Government Comes After Costco, Walmart, and Sam’s Club’s Business Model

By Bob Goodlatte in National Review

No one wants their Costco or Walmart discounts to go away. Congress should think long and hard before moving S. 4147 forward.

Congress is once again considering legislation that, despite its stated intent, could end up raising prices for American consumers.

The bill, the so-called Fair Prices for Local Businesses Act (S.4147), was introduced by Democratic Senators Chris Murphy, Amy Klobuchar, Richard Blumenthal, Ruben Gallego, and John Fetterman, with the stated intention of protecting small businesses and lowering prices. The opposite result is much more likely.

The bill purports to strengthen a law called the Robinson-Patman Act (RPA), a piece of antitrust legislation that makes it illegal for businesses to engage in predatory pricing.

However, the Democrats who introduced this bill intend to “strengthen” it into something that it was never intended to be.

In practice, the bill would make it harder for businesses to offer bulk pricing discounts — the very thing that keeps prices low for everyday Americans.

The RPA does not treat every price difference as unlawful. The law was built on the premise that different prices are common in ordinary commerce. It is simple economics: When companies buy in larger quantities, suppliers can produce and ship more efficiently, lowering the cost per unit. Those savings don’t just stay with the retailer — they get passed on to shoppers.

When you walk into Costco, Sam’s Club, or Walmart and buy a 24-pack instead of a single item, you expect a lower per-unit price. That’s not “predatory” — it’s the reason millions of families can afford groceries and household essentials.

The RPA has never prohibited such deals. Rather, it specifically targets certain situations where sellers might offer preferential pricing to some buyers while denying the same terms to others without a legitimate justification.

However, S.4147 would expand government’s reach by restricting common practices such as price matching and volume discounts — things these politicians seem to think are somehow abusive.

No American consumer does.

In practice, they are building off the initiatives of President Biden’s former FTC chair, Lina Khan, who tried to expand the RPA in harmful ways.

Just days before President Trump’s second inauguration, she tried to sue Pepsi for giving a big box store pricing discounts because it purchased its sodas in bulk. A month earlier, she also sued Southern Glazer’s, a wine distributor, for doing the same.

Thankfully, the new FTC chair, Andrew Ferguson, is having none of this. He already dropped the Pepsi suit, which Ferguson said was backed by “no evidence to support the most important allegations of the complaint.” And while the Southern Glazer’s case hasn’t yet been dismissed, Ferguson’s dissent forcefully noted the commission had exercised is discretion “poorly by bringing the case,” and would likely not prevail “even on its own theory.” Nonetheless, the case still remains on the docket.

And yet, some Democrats in Congress now want to expand the RPA so that this burden of proving consumer harms is seriously weakened.

That would not protect competition. It would instead lead to a less competitive marketplace — and higher prices at the checkout line. The real losers would be the millions of Americans who rely on stores like Costco, Walmart, and Sam’s Club to stretch their paychecks.

Without a doubt, small businesses face many pressures. Helping them remain competitive is a worthy goal. But the free market works best for all businesses, large and small, when suppliers and retailers are free to negotiate deals that will result in the most attractive pricing for consumers.

No one wants their Costco or Walmart discounts to go away. Congress should think long and hard before moving S. 4147 forward.