PRICE DISCRIMINATION
What is Price Discrimination ?
Price Discrimination occurs when like goods or services are provided to different persons, for reasons other than costs of supply.
Price Discrimination can be either pro- competitive or anti-competitive.
Pro-Competitive Price Discrimination
Examples of pro-competitive price discrimination are in airline industry where seats are sold at different prices, or in many movie theaters, where students and pensioners are given a special discount, or even “Ladies Nights”, were women are admitted free to a night club.
Anti-Competitive Price Discrimination
Price discrimination is a tactic that can be used “power buyers” to give themselves an unfair advantage, by bullying suppliers to give them a lower price than their competitors.
This way a ‘power buyer’ can gives themselves an advantage, and they effectively pass their costs on to others competitors, handicapping them and placing them at a disadvantage.
This destroys the level playing field, and with an unfair competitive advantage, the power buyer can drive their independent competitors to ruin and bankruptcy. > This allows a few power buyers to creating a duopoly, and they can increase their profits above what they would normally be in a competitive market.
In many areas of commerce, there are cost savings in volume, and large companies can take advantage of their larger volumes to give themselves an advantage over small business – and this is the normal functioning of the market.
However, large companies have a disadvantage in that they have higher overheads with their head office and bureaucratic structure. In comparison, a small business also has an advantage as the owner of the business generally runs the business, and as the US Congress has noted;
There is not anything that makes people more dependable like the responsibility, or so willing to fight for a thing, as having an ownership interest associated with responsibility. Human beings do not fight for a boarding house as they fight for their own fireside”
In free fair and open markets, the forces of big and small business battle it out, the volume benefits to big business v. less bureaucratic structure of small business. The free enterprises system relies on this battle to allocate resources efficiently to the benefit of society.
However, just as the forces of the market can be distorted if a labour union obtains too much power, so to can a market be distorted when a big company becomes a power buyer.
When a company increases it’s market share and becomes a ‘power buyer’ as well as obtaining a legitimate discount based on the true economic costs of buying in a larger volume, through the use of their power, they can often bully and coerce suppliers to give them a further advantage over small business, over and above those justified by the economic savings.
As this extra discount is not earned, nor related to any economic efficiency- some one must pay for this – and therefore the ‘power buyer’ merely passes these costs onto others. Therefore a supplier develops a system of price discrimination that sees the small competitors paying higher prices, that the power buyer, because of coercion and bully tactics.
Instead of all competitors purchasers fighting it out on a level playing field, where each has to develop their own advantages through genuine efficiencies and real cost savings - through use of power, a big business can tilt the playing field in their advantage through price discrimination.
When this situation occurs, the small company is put at an unfair disadvantage, as they are no longer able to compete with the large company, not because they are not as efficient, simply because the ‘power buyer’ has been able to force extra discounts out of the supplier, over and above a the real discount created by the efficiency in volume.
Therefore the ‘power buyer’ is artificially strengthened, and they can start an ever increasing circle of dominance, destroying efficient existing competitors, and denying equitable opportunity to any new small firms that tries to enter the market.
The consumer also looses - as with less competition in the market, the power buyer is not forced by the market to pass on all the discount granted by the supplier, therefore the power buyers profit increases, and/or they allow inefficient practices to fester in their organization.
Therefore the wealth and power is concentrated in the hands of a few, whom are able to skim off the wealth of an entire industry, forcing the majority to work as corporate slaves on low wages, that owe their allegiance to an economic master – just as feudalism worked in the Middle Ages.
With the normal workings of a competitive market are destroyed, instead of society being a democracy, with equality of opportunity - crony capitalism sets in, with the risk of the entire free enterprise system itself being destroyed.
Anti Price Discrimination Laws - History
The United States was the first country to identify and take action to prevent the market distorting effects of Price Discrimination by “power buyers”, as they realized how price discrimination could lead concentration of industry, the destruction of the middle class and a return to Feudal times.
Being the first country in the world to have a middle class majority, and determined to protect this and the workings of the free enterprise system, the first Price Discrimination Laws were part of the Interstate Commerce Act 1887.
These were introduced as a result of lang=EN-AU>railroads discriminating in the prices they charged for freight by providing rebates to large firms that were not available to small firms. These practices were especially harmful to small business and American farmers, who lacked the shipment volume necessary to obtain more favorable rates and lead to concentration of industry and protected large corporations from competition
Section 3 of the Interstate Commerce Act 1887 lang=EN style='mso-ansi-language:EN'> stated;
"It shall be unlawful for any common carrier……..to make or give any undue or unreasonable preference or advantage to any particular firm….. or locality, or any particular description of traffic, in any respect whatsoever, or to subject any firm….. or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever.”
The problem of Price Discrimination handing unfair advantages to large firms at the expense of small firms, continued to be a problem in areas other than the rail transport, and further Price Discrimination laws were introduced in The Clayton Act in 1914 which made it;
“unlawful to for any person engaged in commerce to ……either directly or indirectly discriminate in price between different purchasers of commodities”
However, the Clayton Act proved ineffective, as the US Congressional Records from 1935 states;
“ it was found by experience that those who were able to employ good lawyers could evade the provisions of the Clayton Act and could bring about unfair price discriminations”
One such organization was the grocery retailer Atlantic & Pacific known as A&P . In 1920 they had 4,000 stores but by the use of Price Discrimination, by the mid 1930’s they had expanded to over 15,700 stores and had driven into ruin and bankruptcy thousands of independent retailers, and had developed an unprecedented dominance over the retailing sector in Nth Amercia.
By comparison, no USA retailer has since reached 15,000 stores until Subway reached that figure in 2003, however these stores are all franchised and independently owned. No company anywhere in the world has since come close to owning the number of stores that A&P had in the 1930’s – even McDonalds which has over 30,000 stores world wide, only owns about 8,000.
The only historical comparison anywhere in the world to compare with the dominance that A&P had in the 1930’ in the USA, occurs in Australia where today just two corporations Woolworths & Coles had expanded to such an extent that they controlled an incredible 80% of the scanned grocery market – such market dominance is unknown in any free market country in the history of modern commerce, and even surpasses the dominance of A&P in the 1930’s.
A & P claimed their expansion was based upon ‘greater efficiencies’ than those of the independent stores, however an investigation by a USA House Judiciary Committee in 1936 found that their style='color:black'> expansions were not based on any greater efficiencies or greater customer service, but evolved from their size and power giving them the ability to coerce, bully and intimidate manufacturers extracting special deals lang=EN-AU> that were not made available to small, independent businesses. They also found that A&P had perfected the art of using in-house brands against manufactures that would not grant them discriminatory prices.
