An Economic Analysis of Policies Protecting Small Business in the Milk Industry

Abstract

Regulatory activity to maintain the status of the independent milk company as a viable competitive force in the milk industry has been a central focus of regulatory policy since the 1930's. Some authorities question the degree of emphasis on preservation under the law, but most feel that there is an important element of protection embodied in regulatory activity affecting the industry. We feel that this aspect of the law is important and is the focus of this article.Legal protection of the independent dairy is afforded from three sources. The Robinson-Patman Act, which prohibits firms from discriminating in price where the effect may be to substantially lessen competition, has been enforced extensively by the Federal Trade Commission (FTC) on behalf of independent milk companies. For example, of 53 complaints filed by the FTC from June 1950 to June 1964, nine were against dairy companies. Independent firms have protected their own position under the law in treble damage private litigation. As a group, the national and regional dairy concerns have been involved in almost continuous treble damage litigation on charges of discriminatory pricing in recent years.