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How a Town, Village or County Can Rewrite the Robinson-Patman Act - Full Disclosure Requirement

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The likelihood that the United States government is going to do anything to protect the nation's small businesses is about as much as President Bush will appoint Michael Moore as the President's economic or media advisor. Small business has no voice because they aren't easy to organizing into a campaign-contributing force. The United States had more than 13,000 licensed radio stations and more than 2,000 licensed television stations, most of which were independently owned. Politically, it must have been difficult raising a substantial amount of money from these 15,000 licensed broadcast stations without relatively high costs, and low net contributions, after deducting expenses. It seems likely that a politician seeking campaign contributions from the large group of station owners could spend much if not all of the money expected to be raised. If, however, the federal government permitted radio and television stations, newspapers, telephone companies, cable companies, internet companies, hospitals and all other parts of the U.S. economy to merge, into larger and larger corporations, you would wind up with a political star system, with the one remaining monopoly (such as the handful of owners of most of the 15,000 broadcast stations) being an easy touch by the politicians that allowed the monopoly to be created and continued. It's just another version of the Hollywood Star system, where out of 50,000 actors and actresses, several actors and actresses get 95% of the money and the rest starve. By creating monopolies, the politicians created highly-motivated business entities with huge amounts of monopolistic cash, anxious to part with a very small percentage of the cash to the greedy politicians always looking for handouts, and willing to accept so little money for the billions of dollars they hand over to the monopolists.

Instead of looking to the federal or state government for help (unless the two-party system so self-destructs that a third-party candidate gets into high state office or is elected President of the United States), we can look to the lowest level of government for help. Here is what I envision can be done, in part, at the lowest level of government to rewrite the Robinson-Patman Act that probably cannot be amended as needed at the federal legal of government:

Local-Government Imposition of Reasonable Conditions for Land Use by Major Retail Businesses

There are two basic problems faced by a community when a major retailer sets its sights on opening up a new retail store in the community. The first is that the major retailer has an illegal price advantage when its buys its goods, paying about 50% as much for the goods as the local retail businesses that buy directly from the same manufacturer (or the wholesale suppliers of the local retail businesses). Competition is widely recognized as having 3 primary elements: price, quality and service, and by far the most important of the 3 elements is price. When everything else is equal, price determines where people will make their purchases. Because the goods are the same, a difference in quality is not even a factor. The only aspect to competition that could save the local retailer from serious financial injury or destruction is service (i.e., superior service), but service requires profit margin, and by the higher cost of goods and the substantially lower retail price for the same goods by the major retailer, there is no profit margin left for the local retailer to provide the superior service which is often the primary reason why a loyal customer base was created in the first place. When the profit margin needed to continue providing the expected superior service is taken away, through the competition of the major retailer, the only competitive factor (of the 3 main factors) favoring the local retailer disappears, and the local retailer is predictably going to lose its customer base to the new store of the major retailer, often on opening day, or it might take several months, but the loss is predictable and inevitable. There is nothing that the local retailer can do except change its business to something else, such as offering giraffes and camels instead of the products being carried by the major retailer.

The second problem is that in any geographic area there is a certain amount of business to be expected. For example, in an area with 10,000 residents there are only so many toasters, decks of cards, magazines, cans of soda, new automobiles, hammers or other types of goods that can be sold, and when a major retailer comes into town (especially now, after the best areas of the country have already received their new stores) the amount of business available from the community is insufficient to justify another major retailer store without getting most of its anticipated business from existing stores in the area, and causing them and their landlords, employees, customers, and towns and taxing authorities predictable injury.

In this light, I propose that every town, village and county create new zoning regulations that impose conditions on major retailers for any retail land use within the town, village or county (which I'll refer to as the "Town"). Without being complete, I suggest that the following provisions be considered for inclusion (probably with revisions) in any such new zoning regulations:

