One of my earliest memories growing up in Kalamazoo, Michigan, was a visit to the bakery at the A&P grocery store at 5800 Gull Road. It was one of a handful of places my parents could afford to shop at in the midst of the great stagflation of the 1970s. My mother made amazing birthday cakes for us as kids, and I presume she was there for some ideas. I had other things in mind. They gave away free "donut holes" to kids who were presumably well-behaved, leading to my temporarily angelic behavior whenever we went there. 

Little did I know then, A&P was once regarded as a retail behemoth. A monopoly needing to be cut down to size. Their crime? Volume discounts. This allegedly nefarious practice was at the center of anti-chain-store sentiment that reached a fever pitch with the passage of the Robinson-Patman Act in 1936. 

Casting chain-store grocers like A&P as greedy villains during the Great Depression, the populist Texan US Representative Wright Patman rode a wave of sentiment from smaller grocers to take down the nationwide grocer. In response to the Supreme Court striking down FDR's National Industrial Recovery Act (NIRA), Patman sought to reimpose portions of the NIRA, which would have faced enormous opposition and risked being struck down by the Supreme Court. Instead, he cleverly decided, along with co-sponsor Senator Joseph Robinson of Arkansas, to impose the bill as an amendment to the long-standing Clayton Antitrust Act (1914).

Entitled the Robinson-Patman Antidiscrimination Act, it was popularly known as the "Anti-Chain-Store Act", but more aptly known as "The Wholesale Grocers' Protection Act." Indeed, it was largely written by the wholesalers' trade association. The bill aimed to protect smaller competitors from the allegedly anti-competitive restraints on trade posed by retail giants like A&P. This was an easy sell to the public at a time when unemployment was at 18 percent, with many small-town retailers closing up shop. 

In order to secure passage, the legislators amended Section 2 of the Clayton Antitrust Act of 1914, with enforcement assigned to the Federal Trade Commission (FTC), a move that helped minimize opposition.. That section was intended to "supplement existing laws against unlawful restraints and monopolies, and for other purposes". The "other purposes" would eventually be made known, to the detriment of consumers throughout the nation.

The specific wording of the Robinson-Patman Act reveals its fundamental economic error. It made it unlawful for "any person engaged in commerce…to be a party to, or assist in, any transaction of sale, or contract to sell, which discriminates to his knowledge against competitors of the purchaser." In frank language, it became illegal for a wholesaler to offer a bulk discount to larger retailers like A&P. This essentially prohibited suppliers from offering A&P the volume discounts their efficiency and scale had earned, and passed on to their beleaguered consumers. A single offense could land the wholesaler in hot water with the FTC, with potential fines up to $5,000 and up to a year in prison, or both.