Khan’s latest assault on business is reviving a 1936 antitrust theory.The Wall Street Journal and I bid An Unfond Farewell to Lina Khan
The FTC lawsuit filed Thursday against Southern Glazer’s Wine and Spirits is a classic Khan job. She has resurrected the dormant 1936 Robinson-Patman Act to sue the nation’s largest liquor distributor for alleged illegal price discrimination. The FTC hasn’t litigated a claim under this law for more than 30 years.
Robinson-Patman says suppliers cannot “discriminate in price between different purchasers of commodities of like grade and quality.” The FTC alleges that Southern Glazer’s squeezed mom-and-pop businesses by selling them booze at higher prices than to larger chains, which it claims resulted in fewer choices and higher prices.
The FTC offers no evidence for the latter, and volume discounts are ubiquitous in retail. Most retailers charge customers lower marginal prices on products bought in bulk. This reduces prices. There’s also no evidence mom-and-pop shops have been harmed by these volume discounts. Liquor and convenience stores have added roughly 24,000 jobs in the last five years.
GOP Commissioner Melissa Holyoak distills the history of the Robinson-Patman Act in a biting 88-page dissent. Antitrust regulators mostly stopped enforcing the law after a 1977 Justice Department report documented how it resulted in higher prices and price-fixing among competitors, while inhibiting small retail cooperatives from negotiating discounts with suppliers.
Meanwhile, the FTC is touting its victory this week blocking Kroger’s $24.6 billion supermarket tie-up with Albertsons. Judge Adrienne Nelson on Tuesday ruled that the combination would reduce head-to-head competition in the narrowly defined market of traditional supermarkets, which excludes Amazon, Walmart, Costco and discount stores. Albertsons then called off the merger.
The merger would have given the combined firm more leverage with wholesalers like Southern Glazer’s and increased supply-chain efficiencies. Kroger promised to invest $1 billion in lowering prices post-merger. Consumer welfare had been the north star of antitrust law for four decades until Ms. Khan took over the FTC.
Alas, Ms. Khan prioritizes progressive hobby-horses above consumers. Grocery unions claimed the merger would make it harder to play Kroger against Albertsons to win higher wages and more generous benefits. But if that’s true, the FTC challenge will also likely result in higher prices, and it may cause some stores to close because they can’t compete.
Albertsons is now suing Kroger for billions of dollars in damages for allegedly failing to exercise its “best efforts” to secure regulatory approval for the merger. But Kroger offered to divest 579 of 5,000 stores to C&S Wholesale Grocers, only to have Ms. Khan and the judge say this isn’t good enough.
There’s nothing Kroger could have done to convince Ms. Khan to drop her lawsuit, which became a cause célèbre on the left. She has developed a media fan club by championing progressive causes like bans on employer non-compete agreements and junk fees. But she’ll mostly be remembered for harassing businesses to no productive end and many legal defeats.
Team Trump Economic ContradictionsKahn will be gone in a much needed house-cleaning sweep.But bear in mind vice-president elect JD Vance has high praise for Kahn.Please consider this July 18, 2024 WSJ Flashback J.D. Vance, Lina Khan and the GOP’s Economic Contradictions
Do Republicans want to rein in the regulatory state or unleash it? It’s hard to tell these days, and the contradiction comes into sharp focus in J.D. Vance’s embrace of Lina Khan, Elizabeth Warren’s favorite regulator who runs the Federal Trade Commission.
At a Bloomberg technology forum in February, Mr. Vance called Ms. Khan “one of the few people in the Biden administration that I think is doing a pretty good job.” At what? Breaking the law and losing in court?
The FTC Chair has been the most ambitious Biden regulator, stretching the law at every opportunity to impose her policy views on antitrust and other matters. No Biden regulator has lost more in court as a result. Federal judges rejected Ms. Khan’s efforts to block the Microsoft-Activision and Meta-Within Unlimited acquisitions. Another judge this month tossed her ban on non-compete agreements.
Mr. Vance nonetheless supports her policy of jettisoning the consumer-welfare antitrust standard that has prevailed for 40 years. Her revised guidelines empower the agency to challenge mergers because of their effects on workers, suppliers and minority ownership stakes, among other non-antitrust factors.
The FTC is challenging the Kroger-Albertsons grocery tie-up on the grounds it would reduce retail labor competition, no matter that the supermarkets compete with countless businesses for workers. They aim to reduce prices by increasing their leverage with suppliers. The combined company would also compete more vigorously with big-box stores.
Ms. Khan also isn’t doing any favors for U.S. workers. Amazon and iRobot, the Roomba vacuum manufacturer, blamed regulatory obstacles in calling off a merger in January. Afterwards iRobot announced it was cutting nearly a third of its workforce and research and development spending by “offshoring of non-core engineering functions to lower-cost regions.”
Mr. Vance’s support for Ms. Khan is all the more puzzling given her hostility to conservatives. She has harassed Elon Musk and accused former Pioneer Natural Resources CEO Scott Sheffield of colluding with the Organization of the Petroleum Exporting Countries (OPEC) based on dubious evidence. Mr. Sheffield’s political offense was criticizing Mr. Biden’s anti-fossil-fuel policies.
Trump’s Nauseating Pick for Labor SecretaryGetting rid of Kahn will be a good thing because no one could possibly be worse.Unfortunately, we will be saddled with a horrendous pick as Labor Secretary instead of the FTC.I discussed this sorry state of affairs on November 25 in Trump’s Nauseating Pick for Labor Secretary Is the Teacher’s Union Favorite
Hard to believe, but Donald Trump nominated a favorite of teachers union chief Randi Weingarten as his Labor Secretary. Why would Mr. Trump want to empower labor bosses who oppose his economic agenda and spent masses to defeat him?
Weingarten is truly rat vomit nauseating. We should be expanding right to work laws not trashing them.If voters wanted the problems of the Chicago school system, they would have voted for Harris.Meanwhile, the big question is how much more damage the Kahn and the Biden administration will do before they are both gone.More By This Author:Fed Interest Rate Cuts Are Hurting Long-Term Bonds And Mortgage RatesProducer Price Index PPI Much Hotter Than Expected, Led By A Surge In Food Continued Unemployment Claims Plus Those With Expired Benefits Tops 3.5 Million