1. The major retailer agrees to reimburse any non-profit or governmental healthcare organizations for uninsured healthcare services rendered to any employees of the Major Retailer or any members of the employee's immediate family;
2. The major retailer agrees not to oppose any efforts by any employees to turn the location into a union shop, if any competitors of the major retailer have any unionized employees;
3. The major retailer agrees to provide all documents evidencing the retailer's agreements, invoices, advertising and promotional allowance programs, all other fees, allowances, payments, discounts, refunds, adjustments to invoices through renegotiation or otherwise, deductions taken from invoices, new store allowances, inventory adjustment allowances, returns, which the major retailer has received from any suppliers to assist a competitor in preparing a complaint under Sections 2(a), 2(d) and/or 2(e) of the Robinson-Patman Act or any similar state laws or rules
4. The major retailer agrees to disclose all relationships during the preceding 3 years with the Town, any of the Town's officials, agencies, attorneys or agents, and with any owners or developers of land situation in whole or in part in the Town
5. The major retailer agrees to provide a list of each new store it has opened during the preceding 24 months and each competitor in the area that closed or sold its business after the major retailer opened its store
6. The major retailer represents that the new store's prices for goods will be no lower than the average price charged by the major retailer's stores throughout the United States
7. The major retailer agrees that it will notify each of its competitors as to the precise terms of any advertising and/or promotional programs or offers that any of its manufacturers or other suppliers have provided to the major retailer, and to do so within 2 weeks after the major retailer receives any such program or offer
8. The major retailer agrees that it will main records showing the per-unit cost of its products with each manufactuer including all payments, fees, allowances, services and other benefits (valued at fair market value) received directly or indirectly by the major retailer, and to do so for a 5-year period, and agrees to provide such records (upon request, and without any court order relating to discovery) to any local competitor of the major retailer that commences an action against a manufacturer or other supplier under the Robinson-Patman Act
9. The major retailer agrees to report to the Town the total expenses incurred in each antitrust suit in which it was a party for any part of the past 5 years
10. The major retailer agrees to disclose whether it has uniform prices through the United States or, if not, the percentage by which the lowest prices for its best selling items (by number of units sold, and then by total dollar amount of purchases) is exceeded by the highest prices for the same products
11. The major retailer agrees to disclose the names, addresses, and telephone and fax numbers of its departments and officials in charge of ensuring compliance with the Robinson-Patman Act and the same for the persons in charge of complying with this Town regulation
12. The major retailer agrees to provide a copy to the Town of all advertising and promotional material run by the major retailer for each of its past 20 new store openings within a radius of 500 miles from the Town
13. The major retailer agrees to provide a list of all people who were employed by the major retailer had any communications with anyone in or near the Town concerning the acquition of land, building a store, obtaining approvals or opening the store in the Town, and a description of what each person did, including the names of each person with whom any contact was made
14. The major retailer agrees to full disclosure of all contacts with any official or agency of the Town during the past 3 years, including any communications, agreements, gifts, meetings and social events
15. The major retailer agrees to have a representative with authority to bind the major retailer (concerning its proposed new store) to appear at a public meeting held in the Town and to respond to all questions about the proposed store by competitors, officials, other businesses, academicians and residents of the area
16. The major retailer agrees to keep a daily record of sales made by its new store for a 1-year period, broken down by categories including but not limited to auto accessories, groceries, healthcare, prescription drugs, books, magazines, small applialnces, major appliances, computer hardware and peripherals, computer software, DVDs and videos, CD's, men's apparel, women's apparel, children's apparel and tobacco products, and to provide such records, upon request, to any local business engaged in Robinson-Patman Act litigation with any of the manufacturers or other suppliers selling goods to the major retailer.

What this new type of zoning regulation will do is either tame the major retailer, and require the major retailer to bend to the needs of your town and its residents and small businesses, creating an opportunity for the town to enforce its regulation through simple lawsuits for breach of contract or fraud, if the major retailer fails to abide by the terms that it agreed to when seeking and obtaining approval to open a new store in the area (or can be said to have agreed to by constructive notice of these conditions for land use promulgated by the town, village or county). Or, the major retailer could sue the town, village or county claiming that the conditions are a denial of one or more various claimed rights of the major retailer to do business in the area without being restrained by any of the conditions being imposed. The lawsuit then would seem to turn on the reasonableness of the conditions and whether the town, village or county had a right to protect its existing residents and independent businesses by imposing such conditions on any major retailer seeking to compete in the area with a new store. The Or, the major retailer might choose to spend its energies in some other area not as inhospitable to major retailers and bypass the area completely, and choose to wreak its financial destruction in a more inviting area. If the chosen area is nearby, and the competition could hurt the residents and its independent retailers, the injured town and several of its retailers could go into court and seek an injunction prohibiting the major retailer from opening up the new branch for the reasons discussed above.

This plan is the way that the Robinson-Patman Act can be rewritten to work to protect a town, its residents and its small businesses. The ultimate protection lies in the courts because the elected politicians at the federal level can be expected to do nothing, or perhaps they could be expected to go to the aid of the major retailers for fear of losing campaign contributions if they do not. Elected or appointed state officials traditionally have done very little to help towns, villages or counties fight major retailers, which means that the fight has got to be waged at the local level, in the ways that I describe here, and in my book Saving Main Street and its Retailers - see Website for Saving Main Street and its Retailers and in my other related websites.

Basically, towns, villages and counties, including their residents and small businesses, are left to their own devices to protect themselves from the financial rape to be expected when a major retailer opens up another store in the area. They must act to protect themselves. There is nobody else going to protect them.