Competitors of A&P were forced to pay higher prices for goods simply because of A&P’s market power, and through Price Discrimination, A&P were able to pass on the economic costs of the resources they used to other smaller competitors. This reduced competition, destroyed the equality of opportunity, and distorted the economy.The result was that A & P were able to force efficient small retailers from the market, increase their market share and achieve higher profits. Life for the independent businessman was described as “poor, nasty, brutish and short”.[1]
A&P’s artificial dominance undermined individual independence, lowered wages for employees, and made it virtually impossible for individuals to start their own business and enter the market in competition against them.
Their actions led to the concentration of wealth and political power in the hands of a few, the dispossession of the assets of the middle class and the destruction of rural independence.
As the House Special Investigating Committee discovered, the dispossession of the assets of the middle class businessman wasn’t passed on to consumers. In one year A&P extracted $8 million in discriminations of which $2 million went to list of executives whom received on average $100,000 each and $6 million (an absolutely colossal sum back in the mid 1930’s) went into the pockets of just two men.
Through the use of price discrimination A&P had developed an invincible position and the normal functioning of the competitive market was no longer.
The US Congressional records at the time states;
“You cannot have it with a few great economic overlords to whom everybody else owes economic allegiance……we find ourselves drifting towards an economic feudalism..........
we cannot preserve a democracy in government unless we preserve a democracy in opportunity”
The Robinson-Patman Act 1936
The actions of A&P forced the US Congress to intervene to assist in the restoration of normal competitive conditions by closing down the loop holes that lawyers had used in original Clayton Act. In March 1936 the report of the USA House Judiciary Committee recommended the introduction of tougher Anti-Price Discrimination Laws and emphatically stated that:
“The purpose of this proposed legislation is to restore, so far as possible, equality of opportunity in business by strengthening antitrust laws and by protecting trade and commerce against unfair trade practices and unlawful price discrimination, and also against the restraint and monopoly for the better protection of consumers, workers, and independent producers, manufacturers, merchants, and other businessmen.”
1936 the US Congress passed the “Robinson-Patman Equal Business Opportunity” bill, called the Robinson-Patman Act which was also popularly known as the “Anti-A&P Act”.
Congressman Wright Patman [3](1893-1976) a Texas Democrat who sponsored the bill, explained the workings of the act in his book on the Robinson-Patman Act, where he stated;
“Essentially the present act provides that when a man sells a product to two or more customers who are in competition of the resale of that product, he must not discriminate between them in such a way that one is given an unfair advantage over the other.” [4]
The principle is that when discounts or allowances are made to one purchaser they must be made to all competing purchasers on proportionately equal terms as to prevent one from having an unfair advantage over the other. This is the protection of the level playing field.
The Robinson-Patman Act works in two ways.
Firstly, any discount structure that a supplier offers for greater quantities, it must be based on sound economic differences in costaccruing from the larger quantity
Therefore where a ‘power buyer’ obtains a discount, this discount must be earned through real cost savings. To have an advantage the ‘power buyer’ must have true efficiencies in volume which will earn their own reward. There can still be a discount structure and the power buyer can still obtain a better price, but the price differential is limited only to the real cost savings.
This compels all purchasers to pay their fair share of material, rent and labour costs, and the small retailer is not subsidizing the large retailer. Efficiency is rewarded, if the larger quantities result in cost saving, the large buyer enjoys the benefits, however if there are no costs savings, the bigger buyer doesn’t get an unfair advantage just because he is bigger buyer.
As the House Committee on the Judiciary explained;
“It limits the use of quantity price differentials to the sphere of actual cost differences. Otherwise, such differentials would become the instruments of favour and privilege and weapons of competitive oppression” [5]
This way the competition is protected, as are the normal competitive conditions in the market.
Secondly, as a back-up to ensure that a few ‘power buyers’ do not turn the market into a duopoly, thereby reducing competition, any discount structure must not be set where the quantity targets are so high that only a few favoured purchases could take advantage of them.
This is explained in the Congressional Records;
“It is a well recognised fact that if one merchant buys a 100,000 pair of shoes, he should receive a more generous discount than the merchant who only buys a 1,000 pairs…….nobody proposes to interfere with that, nobody objects to it, it is one of the laws of business………but there may come such a condition after a while that the purchasers becomes so enormously large his purchasing power so tremendous, the quantity he buys may become so very great that the discount which he receives will enable him to drive all others out of the business……that ought not to be allowed, that brings monopoly…….for if a man has such purchasing power he can crush out of existence all the independents”
“It is based upon the principle that where even an admitted economy is of a character that is possible only to a very few…..it may become the meat upon which monopoly feeds, and that in forbidding its use, and foregoing its benefits, the public is but paying a willing price for its freedom from monopoly control.”
The concept is based on a way of avoiding market concentration, such as situation where two firms may control over 75% of the market, as with many players all competing on a level playing field, competition is greater, prices are lower, there is more innovation, greater diversity and wider consumer choice - in the end the consumer is the winner.
When the Bill was read in the House, Wright Patman said;
“Mr. Speaker, a million and half independent retail dealers are interested in this bill……they are not asking for special privileges, special rights, or special benefits. They are just asking for a fair, square deal. That is all they are asking for and that is all this bill will give them….It will help farmers, wage earners and the consumers general. The bill grants each one the opportunity to do an honest legitimate business and protects him from cheaters and racketeers”[6]
The act was passed by a margin of 290 to 16 in the US House of Representatives.
The Robinson- Patman Act, as state by John Miller an Arkansas Democrat;
is based on the simple American ideals of equal opportunity and fair play”[7]These principles of equality of opportunity, the prevention of market distortions, and reward for efficiency have been embodied in the law in the USA for almost 70 years and remain true and equally important today.
Other countries introduced similar laws, including Canada with the Competition Act and also Australia which in 1974 introduced Anti-Price Discrimination Laws under section 49 of the Trade Practices Act, however the Australian version was just a weak and watered down version of the Robinson-Patman Act.
Also several US states, such as the economic power-house of California, have introduced their versions of the Robinson-Patman Act, which also include services, to govern intrastate competition.
A Benefit to the Nations Economy – Protecting Efficiency.
When a country has effective price discrimination laws, its economy runs more efficiently.
By requiring any discount structure to be based on actual sound economic cost savings, rather than just arbitrary discriminations, obtained by bullying and coercion, favoring the powerful, efficiency is encouraged and rewarded.
