Category: Corporate Ethics

Heard of the Robinson-Patman Act? If you spend money, you should.

Small retailers have a law to help them compete but is little used.

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Have you noticed a considerable decline in local and regional retail businesses over the years?

Small groceries, pharmacies, hardware, music shops, bookstores have lost out to what we now call “Big Box”.

Some of this can be contributed to changing shopping tastes.  Big Box can offer the stock and breadth of products that smaller retailers cannot.  I admit that I go to Big Box for this reason.  Also, Big Box has a stronger online presence that some retail businesses have either not adapted well to or refuse to. 

Robinson-Patman Act

Local and regional retailers do have the support of the Robinson-Patman Act.  It was enacted in 1936 by Senator Joseph T. Robinson of Arkansas and Representative Wright Patman of Texas.  The Act was designed to restrict price discrimination by large suppliers and protect small retailers from national chain stores.  Suppliers could offer discounts to retailers who bought in bulk, but criteria had to be available to any retailer, without favoritism to individual ones.

The 1980’s saw enforcement begin to wane, as challenges to price discrimination began being seen as anti-competitive.  Businesses were allowed to violate either the law or the spirit of the law and get away with it.

Walmart and Pepsi Collusion

In late 2025 The Institute of Local Self Reliance sued the Federal Trade Commission (FTC) to make public censored details from the case involving PepsiCo and Walmart.  Brought by three Walmart customers, the suit alleged that PepsiCo was informing Walmart what other retailers were paying for the product and conspiring with Walmart’s knowledge to charge them a lower price, in keeping with Walmart’s well-known message of having lower prices.  The Trump Administration subsequently supported the decision by the current FTC to not pursue it any further.

Legislation

On March 19, 2026, Senator Chris Murphy of Connecticut filed in Congress the Fair Prices for Local Businesses Act.  In effect it would strengthen the Robinson-Patman act by eliminating loopholes that currently allow large companies from striking better deals with suppliers than their smaller rivals.  In other words, it would further codify as illegal the arrangement that occurred between Walmart and PepsiCo. 

Conclusion

One thing I advocate is strengthening anti-trust laws to allow for a greater definition of what anti-trust and anti-monopoly behavior is.  This can allow judges have better clarity as to what is in violation and what isn’t.  I support this law.  Equally important, it should go further and eliminate bulk discounts to large retailers.  Testimony from local and regional retailers on this would be welcome, and the media picks up on it as a priority. 

Contact your Senators and ask them to support this legislation.  At the same time ask them to support the Break Up Big Medicine Act, a bi-partisan legislation by Senators Hawley and Warren.  This targets Big Pharma and its acquisitions of health care companies and pharmacies.

 

 

Hostile Takeovers – How to Cease Hostilities

Businesses need help from wasting time and money on this.

In the News

Paramount continues to pursue Warner Brothers Discovery, though management has clearly indicated the Netflix deal is in the company’s best interest.

At the same time, Cincinnati based Cintas Corporation has announced a third attempt to acquire Massachusetts-based UniFirst.  Both companies provide employee uniforms and related services but in separate parts of the country.

What is the link between the two?  They both involve using the tactic known as the hostile takeover.

Definition

A hostile takeover is an acquiring company seeking to obtain control of another company, often a competitor, against the recommendation of either senior management or the board of directors.  The pursuer will sometimes appeal to the shareholders directly to force a vote on the bid. 

This tactic was used by Standard Oil Company to acquire refineries a century ago.  Since the Depression it was rarely used until the 1980s.  The Reagan administration pursued deregulation, which led to a different, and sometimes aggressive, approach to corporate governance. 

Anheuser-Busch

One that made headlines in 2008 was the acquisition of Anheuser Busch by Belgian-based InBev.  It is now known as AB-InBev, which is now the world’s largest brewer.  By the way, it was the world’s largest brewer PRIOR to the acquisition.  During negotiations InBev promised not to close any breweries, but it did not promise to maintain current employees.  As a result, some 1,400 jobs were eliminated—jobs perfectly legitimate one day were now gone the next day.

Analysis

In my opinion, hostile takeovers deviate far from the founding principle of capitalism.  That principle is having an idea for a product and service and acting on it in an environment where those ideas can become real and make a profit.  Having to battle competition is also part of this principle.  Hostile takeovers are nothing more than a power grab meant to either dominate the market or specific companies.

