1936 antitrust ruling comes under fresh criticism

The Chicago Tribune reports:

Wander the aisles of Costco or Sam's Club and you enter a bizarre alternate universe of products for sale. Cereal comes in twin packs. Coke is available in cases containing 32 cans, not 24. And printer cartridges are sold in three-packs, not as singles or in pairs as at other stores.

These packaging oddities are a direct result of a 1936 antitrust law that was designed to keep a level playing field in American commerce but critics say has lost its usefulness. They contend the law actually costs consumers millions of dollars annually while forcing manufacturers to concoct wild, unnecessary packaging schemes.

The legislation -- the Robinson-Patman Act -- is such an ingrained part of the American retailing landscape that it gets little notice.

Now a Massachusetts lawsuit involving Ocean Spray Cranberries Inc. has cast a spotlight on the act at the same time that voices in Washington are challenging its relevance.

The basic question, raised by a Federal Trade Commission report in April, is who actually benefits the most financially from, say, the sale of a super jumbo-size container of crackers?

The initial answer might be consumers, because they save money by purchasing in bulk. But the FTC report -- written by a commission that calls for Robinson-Patman's repeal -- suggests that neither consumers nor Costco is the ultimate winner. Rather, the winners are less efficient competitors who, in effect, are shielded by Robinson-Patman, because the act puts restraints on the ability of big-volume retailers to aggressively undercut everyone else on standard-size products.

"This statute imposes significant compliance costs on U.S. businesses and, where applicable, operates as a deterrent to price competition," FTC commission member Jonathan Jacobson said in the report. "The harm it inflicts on U.S. consumers is great."

It's time to repeal the moronic New Deal legislation.