Without any free riders, or small firms subsidizing the large - all firms are compelled to pay their fair share of the resources they consume, therefore resources are used in the most efficient manner – and the entire nation benefits.
Power buyers are forced to concentrate on developing real efficiencies to obtain real cost savings, rather than costs savings achieved by bullying by simply transferring costs off themselves and on to other.
When power buyers reduce their costs in this manner, the real saving to the entire economy and the nation is zero. The only benefits are to the powerful firm, which occur at the expense of other less powerful firms. No new wealth is created – wealth is simply transferred from the powerful to the less powerful.
When power buyers can reduce their costs by simply passing them on to others, rather the competitive forces of the market requiring them to develop real cost savings - they develop inefficient practices.
Shielded from the full competitive forces of the market, large corporations have a tendency to develop bloated and inefficient head offices and slow moving bureaucratic structures – yet, by being able to use buyer power by passing costs on to others, they still increase profits, allowing these inefficient practices to fester further. The nett result is increased inefficiency which is to the detriment of the nation.
When a power buyer reduces their costs by simply passing them on to others, i.e small competitors – a system of cross subsidization results. Small companies end up working to subsidies their larger competitors, and as with all systems of cross subsidizes - total output is reduced to the detriment of the nation.
Just as laws are needed to prevent labour unions growing too powerful and extorting small business, these laws are needed to prevent large corporations from growing to powerful and also extorting small business.
The Courts Interpretation of Law
One of the leading cases in the USA regarding Price Discrimination is Federal Trade Commission v Morton Salt Co. 334 U.S (1948) in which Justice Black delivered the opinion of the court;
The legislative history of the Robinson-Patman Act makes it abundantly clear that Congress considered it to be an evil that a large buyer could secure a competitive advantage over a small buyer solely because of the large buyer's quantity purchasing ability. The Robinson-Patman Act was passed to deprive a large buyer of such advantages except to the extent that a lower price could be justified by reason of a seller's diminished costs due to quantity manufacture, delivery or sale, or by reason of the seller's good faith effort to meet a competitor's equally low price.
Protecting Competition Requires the Protection of Small Business
Through the Robinson-Patman Act, the USA showed the high value they place on the protection of competition and the level playing field for small business. It also demonstrates the important concept that the viability of small business is essential for protecting a competitive economy. This is lang=EN-AU>best summed up by Federal District Court Judge Abner Mikva who noted in 1988,
Congress was convinced that, by protecting small businesses, it was also protecting the operation of a competitive economy.
Imperfections in the Act
Unfortunately this continues today, and the vested interests of the large corporations, those that benefit from Price Discriminations, have for over 70 years sought to undermine its working and confuse governments of its effects.
The Robinson-Patman Act is not perfect, it’s illogical that it does not apply to services and only to ‘commodities’ – however it was drafted at a time when services were not considered an important part of the economy, and there were separate laws to prevent discrimination in services such as freight.
The authors of the original bill could have not have foreseen the destruction in competition that could occur from discrimination in services, especially such things as retail rents and bank fees and how these discriminations can distort the economy and led to inefficiencies to an even greater extent than discriminations in the price of goods.
However despite it’s flaws, the Robinson-Patman Act has significantly contributed to some degree of maintenance of a level playing field and the equality of opportunity and today the USA is the most competitive and innovative retail market in the world, and in recent years Amercian consumers have benefited as new business start-ups specializing in Organic-Food and Low-carb foods have been able to get a foot-hold in the market.
It has helped to limit the unfair discrimination that an independent retailer encounters simply because they are not rich and powerful – as the recent example of how the law worked to prevent independent book retails from being wiped out.
Without such legislation, tens of thousands of independent retailers in the USA would have been forced out business, both competition and diversity would be less, and a few giant retailers would enjoy higher profit margins – all to the detriment of consumer.
An example of the success of the law is Wal-Mart. Although Wal-Mart is a giant today, it opened its first store back in Arkansas back in 1962. Without the Robinson-Patman Act providing equality of opportunity to Wal-Mart back in the early 1960’s Wal-Mart would have never had a chance to get established. However Wal-mart also demonstrates the failing of the laws, as today Wal-mart benefits from discriminations that are not covered in the provisions of the Act.
The Protection of “a Fair Go”, and Equitable Opportunity
The Robinson-Patman Act is premised on the ethos of a fair go. It’s designed around an American way of thinking of an equitable opportunity for all – that the rich and powerful should not get special privileges, denied to the average citizen, just because they are rich and powerful.
It’s also designed around protecting the independence and entrepreneurial spirit of small businessmen, rather than turning them into slaves toiling for the benefit of a giant and impersonal corporate organization.
The Robertson-Patman Act is also about protecting democracy and the concept of “one man – one vote”, as Wright Patman observed in a speech broadcast nationwide in 1938;
“The question is……..will the country’s interests be promoted in a better way by the million and a half retail stores being owned by a million local citizens, or will the country be better off if these million and half retail stores are owned and controlled by a just few [corporations]…” [8]
Arthur Greenwood (1880-1963) representative from Indiana supporting the need for Price Discrimination Laws said;
“there is no room in this country for commercial feudalism because we live in a country of democracy, which some have called rugged individualism, where we believe in fair play for all groups and classes that are engaged in the same kind of endeavor”
Hatton Sumner (1875-1962) representative of Texas said of the reason to support Price Discrimination Laws;
“we find ourselves drifting towards an economic feudalism and on the other extreme we find ourselves drifting toward an attitude of dependence upon government or somebody else. This bill proposes to try to give the little man in business and industry better opportunity to survive than he now has……..we cannot preserve democracy in government unless we preserve democracy in opportunity”
Anti-price discrimination laws are all about individuals having control of their own destiny, to succeed or fail on merit, and to be free to make ones own decisions, without the authoritarian control from either a large powerful; labour union, corporation or government.
They are based on same philosophy that broke down feudalism and the class structures of Old Europe, and went on to destroy the fascists of Nazi Germany and Japan, and then defeated the totalitarianism of the communists.
The Protection of Free, Fair and Open Markets.
The Robinson-Patman Act is also premised on the understanding that free, fair and open markets do not occur naturally by themselves, and that sometimes governments need to intercede to create a set of rules which makes the game fair for all and to assist with the restoration of normal competitive markets.
Although government interfering in the free market should normally be avoided, and Americans are generally in favour of de-regulation – by itself de-regulation does not create free, fair and open markets.