Some may argue that they are pursuing growth.  They also argue that some companies are bloated and inefficient and an outsider needs to come in and straighten things up.  Nothing wrong with pursuing growth.  But growth can (and should primarily) be pursued through internal research and development.  As for inefficiencies, some companies may have them.  But they should be urged to change through persuasion rather than bullying tactics.  Some may not change, and they may fail.  Business failure is also a principle of a capitalist economy.

How to stop this

Some pursued companies have adopted tactics known as a “poison pill,” meant to provide roadblocks.  An example would be issuing additional shares to existing shareholders, thus making it difficult for the acquirer to obtain a majority stake.

The federal government could also create a law that would allow the victim to declare a hostile takeover has been pursued.  The aggressor would then be prohibited by law from making any further attempt to acquire the other.  If the victim does not declare, the pursuit may continue.  This would allow the pursued to keep its resources and not waste either time or money with lawyers to try and fend it off. 

Does this make sense? 

Should this not be pursued?

Tariffs: That Giant Sucking Sound

Use tariffs to put pressure on companies to raise wages of their overseas workers.

The 1992 Presidential debate had three candidates on stage, President George Bush, Democratic challenger Bill Clinton, and independent Ross Perot.  In one debate questions were allowed from the audience.  At the time the Bush administration was negotiating with the leaders of Mexico and Canada with what came known as the North American Free Trade Agreement.  It was signed in 1992 and implemented in 1994.  Mr. Perot was personally asked about how he would keep jobs here in the United States.  He said, “We have got to stop sending jobs overseas.” 

“if you don’t care about anything but making money there will be a giant sucking sound going south.”

Ross Perot

Perot then presented a scenario of a domestic manufacturer facing paying $12-14 /hour, with health care versus the same job in Mexico paying $1 /hour with no benefits.  Click here to watch the clip.

He addressed business owners saying, “if you don’t care about anything but making money there will be a giant sucking sound going south.”

The Social Contract

The Wharton School of Business recently published an article by Stefano Puntoni titled “Outsourcing vs. Offshoring: Why Consumers Push Back on Jobs Sent Abroad.”

In it Puntoni states that employees had traditionally believed firms should support the ‘Social Contract.”

“When a company cuts domestic jobs and moves them overseas, consumers often view it as a betrayal of that norm — even if the move makes business sense on paper.”

He added that employees have a more negative view of layoffs due to offshoring than by consolidation, automation or internal restructuring.

“A U.S.-based firm laying off workers in Illinois and opening a facility in Vietnam will likely face more reputational fallout than a Swiss multinational doing the same — even if both decisions are rooted in the same logic of cost control.”

Analysis

Companies have closed shops here and located overseas primarily for one reason: cheap labor. Throughout the decades companies have sought out ways to reduce labor costs.

President Trump has stated his tariffs are in place mainly to pressure companies to relocate to the United States.  So far I have not read of any announcement from Apple or any other manufacturer planning to do this.  Have you? 

In addition, I have read of American companies with domestic operations being hurt by tariffs because parts or supplies coming from overseas.

Solution

What should be done is what Mr. Perot referenced in the 1992 debate:  raise the wages of overseas employees so they are at or closer to parity with American wages.  This also includes benefits.  Use tariffs just to put pressure on companies to improve the wages of their overseas workers.  Do not use the fact that they are technically employed by someone else there as a cover for not doing it.

This is especially with American companies with operations in China.  China is a communist country.  It is technically a worker’s state with doing what is best for the working class and peasants.  Where are the independent unions? What is a communist country doing with millionaires?  Whatever happened to the Marxist wing of the Chinese Communist Party?   Seems hypocritical, doesn’t it?  But these are questions to deal with another day.

Google’s Buy of Wiz May Not Be a Whiz-Bang

Past anti-trust pursuits may stall or stop this buy from going through

Google announced on March 18, 2025 a $36B (B as in billion) acquisition of Wiz.  They are a relatively new startup involved with cybersecurity. 

Google is technically a subsidiary of Alphabet, the parent company that owns Google and all the other acquisitions.

This would be Alphabet’s largest payout for an acquisition. 

