Distribution, Competition, and Antitrust / IP Law

So, What’s the Point?

When I decided to start this blog, I resolved that it would not be simply a collection of legal case squibs — although there will certainly be room for those. I commit to writing about some issues in the news and more general issues of direct or tangential relevance to distribution law.

But first, a basic question: why distribution law? Aside from its own charms, why should anyone pay attention to it?

The answer is that distribution systems — defined and circumscribed by applicable law — have a fundamental impact on our quality of life. In the former Soviet Union, before the late 1980s, distribution was (at least in theory) highly planned and completely centralized. Bureaucrats decided which factories made which products, and in what quantities. They decided how those products were sent to market, and where they were sold. The result was a society with an impressive military machine but which could not provide basic appliances or products (washing machines, dishwashers, cars) to most of its people, and which witnessed repeated shortages of food and other household consumable goods.

The USSR was, of course, an extreme case. But in between it and a completely open, anarchic market are many points in between. How should one choose where on this spectrum to land?

Probably no one, and certainly not me, has the definitive answer. European law and U.S. law often diverge, yet both serve their societies reasonably well. What I can suggest is that distribution law has two primary, and sometimes contradictory, goals. First, efficiency.(*) Distribution law should attempt to ensure that high-quality products get to market in the fastest, cheapest way possible. And second, fairness. Sometimes the law decides to protect certain categories of persons because of values society attaches to their work or function. Sometimes this sense of fairness is merely sentimental; sometimes it is grounded in something deeper. Often, upholding a rule based on perceived fairness will result in decreased theoretical efficiency. There are almost always tradeoffs.

The federal Robinson-Patman Act sits squarely in the center of the efficiency v. fairness debate. It was enacted during the Great Depression in a deliberate effort to protect “mom and pop” retailers whom Congress thought were faced with potential commercial extinction. The Act strongly emphasizes fairness to such an extent that many have argued it fosters inefficiency.

We will see the Robinson-Patman Act often in this blog. More on it in a bit.

(*) Competition may be thought of as a goal of distribution law as well. But competition is not a goal in itself; competition is valued because it is thought to promote efficiency (lower cost, higher quality goods and services).

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About Howard Ullman

Antitrust, competition, and IP law enthusiast.

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