Deregulation does not improve competition; it actually reduces it, as was clearly demonstrated by A & P in the 1930’s. Without strong laws protecting free, fair and open markets, large corporations will dominate, and we return to ridged class structures of feudal Europe, where privileges are handed out to the rich and powerful, just because they are rich and powerful, and these privileges are protected, by denying equitable opportunity to all.
The Protection of Innovation
The A&P company is still around today - but instead of the 15,700 stores they had in the 1930’s, today they down to only 400 stores.
If the Robinson-Patman Act was not introduced, A & P benefiting from the unfair advantages of price discrimination, and protect from competition from small retailers, would have been in an invincible position, and today they would still be the most dominant retailer in world.
Other retailers that have since brought innovation to the market and now provide great service and low prices to consumers in the USA, would just not have had the equitable opportunity to start up in competition against A&P without the Robinson-Patman Act
If price discrimination were allowed, today’s successful retailers, such as Wal-mart ,Costco, Whole Foods Market, etc would have always been at such a comparative disadvantage, that they would have never been able to get a foothold in the market, and go on to challenge the dominance of A&P.
In the 1930’s A & P stores were considered ‘very modern’, and the innovations in grocery retailing that we take for granted today, may have never occurred without the Robinson Patman Act maintaining the level playing field and giving new firms a chance. A&P would have been able to shield themselves from competition of new small firms entering the market – and facing less competitive pressures, with new firms denied equality of opportunity, A & P’s dominance would have continued to this day.
Likewise today, although we may consider today’s dominant retailers ‘very modern’, its only through effective enforcement of the Robinson Patman Act and other similar Anti-Price Discrimination laws that small firms have equality of opportunity to compete against today’s dominant retailers and have the opportunity to bring new innovations to the market, that would otherwise not occur.
Without such laws, the ‘status quo’ or the ‘existing retailing hierarchy’ gets locked in, as dominant retailers are protected from competition – and innovations that will benefit tomorrow’s consumer are stifled.
Much of today’s economic prosperity is founded on the entrepreneurial small business startups of the past. If competition laws today work to hand an unfair advantage to big business, today’s small business start-ups are denied the opportunity to get a foot-hold in the market and to flourish. Such a policy that results in the dominance by big business can only lead to economic stagnation in the future.
It is also interesting to note that in the 1930’s the A&P company lobbied to prevent the introduction of Price Discrimination Laws to protect their position and deny equality of opportunity to small business - and likewise today’s large retailers that have benefited from this law and taken over A&P’s dominant position, now lobby for Price Discrimination laws to be repealed as so they can maintain their protected position.
What Degree of Price Differentials Constitutes Price Discrimination?
In the leading US case is FTC v Morton Salt Co 334 US 37 (1948) , Morton Salt was a company that sold a table salt called ‘Blue Label’ – which offered the following discount structure ;
Less than a ‘Carload’[9] - $1.60 per case
‘Carload’ purchase - $1.50 per case
5,000 case purchase over 12 months - $1.40
50,000 case purchase over 12 months - $1.35
Out of Morton Salt’s 4,000 customers only 5 customers were able to buy at the $1.35 price, and the price differentials could not be directly attributed to lower costs of the larger quantity orders. Justice Black stated;
“Here the Commission found what would appear to be obvious, that the competitive opportunities of certain merchants were injured when they had to pay to the respondents substantially more for their goods then competitors had to pay……the effect of such price discriminations may be substantially to lessen competition and to injure destroy and to injure, destroy and prevent competition”[10]
“The legislative history of the Robinson-Patman Act makes it abundantly clear that Congress considered it to be an evil that a large buyer could secure a competitive advantage over a small buyer solely because of the large buyer's quantity purchasing ability.”
Given that Justice Black considered the 10-20% pricing differential of the Morton Salt Company an “evil” – one would hate to consider what words he would choose to describe the 600-1,000% pricing differentials by Westfield in retail rents.
In the American Booksellers Association’s claim against the giant retailers, Borders and Barnes & Noble, the discriminatory price disadvantages that the small retailers faced were between 4% and 8%.
Through the enforcement of price discrimination laws under the Robertson-Patman Act, it was estimated that for a typical small book retailer - that their purchasing terms were improved by 4% to 6%.
To a casual observer, although the above discounts might seem small, there significance is demonstrated by Mr. Bruce Spiva the lawyer representing the small book retailers;
“Given that the average of independent operates at an annual loss of approximately 2% of sales a year [11] such an improvement in purchasing terms [4% to 6%] certainly means the difference between staying in business or closing their doors for a substantial number of independents.” [12]
Preventing Decline in Country Towns
Anti-price Discrimination laws also protect country towns. Small retailers often service small remote towns that are not large enough for large retailers to operate from.
Price Discrimination Laws level out the playing field, so independent retailers in country towns can purchase their goods for resale to locals without facing discriminatory pricing. As the owners of these stores often come from within the local communities, the money that is spent in the town stays in the town.
Without such laws, independent retailers simply die in small country towns, and locals are forced to travel great distances to purchase goods, that they would otherwise purchase locally. When the money that this spent is taken out of the small town, the entire town goes into a downwards spiral.
The Myths of Anti- Price Discrimination Laws –
“The Bill has been very badly misunderstood, whether intentional or innocently” [13]
Unfortunately this continues today, and the vested interests of the large corporations, those that benefit from Price Discriminations, have for over 70 years sought to undermine its working and confuse governments of its effects.
Large corporations and large retailers hate Anti-Price Discrimination Laws, as it curbs their ability to abuse their market power, it also removes an umbrella which they can use to shield themselves from the competitive pressures from small retailers.
It is therefore little surprise that there have been many the attempts to misrepresent, white-ant and undermine these laws. The stooges acting for the interests of large corporations, assisted by theoretical economists, with no practical knowledge of real world buying and selling, have therefore tried to perpetuate a series of myths surrounding the effects of Price Discrimination Laws, hoping that the gate will be opened from them, to use Price Discrimination to reduce competitive pressures in the market.
The anti-competitive nature of Price Discrimination may be difficult to appreciate for those with limited experience in real world buying and selling of goods and services. However, when these claims of the large corporations are carefully analyzed– it is self evident that they are not only erroneous and myths, but the complete opposite of what is claimed is the truth.
Myth 1 - They protects inefficient retailers.
Price discrimination laws do not protect the inefficient, and they do not prevent inefficient firms from failing. They simply ensure that all firms have the opportunity to succeed (or fail) on merit.
These laws actually encourage firms to become more efficient. Price differentials have to be earned from real efficiencies, and not just handed out in a discriminatory fashion to the privileged and powerful through bullying.
Therefore manufacturers, wholesalers and retailers are all encourage to look for, and take advantage of all possible efficiencies. This makes the entire distribution chain more efficient and the more efficient the distribution chain, the greater benefit it is to consumers and the nation.
To the contrary, where price discrimination is allowed, it encourages inefficiencies. A large retailer, being shielded from competitive market forces, by having an advantage of unfair advantage through discrimination in prices, can allow inefficiencies to fester in their organization that would not occur in a fully competitive market.
For an example, a large retailer benefiting from price discrimination, may be able to allow their head office to become bloated and inefficient, they can become overstocked by hundreds of millions of dollars, they may be able to waste resources by paying senior executives multi-million dollar packages for no improvement in store performance. Yet with the advantage of discriminatory prices and shielded from the full competitive forces of the market - these inefficiencies can be allowed to fester, without any effect on the profitability of the business. [14]
Through Anti-Price Discrimination Laws, with greater competitive pressures, and price differentials having to be earned - the market wouldn’t allow such inefficiencies to occur – therefore the distribution chain is more efficient to the benefit of the nation and consumers.
Therefore Anti-Price Discrimination laws do not protect inefficient retailers – in fact, the compete opposite of the myth is true – where no Price Discrimination Laws exist the inefficiencies of large retailers are protected.
Myth 2 – Anti-Price Discrimination laws have a “Chilling Effect” on Price Flexibility
Anti-Price Discrimination Laws do not have any chilling effect on downward price flexibility
– they actually work to reducing prices to consumers.
The following part of the Testimony by Mr. Harvey Saferstein, [15] to the US Antitrust Modernization Commission in 2005,
“It is also my impression that buyers are not significantly restrained by [Anti-Price Discrimination Laws] from soliciting better prices………it is my sense that the buyers are seldom reluctant to ask for better pricing and give little credence to sellers using [Anti-Price Discrimination Laws] as an excuse to avoid price concessions…..I am also under the impression that aggressive buyers can often serve as proxies for their industries - that is, a chain store’s request for lower prices can often lead to lower prices for all small retailers” [16]
Mr. Saferstein, has decades of experience in this field, and he states the obvious – Anti Price Discrimination Laws have absolutely no chilling effect on downward price flexibility.
However if only a few dominant firms benefit from lower purchase prices, (instead of the entire market) the reduction in prices is not fully past on to consumers. The dominant firms simply increase their profit margins or only pass a fraction of the lower price on to consumers.
In markets with anti- discrimination laws all firms benefit from the lower prices, and then with competitive pressures across all firms in a market (instead of just a few) – the full benefits of the lower prices are passed on to consumers, rather than being captured by a few large firms.
Therefore again, the exact opposite of the myth is the truth.
Myth 3 – All Prices are the same –it encourages price uniformity.
Firstly, all wholesale prices are not the same. Different prices at the wholesale level are encouraged, but only where the price differential result from economies of scale, or costs related to supply.
When just two large retailers buy at a lower price than all other competitors there is simply less competitive pressure in the market – and this encourages price uniformity.
When all retailers are buying on relatively equal terms, there is simply greater competitive pressures in the market – and with more competitive pressure, prices are more likely to be forced downwards and there will be greater flexibility.
Again the opposite of the myth is true.
Myth 4 – They diminish Price Competition
With Price Discrimination Laws, all competitors are on a level footing – therefore competition is greater. Without price discrimination laws, only a few competitors on a level footing, therefore price competition is diminished.
Again the opposite is the truth.
Myth 5 – It stops Suppliers from lowering prices.
The prohibition is not against lower prices – it about prohibiting suppliers from discrimination against competing purchasers and charging one group higher prices.
As Mr. Saferstein has stated, aggressive buyers still put pressures on prices, and then become proxies for an industry.
Therefore price discrimination laws make sure that the lower prices are passed on to all competing purchases and not just a few – and therefore the full benefit of the lower prices reach consumers – otherwise, part or all of the lower costs are kept by the large corporation in the form of higher profits and higher executive wages, and not passed on to the consumer.
Again the opposite of the truth, instead of stopping suppliers lower prices, they actually put greater pressure on suppliers to lower prices for the entire market.
Myth 6 – They harm the competitive process.
The USA has had Price Discrimination Laws on the statues for 70 years, and its retail market is the most competitive in the world, to the benefit of consumers. Those that oppose Price Discrimination Laws only need to look at the levels of competition in the USA, the lower inflation, and the more innovation in the market - and compare these factors to countries without price discrimination laws to appreciate the errors of their thinking.
7 – They create barriers to entry.
Low barriers to entry are critical to maintaining a competitive market because they ensure that existing market participants are always subject to competition from potential new entrants.
However there are bizarre claims that Price Discrimination creates ‘barriers to entry’ – but yet again when the claims are analyzed, it is obvious the opposite is the truth.
Where price discrimination exists, it makes it virtually impossible for a new small firm to enter the market, as with price discrimination they are forced to pay prices than the large existing market participants – this throws out a barrier to entry and shield the existing market participants from competition from small new potential entrants.
Where price discrimination exists, it also creates barriers to entry for new suppliers to the market. Through price discrimination, a market can become concentrated (for example there has a recorded situation in one international market that through prices discrimination in groceries, just 2 firms now control an unbelievable 80% of this market). Therefore for any new supplier wishing to enter the market, unless he able to sell to there of these two dominant firms, the remainder of the market left is small, that it would make market entry unviable.
This then creates a barrier to entry on the supply side. Therefore in markets where price discrimination exists – the barriers to entry are created on the both the retail and supply side of the market. The end result - less competition, and higher prices to consumers.
The Harm To Consumers.
When one or more competing purchasers are placed at a disadvantage through Price Discrimination, it causes harm to consumer, as;
The Importance of Anti-Price Discrimination Laws
Competition is what makes economies successful, and free market countries have a tradition of enshrining laws to assure that competition is fair, free and open - and whether a firm succeeds or fails depends upon its efficiency and ability to fulfill consumer needs rather than its ability to use market power, bully and coercion to obtain unfair advantages over its competitors.
Price Discrimination is illegal in almost every developed country in the world because it is clearly recognized that price discriminations confer great advantage to companies with market power and this causes distortions to the competitive system, inefficient use of resources and concentration of economic power.
Size, power and bullying tactics, rather than efficiency and quality of services become the determinants of economic success.