This acquisition was attempted just last year in July.  Wiz declined the then offer of $23 billion, saying they wanted to pursue an initial public offering. 

This acquisition plans to undergo federal anti-trust scrutiny.  A major reason is that over the years Google has acquired a boatload of companies.  According to Wikipedia, the total is a staggering 261!  Some of those bought are You Tube, Fitbit, Android, reCAPTCHA, Invite Media, Skybox Imaging, Dropcam.  Google is technically considered one of the acquisitions, thus under Alphabet. The question here is, does a company with over 250 acquisitions qualify as a monopoly?

Alphabet has a history of anti-trust pursuits, and not all by the U.S. government.  Most of these have been over Google’s perceived monopoly over the search engine market, including entering into exclusive agreements with device manufacturers to provide its browser.  A separate lawsuit focuses on its digital advertising platform.  Not only by the U.S. federal government but also European governments as well.  My argument is whether Google has created a monopoly based solely on its acquisitions. 

ANALYSIS

What’s wrong here?  How can you avoid being slapped with the name of oligarch if you have over 250 acquisitions?  How can you avoid this scene being labeled as a monopoly?  Does your company have over 100 acquisitions, let alone 250?  Is acquisition the only way for Google to “grow?” 

If Google needs improvement with cybersecurity, can’t they develop their own?  Or they could form a partnership.  Or they could simply purchase the service as a customer.  These other companies could still exist as independent entities.  Why does Wiz and hundreds of others have to be “acquired”. Alphabet may have legitimate evidence to justify it.  However, theirs is not the only valid point of view here.  It then becomes determining which valid argument takes priority.

POSSIBLE SOLUTIONS

  • Have Alphabet pay an annual acquisition tax for every acquisition they have made.  The idea here is not to slap a tax on simply being large but on specific behavior. 
  • Have the courts break up Alphabet from its acquisitions, leaving what it may have developed itself.
  • Provide “incentives” for Google and the other Big Tech companies to divest their acquisitions on their own.  Divestiture is something recently pursued by both General Electric and Honeywell.
  • If the courts rule that Google is not a monopoly, laws need to be rewritten so the courts can rule based on specific statutes and not on wide interpretation.

This proposed acquisition will be interesting to follow in the coming months. Future articles here will explore further the idea of defining “growth” as well as this pursuit of divestiture.

Cintas and UniFirst Visions aren’t Uniform

This is a classic example of what’s wrong with mergers and acquisitions today. 

Cintas Uniforms Truck

On January 7, 2025, Cintas Corp. announced a $5.3 Billion offer to purchase rival UniFirst.  Both companies’ core business is corporate uniforms.  Cintas is headquartered in Mason, OH, over 20 miles north of Cincinnati.  UniFirst is in Wilmington, Massachusetts. 

This proposed acquisition has an interesting history.  Cintas proposed acquiring UniFirst in February 2022, but the offer was rejected.  Management has now rejected this second offer.

Steve Watkins of the Cincinnati Business Courier quotes Cintas CEO Todd Schneider saying:

 “We call on the UniFirst board, its controlling shareholders and management team to immediately engage with us to reach a mutually acceptable definitive agreement that delivers the full value of this combination for shareholders and other stakeholders…We firmly believe in the compelling strategic fit between our two companies, and our offer would deliver immediate and compelling value to UniFirst shareholders…The combination would also amplify the benefits of Cintas and UniFirst’s ongoing technology investments to drive growth and benefit our collective customers and employee-partners.”

UniFirst issued a response, saying:

“The board conducted a careful review of the unsolicited proposal and determined that it is not in the best interests of UniFirst, its shareholders and other stakeholders,” adding the decision was made based on the offer price, business risks and feedback from its largest shareholders.

Cintas

Cintas is 3½ times larger, with $9.6 Billion in revenue, versus $2.7 Billion for UniFirst.  UniFirst has an interesting strategy, though, to fight back.

UniFirst posts on its website suggestions directed at customers of companies acquired by Cintas to consider switching to them.  And there is more than one company listed.  How about that!

Resistance Strategy

Cintas is not a bad company.  Watkins published an article in 2024 that highlights its positive work culture. 

Analysis

Cintas’s approach to acquiring UniFirst is a classic example of what’s wrong with mergers and acquisitions today.  It is a business chess game where the opponent is forced to play.

