GOVERNMENT: A Matter of Survival

If a businessman fears he is going to lose a customer, he often tries to keep him by cutting prices. But when Standard Oil of Indiana tried this traditional method in Detroit in 1938, it ran afoul of the Federal Trade Commission. Standard had cut gasoline prices to four of its biggest jobber customers, to compete with the prices of other oil companies. Standard thereby enabled one of its customers, who operated his own filling station, to undersell competitors.

This, said the Federal Trade Commission, violated the 1936 Robinson-Patman Act, which Congress passed to protect small...

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