The Robinson Patman Act sets out the “rules of engagement for competition”, ensuring fair competition and the opportunity to succeed is based upon a firm’s ability to meet consumer’s desires and efficiencies – and not it is not decided by a rorted policy of favoritism, bullying and discrimination.
PRICE DISCRIMINATION IN AUSTRALIA.
Fortunately for consumers worldwide, legislators in almost every developed country have seen through the myths perpetrated by the stooges of large corporations, and the mis-guided theories of theoretical academics with no little real world experience - and Price Discrimination and remains illegal.
Today all developed economies have specific legislation to prevent Price Discrimination, well all developed countries except one - Australia.
The same country that has the world’s highest level of market concentration in groceries is the only developed country in the world that does not have specific Price Discrimination legislation.
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Countries with Specific Laws that Prohibit Price Discrimination which has the Effect of Harming Competition |
Countries where no specific Price Discrimination laws exist |
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United States, Canada, England, Ireland, Scotland, Wales, Spain, France, Germany, Italy, Belgium, Switzerland, Norway, Sweden, Netherlands, Austria, Portugal, Denmark, Greece, South Africa, Japan, Singapore. |
Australia, Angola, North Korea, Solomon Islands, Haiti, Mongolia, Iraq, Iran, Libya. |
The 3 pricing strategy’s identified that large retailers can use to reduce competition are; Exclusive Dealing, Re-sale Price Maintenance, and Price Discrimination. These were all outlawed in Australia by sections 47, 48 and 49 of the Trade Practices Act.
However, in 1995, section 49 (Price Discrimination) was repealed by Prime Minister Keating from the recommendations of the ‘The Hilmer Report’ – headed by Westfield director and theoretical economist Fred Himler.
The Himler report is best summed up by Associate Professor Evan Jones, of the Economics & Business Facility at Sydney University ;
National competition policy presumed comprehensiveness…but it comprehensively ignored small business…[Hilmer’s policies] are derived from the speculations of witless academics and bureaucrats with no historical knowledge whatsoever.” [17]
Therefore the ‘speculations of witless academics and bureaucrats with no historical knowledge whatsoever’ have left the gate open for Woolworths and Coles Myer to use Price Discrimination to distort the market and protect themselves from competition and then leverage this advantage to spread their tentacles into almost every area of retailing.
Mr. J Campbell President of the US National Grocers Association has given the following warning of what would happen in the USA if Price Discrimination were weakened;
"If [anti-price discrimination] laws were weakened, it would lead to further concentration at all levels of the food distribution chain, with that would come drastic reductions in diversity, consumer choice would be limited, the mega-retailers would increase there profit margins and consumers would pay higher prices”
And this is exactly what has resulted in Australia through the misguided policies of former Prime Minister Keating and the ‘witless academics’ of the Hilmer Committee.
By his actions, Prime Minister Keating has destroyed the equality of opportunity for small retailers, and made legal a practice outlawed in almost every other country in developed world and one that the US courts have considered an “evil”, and one Wright Patman said was necessary to protect “honest legitimate business from cheaters and racketeers and the bandit fringe”
In the USA, Price Discrimination Laws are considered the ‘Magna-Charta’ of small business. By his actions, Prime Minister Keating, ripped up Australian small businesses version of the law, and threw it in the bin.
Back in 1996, as a result of damage to small business caused by other policies of the Keating Government, the outgoing Queensland Labor premier Wayne Goss predicted the voters were;
“waiting on their porches for Paul Keating with their baseball bats poised.”
If they had only realised the damage that would be done to the country in the next decade through his repeal Anti-price discrimination laws, they would have been armed with more than baseball bats.
More Power to Woolworths and Coles
By opening the gate to allow Price Discrimination in goods, Woolworths and Coles already benefiting from massive price discrimination in rents from Westfield, where as part of predatory pricing strategy of Westfield and other landlords, Woolworths/Coles are just paying peppercorn rents - have been able to further shelter themselves from competition, by pressuring suppliers to give them preferential terms that are not available to small retailers trying to compete in the same market.
This evidenced today by the crazy situation where many small competitors of Woolworths actually find it cheaper to purchase goods from Woolworths, than directly from manufacturers or wholesalers.
With the reduction in competition, both Woolworths and Coles have both been able to increase their profits margins year after year, a characteristic typical of a completely uncompetitive market. And they now seek to take control almost every area of retailing – the diversity, uniqueness and competitive vigor that the independent retailer brought to the competitive environment in Australia is quickly being destroyed.
Small retailers in Australia today simply cannot compete against Woolworths/Coles, not because they are not as efficient, or that they offer less customer service, but simply because of Price Discrimination in retail rents, the goods they purchase, and bank fees.
Woolworths and Coles power originates not from there efficiencies or superior customer service, but feeding off the Predatory low rents granted by Westfield, and shielded from competition through the misguided repeal of the Anti-Price Discrimination legislation by Prime Minister Keating - Woolworths and Coles have become a ‘Frankenstein monster’ with a insatiable thirst for ever increasing market dominance and the destruction of small business.
The 30% Threshold.
It’s often accepted that once a company’s market share reaches 30%, there are grave risks that this corporation can be so dominant that it can subvert the functioning of a free market.
Even Mr. Lee Scott, the CEO of Walmart Corporation, the most dominant retailer in the world, has said that for one firm to have a 30% market share it is time for the government to act.
"As you get over 30% and higher I am sure there is a point where government is compelled to intervene”
In 1995 when Prime Minister Keating repealed Price Discrimination Laws in Australia, the combined market share of both Coles/Woolworths was over 65% in dry groceries. At a time when Competition Laws should have been made stronger, Prime Minister Keating did the opposite and allowed Woolworths and Coles to further shield themselves from the competitive pressures in the market, by making Australia the only country in the history of the world to repeal Anti-Price Discrimination Laws.
Prime Minister Keating misguided policies have handed massive additional profits to Woolworths and Coles, with Australian consumers paying an additional $1.2Billion in 2005 alone for groceries than would otherwise occur in a competitive market.
His misguided policies have not only harmed consumers, but due to the destruction of both equitable opportunity and the level playing field, tens of thousands of small retail businesses have been destroyed and employees in the retail sector are paid lower wages.
The Anticompetitive Affects of the Dominance of Woolworths & Coles.
The subversion of the functions of free, fair and open markets - and the harm to consumers and the nation resulting from almost 80% of the grocery market being controlled by just two players; Woolworths and Coles, must be viewed from two directions simultaneously.
Power to Increase Profits.
