advantage of their size and market power. However, it has also been criticized for its potential to reduce competition in the marketplace. References: