Tag: Economics

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.

 

 

The Core of American Capitalism

Human interaction is an overlooked part of capitalism defined

In the News

I see where Warner Bros. Discovery is giving the Paramount offer a second look at being acquired.  Paramount initiated this acquisition pursuit way back in September, 2025.  It has gotten much media attention, in the national news outlets as well as the business news.

If someone was not a student of economics and relied on the news media for his or her information, you may get the impression that this acquisition, and other big ones that get media attention, are the center of our economic system.  In addition to this acquisition, there is also the constant chatter of how Big Tech is investing umpteen dollars in artificial intelligence.  This sure has had an effect, both positive and negative on the stock market recently. 

Where is this Core?

In my opinion, it started with thousands of men and women throughout the decades who, with some material and financial resources combined with inspiration, went on to create great companies, both large and small,  throughout this country.

I remember reading how both Apple and Microsoft got started in garages.  There is also Walt Disney starting out creating a Mickey Mouse cartoon called “Steamboat Willie.” 

However, since 1980 there have been individuals and companies involved in directions that have shifted much of our economy away from innovation and more about domination.  We have been introduced to such things as investment banks, leveraged buyouts, corporate raiders, hostile takeovers, private equity, private credit, stock buybacks, Pac Man defense, activist investors.  In my opinion they have all immensely deviated from this basic core.

The people involved in these activities are far away, literally and figuratively, from many people found on Main Streets throughout this country.  family and friends may work for local or regional businesses, where upper management has regular face-to-face contact with both employees and customers. 

This personal, human interaction is, in my opinion, where you find the core of our capitalist system.  Laws and tax reform should be in place to help keep businesses independent who want to be independent.  Legislators should give primary attention to small business issues more than corporate campaign contributions. Large corporations are not inherently bad, but the distant relationship between management and employees and customers located hundreds of miles away or across oceans, reduces these people to being mere statistics on paper or a screen.  Decisions can thus be made without the decision makers having any personal interaction with those on the front line.  Decisions based on statistics is important but should also include the personal input from employees and customers.

Final Thoughts

I have written before wondering what is going through the minds of Warner employees with all this acquisition talk.  Customers are also faced with the thought of less entertainment choices and possibly higher costs.  This is high dollar negotiations with huge financial consequences for everyone involved.  Fees and profits are to be earned by some, maybe not all.  Careers may also be on the line.   It is all very important.

It makes for high drama and entertaining news headlines, but has consequences.  Such corporate wheeling and dealing is far removed from what occurs on Main Street America.  Some may call this capitalism, and they may find sources to back that up.  But, in my opinion, this corporate world contributes to the decline in some American’s belief in the capitalist system. 

What do you think?

What the F.T.C. Can Learn from Al Capone

F.T.C. needs broaden anti-trust laws to better insure convictions.

Al Capone

A century ago, gangster Al Capone was alleged to have been involved with prostitution, illegal gambling and murder, including the St. Valentine’s Day murder.

I say alleged, because Mr. Capone was tried but never convicted of any of the above.  In 1931 the Justice Department changed its strategy and convicted him of tax evasion.  He was given an 11-year sentence and was released early, in 1939.  His health subsequently declined and he died in 1947.

Had there not been laws on tax evasion that could land a person in jail, Mr. Capone may very well have continued his crime spree.

Failed Attempt

The New York Times reported on January 20, 2026 that the Federal Trade Commission (FTC) announced it will reopen its pursuit of anti-trust charges against Meta, parent of Facebook, regarding its acquisition of both Instagram and What’s App.

The judge in the original case, Judge James E. Boasberg, ruled that Meta did not violate anti-trust law with the two acquisitions. 

Judges should interpret the law and not legislate from the bench.  If Judge Boasberg believes that Meta did not violate anti-trust law with these acquisitions, it is important to know where in federal law he justifies his position.  The F.T.C. originally sought charges that the Sherman Anti-Trust Act of 1927 was violated.  Meta argued that it faces competition from apps like You Tube and Tik Tok. 

There is a video on YouTube from 2010 where Mark Zuckerberg states at a company address that Facebook does not acquire companies for the company itself, but to acquire the individual or individuals behind it.  In other words, he explained this as his method of acquiring top talent.  However, as a result, the companies these people started, all tech companies, simply disappeared.  Nice way to quietly get rid of any rising competition, isn’t it? 

Analysis

If the F.T.C. is serious about revisiting this, the people there really need to look at why they lost the first time.  If they apply the same evidence, they may get a similar result, even if ruled by a different judge.  Perhaps looking at Meta’s (previously Facebook) ENTIRE acquisition history may provide additional evidence of anti-trust, monopolistic behavior.  If they feel they still have a weak case, perhaps amending federal law to provide them with a wider net would bring Meta, and possibly others, to justice. 

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?

Cintas abandons pursuit of UniFirst

Tactic of pursuing hostile takeover fails

As a follow up to the article “Cintas and UniFirst’s Visions aren’t Uniform,” the Cincinnati Business Courier reported Cintas has dropped its bid for UniFirst.

In my opinion growth can be pursued by other means than acquisition. I heard this proposed acquisition referred to as a “hostile takeover,” which indeed it may have. These takeovers were often pursued years ago, made popular in the film, “Wall Street”. They do more harm than good.

Further articles will pursue this idea of growth and options available that companies can use to pursue it. Once again, the end doesn’t justify the means here.