The first and most obvious is when Woolworths and Coles act as the ‘seller’. When just two company’s have such a huge market share there is simply less competitive pressure in the market. There are numerous studies throughout history, which clearly demonstrate that as market concentrate increases – so do prices, and corporate profits.
The harm to the Australian consumer is clearly evidenced by a recent Deustche bank study that showed where Coles and Woolworths operate side by side, they sell at one price, but where a strong third competitor enters the market, with additional competition prices are reduced.
It is therefore little surprise that studies show that Australian consumers pay over $1.2 Billion in higher prices to Woolworths and Coles, than would occur in a normal competitive market.
Power Buyers
The second subversion of free, fair and open markets and harm to consumers & the nation from such market dominance, is from the perspective of Woolworths and Coles becoming ‘power buyers’.
The first Antitrust law was called The Sherman Act, named after Senator John Sherman who 1890 said;
‘if we will not endure a King as a political power we should not enure a King over the production, transportation and sale of any of the necessaries of
The principles of democracy, are not only about protecting citizens and independents businesses for the abuse of power from big governments (fascism) or big labour unions (communism) - they are also about protecting citizens and independent business from the abuse of power by big corporations (crony capitalism).
By allowing Coles and Woolworths to become power buyers, with an dominance unprecedented in any country in the world, we have allowed them to become a ‘king or dictators’ over the sale of the necessities of life.
As Woolworths and Coles account for an ever-increasing percentage of supermarket sales, they also account for an every increasing percentage of sales from small suppliers.
With each increase in market share, they develop greater and greater power to negotiate discriminatory special conditions, such as discounts, slotting fees, promotional allowances, etc from suppliers, that their competitors are denied.
These two corporations yield power unimaginable in almost every other country in world and for the thousands of small businesses and their employees in Australia, today their success or failure depends not on scrum of the competitive market place and from the nett result of thousands of individual decisions - but their success or failure depends on the decisions of just one person; the buyer from Woolworths or Coles.
For these individuals the most powerful and important person in country is not the Prime Minister or even the captain of Australia cricket team, but the buyer from Woolworths or Coles.
Advocates of the free market have long decried when economic decisions are put in the hands of a few government bureaucrats that have the power to pick ‘winners’ or ‘losers’. Yet Woolworths and Coles pick ‘winners’ and ‘losers’ every day – if they don’t like the colour of your tie – a small business is out, possibly bankrupt, with no recourse to any court or political representative anywhere.
Such a situation is more akin to Stalinist Russia, but this is what has occurred in Australia as the result of the repeal or Anti-Price Discrimination Laws and the predatory low rents granted by Westfield enabling Woolworths and Coles to become power buyers with an dominance unprecedented in any other country.
One of the basic premises of the free market and of a democrat society is that companies are free to buy and sell to whom they choose. In the case of Woolworths and Coles, in theory every firm that supplies to them is free not to do so, but in the real world, when a small business has commitments to maintain machines, to lease property, to meet their employee’s entitlements, and has a bank overdraft that needs to be serviced - this freedom of choice is denied.
Any demand from Woolworths or Coles, becomes a ‘take-it-or-leave-it ’situation. Not to agree to a demand from a power buyer and to loose such a huge proportion of the firms sales - is suicidal for a small company. Through the growing dominance of Woolworths and Coles, many small firms now have less bargaining power than Serfs had in feudal times.
To accept a demand for special terms from Woolworths, a small food producer still has overheads and costs to recover if they are to stay in business, and therefore they are forced to charge higher prices all other small retailers.
Therefore through price discrimination, where Woolworths and Coles are paying one price, and their competitors a higher price, they are effectively shielded from competition from independent retailers, and their small competitors are actually forced to subsidies them.
Today in Australia – almost every independent retailer is cross subsidizing the profits of Woolworths and Coles.
This distortion of the free market results in a detriment to consumers, as the small retailer (those left surviving) are forced to pass on these higher costs on to consumers. The lower price for Woolworths is not passed on, or is only partly passed on to consumer, and Woolworths use this to increase their profits.
Therefore through price discrimination the nett result to consumers is higher prices, and a less competitive market.
The repeal of anti-price discrimination laws has continued the vicious cycle of dominance of Woolworths and Coles, as small retailers are effectively subsidizing them by paying higher prices, and the ‘un-level playing field’ is titled even further against small business that many are forced to close. This leaves Woolworths with even greater dominance, and even more power over small suppliers, which enables them to extract even lower prices out of suppliers, which tilts the un-level playing field even further in Woolworths advantage, and the cycle of dominance continues.
Everyday the competitive landscape tilts just that much more in the favour of Woolworths and Coles.
For Woolworths current major suppliers, that might think that they are doing well know, they only need to look to the USA, where of the 10 top suppliers to Walmart in the mid 1990’s – today 4 of the 10 have filed from bankruptcy.
The Reduction in Innovation & Consumer Choice
With Coles and Woolworths dominance, small entrepreneurial food manufacturers simply have less chance to get their product on the shelves of retail stores and into the hands of consumers.
Today, house brands of Woolworths and Coles are squeezing even the most established brands of the shelves Australian Supermarkets – and entrepreneurs willing to risk all on a new food product simply has less chance to break into the market.
This is exactly what is happening to one of our most innovative food producers Dick Smith Foods, they finding it harder and harder to get their innovative products on supermarket shelves – if Woolworths/Coles don’t purchase their products, when they control 80% of the market, there is little market left to sell to.
The nett result is not only less diversity and less consumer choice, but also less export potential. Australia’s food processors should be one of our growing export industries, where rather than just exporting raw commodities, we export packaged food with the value-adding and packing is done in Australia and then exported to the world.
For these export industries to be viable, they need the opportunity of first developing strong innovative products in the Australian market. If they are denied this opportunity because there are only 2 major customers in the Australian market to sell to, and these customers are offering less, less space, on their shelves - investment in innovation will be simply less, and our exports suffer – and as nation we’ll pay a penalty.
Packing costs for primary producers are also much higher due to price fixing cartel in the packing industry – yet another highly concentrated industry that has been allowed to develop in Australia.
The Need for the Re-Introduction of Anti-Price Discrimination Laws in Australia
The policies of Prime Minister Keating were a disaster for the nation. His repeal of Section 49 of the Trade Practices (which the equivalent law in the USA in known as the Magna-Charta of Small Business) was completely misguided and has caused great harm to both consumers, small business, and social fabric of the nation.