If someone came out of the blue to tell you what is in your best interest, would you like that?  Is this a way to win friends and influence people?  I know that many people preach about the benefit of “persistence”, but in this case “persistence” is really bullying, isn’t it?

If a company’s management is actively pursuing an acquirer, do their homework and find “the right fit”, that’s one thing.  A merger may be a better option than an acquisition, though.  In this case bullying tactics are used where the only real question the acquirer asks is “what’s in it for me?” 

Corporate Directions

Cintas’ approach to its employees is totally different to its acquisition process, isn’t it?  It is like they act as a Jekyll and Hyde company.  Do you believe companies should engage in bullying tactics with their competition?  Is this how you operate?  Does the end justify the means here?

DELAY, DENY, DEFEND…and DISCLOSE

Health Care Acquisitions contribute to the large CEO Compensation Gap

We need to further explore actions taken by United Health, and the connection between health insurers CEO compensation and their acquisitions.

Brian Thompson

Brian Thompson’s death on December 4, 2024, captured much attention, both for the murder and hateful backlash against United Health Care. 

Before proceeding, I want to say that IMO, the end does not justify the means here.  On my home page I argue it is important to focus on HOW things are done, not just on the end result.

It is important to note that Mr. Thompson was the CEO of United Health Care, but Andrew Witty is the CEO of the parent company, United Health Group.  Also, Tim Noel has recently been appointed to replace Mr. Thompson.

United Health Care

Fortune 500 magazine has United Health Care in the top 10 of 500 companies, ranked by revenue, for 2023.

ProPublica reports they have been criticized in the past for denying coverage of mental health claims.  According to the article, UHC had been using algorithms instead of reviewing all claims independently. 

United Health is not the only one to do this.  EviCore by Evernorth, owned by Cigna is the major player here, providing decision-making services to multiple health insurers based on algorithms.

CEO Compensation

Insurance Business magazine provides data on the CEO compensation by the top health insurers in the United States.  It includes CEO compensation and the ratio between that and the salary of the average employee.  Published in November 2023, it is based on statistics provided by the National Association of Insurance Commissioners.  Here are the top 5 earners:

Joseph Zubretsky           Molina HealthCare        $22.1 million    278:1

Karen Lynch                      CVS Health                       $21.3 million    380:1

David Cordani                  CIGNA HealthCare       $20.9 million    277:1

Gail Boudreaux               Elevance Health Care  $20.9 million    383:1

Andrew Witty                    United Health Group    $20.8 million    331:1

United Health Group is reported to have made 25 acquisitions, spending over $36 Billion for them.  That’s B as in Billion.  Its largest has been Change HealthCare.  Hovering over some of the other company names you will find links to their acquisitions as well.  If United Health Care had not made these acquisitions, do you think they would be as big as they are today?  Same with the others.  If they had taken that $36 billion and invested it on R&D, better coverage or on increasing employee salaries, do you think that ratio would be as big as it is? 

The Economic Policy Institute has recently released a report of CEO compensation since the 1970s.  It spiked in the 1990s when Mergers and Acquisitions began to take off beginning (but not ending) under the Clinton administration. 

What Can Be Done

I do not have the resources that institutions have to crunch the data and spit out results.  A direct relationship between acquisitions and income inequality between CEO and average employee, in my opinion, may exist.  This may “contribute” and not necessarily “cause” this inequality.  There may be other factors that contribute, such as CEO pressure on corporate boards to increase compensation.

What can be done here?  One would be for Congress to institute an annual “acquisition tax” on the top companies with the largest number of acquisitions.  Or have the Federal Government break off companies that have been acquired.  Another could be tax incentives to encourage “divestiture” or to block future acquisitions being made. Also, prohibit future acquisitions.

One thing that shouldn’t be done is for individuals to take it upon themselves to attempt to assassinate executives or to celebrate it.  As a result of this act some people lost a family member and others lost a colleague. Nothing changed for policy holders…. did it?

What Do You Think?

What do you think?  Is there a connection between acquisitions and the size of CEO compensation?  Should algorithms be the main source for accepting or rejecting claims? Do you have a problem with this? Has not only the compensation gap but the physical barriers between the decision makers and customers grown too impersonal?