6.12. SR 10-18-1999 - Laserfiche WebLink

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Chapter 10 Page 190[25 predatory pricing features of Robinson-Patman Act; particularly with respect to the several different approaches to calculating below cost sales on the "market basket" approach or the "single product" . approach. The majority opinion in the Supreme Court reversal also acknowledged that, "Admittedly, there is point where competitive pricing ends and predatory pricing begins." Further, Justice Robert L. Brown's majority decision in favor ofWal-Mart also pointed out that the Eighth U.S. Circuit Court of Appeals had discussed the difficulty in distinguishing the two in the context of the Sherman Act; i.e. "Competitive pricing" vs. "Predatory pricing." Moreover, while a finding that a defendant has engaged in selling below cost, is not the equivalent of finding specific predatory intent; nevertheless, it could be a basis from which such intent might be inferred. In the August 1994 House Small Business Committee Public Hearings and in Subsequent Congressional Sessions. the Committee Lashed out at the Mega-Discount Superstore for Hurting Small Businesses and Entire Communities with Predatory Pricing. Unfair Labor Practices and Market Saturation In Joyce Barrett's article on August 11, 1994 in Women's Wear Daily she reported on the first Congressional probe of the retailing phenomenon that was changing local markets nationwide. The mega-stores were blamed for everything from crushing local competition to altering the product distribution chain. As the largest retailer in the nation, according to Barrett, Wal-Mart Stores Iuc. drew most of the ~riticism, although Representative John Lafalce (D., NY), Chairman ofthe House Small Business Committee Gaid he had hoped the discussion would not target specific retailers. Wal-Mart's projected volume for thi~ year was $85 billion. . Representative Lafalce said he aimed to explore three ways of protecting small business fram the super-chains. 1. Increase publicity about expansion of the mega-stores. < 2. Curb federal money, sllch as industrial revenue bonds, that goes toward retail development. 3. Insure that federal antitrust and banking laws are tough enough and are enforced. LaFalce acknowledged that the federal government can do little to affect the recent course of retailing, but said he was concerned that superstore development was coming at the expense of smal1er merchants. At the hearings, which were commented on in Chapter VII, there was a litany of complaints about the superstores. Thomas Muller, a Fairfax, V A, economist and the author of a report on the impact that three proposed Wal-Mart stores would have on northeastern Vermont communities, said Wal-Mart charged higher prices in communities where it has eliminated the competition. Also, Wal-Mart and other mega-stores don't increase the dollar volume of sales, but instead redistribute sales. Further he pointed out that the claim that Wal-Mart creates jobs also is wrong. Muller added that in communities with a Wal-Mart the result could be fewer retail jobs. He also said that full-time jobs in the mega- retail were often based on a 28-hour work week, instead of the usual 40 hours. He also observed that based on its current marketing strategy, Wal-Mart could open another 5,000 stores within the next 10 . to 15 years. Muller further estimated: "...that Wal-Mart had reached optimum penetration levels' in Arkansas, Mississippi and http://www.shilsreport.orglchapl0.html 10/6/99