Australia has experimented with the repeal of Anti-Discrimination Laws, and the experiment has been a total failure - an absolute disaster. The time has come for the experiment to end. Australia cannot continue to remain the only country in the developed world not to have effective anti-price discrimination laws.
For 70 years the USA has had Anti-Price Discrimination Laws, and its retail market is the most competitive, vibrant and innovative in the entire world – consumers in the USA enjoy the lowest prices in the world.
While in Australia, the trio of Westfield, Woolworths and Coles, have all increase their dominance, their profits are higher by billions – innovation and diversity is less, prices are higher, food inflation is higher, interest rates are higher, equitable opportunity has been destroyed. For the nation, small business and consumers – the repeal of Section 49 has been an unmitigated disaster.
However there are a few that have benefited – at ColesMyer just three individuals are reported to have pocked over $110 million in the past 5 years, while at Woolworths just one individual is reported to have pocketed over $100 million over the same period.
Australia urgently needs the re-introduction of Anti-Price Discrimination Laws, including both goods and services - especially retail rents, and bank fees;
to restore, so far as possible, the equality of opportunity in business and to protecting the free market against unfair trade practices and unlawful price discrimination, and also to restraint the duopoly of Woolworths and Coles - for the better protection of the competitive environment, consumers, workers, independent producers, manufacturers, farmers, wholesalers, country towns, small business, and the Australian nation as a whole.”
Our political leaders have a simple choice –
‘Price Discrimination’ or ‘Equitable Opportunity’ – which will it be ???
The Long Term Benefits – Learning from Mistakes ??
Although Australia’s repeal of its Price Discrimination Laws, has done much damage to the nation, for consumers world-wide and future generations there maybe some long term benefit of Australia’s mis-guided experiment.
The effects of Price Discrimination and the need for such laws have been vigorously debated by economists for decades. However no longer are the effects of Price Discrimination Laws subject to the speculations or masked in theories. Australia’s experiment has given the world an empirical study of what happens to an economy when Price Discrimination Laws are repealed.
For generations to come, economists from nations around the world will be able to study exactly what happened to a modern economy when Price Discrimination Laws are repealed, rather than it just being an economic theory.
They will be able to study how Australia’s repeal of Price Discrimination Laws led to;
* Higher levels of Market concentration
* Higher Prices for consumers
* Higher Inflation
* Higher Interest rates
* A reduction in Diversity
* A reduction in consumer choice
* Lack of Innovation
* Lower Wages for employees
* Reduction in export potential
* Concentration of Wealth and Power in the hands of a few
* Obscene salaries of a handful of executives
* Mega retailers increasing their profits margins to 3 times the international average
* The crushing of entrepreneurial spirit
* Inefficient use of resources
* The decline of country towns – leading to further unwanted urban consolidation in cities
* The destruction and undermining of small business, and the associated social costs
We can only hope that future generations worldwide will learn from Australia’s terrible mistakes, of this misguided experiment and not let history repeat.
However learning from past mistakes, Australia now has the chance to introduce the world’s “best practice” set of Price Discrimination Laws, including services especially retail rents and bank fees – to enshrine in law equality of opportunity and the level playing for all businesses, as so the ultimate beneficiary will be the consumer.
Further, the need for these new laws may have never been as obvious if the previous “speculations of witless academics and bureaucrats with no historical knowledge whatsoever” had not been allowed to repeal our previous weak Price Discrimination laws back in 1995.
Although it is little consolation for those that have been damaged over the past decade, maybe the ‘ill-tutored inconsequential bureaucrats’ of Westfield’s Fred Himler’s committee have done Australia and the rest of the world a favour in the long run.
Sometimes the only way to learn is from mistakes.
[1] Richard Teldlow, New & Improved : The Story of Mass Marketing in America (1976) at p209-10
[2] US Congressional Record p8109 27th May 1936
[3]Wright Patman was a champion of small business. From his earliest days in Congress Patman sought payment of a "bonus" for World War I veterans, to fulfil what he believed was a debt to the men who fought for their country and this allowed many returned soldiers to start their own small business. After World War II he lobbied for programs beneficial to the small businesses he believed were victims of a federal policy that encouraged large multinational corporations. In the 1960s and 1970s he added a new dimension to his attack on elite privileges, maintaining that most large foundations existed not for charitable purposes but as tax dodges for the wealthy families that established them. He led a perennial crusade against the Federal Reserve and against high interest rates because of the harm that high interest rates did to small business. Wright Patman was a great man, served in the U.S. House of Representatives for forty-seven years, and his efforts to support small business are in complete contrast with many contemporary politicians and their cosy relationships with big business, making laws to favour big business over small, and then leaving politics and going on to receive huge ‘consultancy payments’ from the same big corporations.
[4] Patman, The Robinson-Patman Act: What You Can and Cannot Do Under This Law. New York: The Ronald Press Company, 1938.
[5] Committee on the Judiciary – US House of Representatives, 74th Congress – 2nd Session Report No. 2287 Prohibition of Price Discriminations
[6] US Congressional Record, Vol 79 p. 9422 4th June 1935
[7] Congressional Record 6621 (1936)
[8] Patman, Wright Absentee Ownership, 1938
[9] A “carload” was considered as a railway carload.
[10] Federal Trade Commission v Morton Salt Co. 334 U.S 37 (1948)
[11] American Booksellers Association, ABACUS (2004) – www.bookweb.org
[12] Bruce V Spiva, Comments to the Antitrust Modernization Commission 27th July 2005 www.bookweb.ord
[13] US Congressional Record , 3rd March 1936 p3118
[14] Any analogy with this paragraph and the Coles Myer organisation is purely co-incidental
[15] Mr Saferstien is lawyer in California with over 30 years in private practice, he has also served as President of the California State Bar, and has been with the Federal Trade Commission twice in his career. His practice defends companies from claims of breaches of Price Discrimination laws, and he has written and published works on the Robinson-Patman Act.
[16] Testimony of Harvery I. Saferstien, Antitrust Modernization Commission. Washington, D.C 28th July 2005Evan Jones, Submission to style='mso-bidi-font-weight:bold'>Senate Inquiry “The Effectiveness of the Trade Practices Act 1974 in Protecting Small Business” Oct 2003 http://www.aph.gov.au/Senate/committee/economics_ctte/completed_inquiries/2002-04/trade_practices_1974/submissions/sub048.doc
[18] Wal-Mart CEO Calls for Government Intervention to Prevent Market Dominance,http://www.reclaimdemocracy.org/walmart/scott_government_intervention_tesco.php
