Back in March, I did a newsletter and blog entry titled Could it happen here?, which noted an increase in regulatory activity related to trade promotion in several places around the world (most notably, investigations of Intel’s channel practices in Korea, Japan, and Europe and repeated investigations of the grocery chains by the UK’s Competition Commission and by the EU). The question, as indicated by the title, was whether similar action might be forthcoming in the US – specifically whether the Robinson-Patman Act might be dug up from wherever it’s buried, dusted off, and actually enforced.
The conclusion I arrived at in March was:
Six months or a year ago, I would have said absolutely not (in fact, I think I did say so in my book). Now I’ll still say “absolutely not” in the short term, but modify it slightly to “probably not, but maybe” in the medium- to longer-term.
Now that another seven months have gone by, I think we’ve moved much closer to a point where there might be serious regulatory action involving trade promo. But I hedged a bit last time, and I’ll continue to hedge now. The current economic turmoil increases the likelihood that the next congress will include a substantial majority favoring populist legislation and strong regulatory oversight of business practices – which pretty much summarizes R-P.
But R-P has so faded from the scene that it might be beyond resuscitation. When I discussed this question recently with a couple knowledgeable observers, Rob Hand of Oracle and Mike Kantor of TPMA, Rob’s comment was, “How many members of Congress even know Robinson-Patman exists?”
As we discussed the question, the three of us came to the conclusion that the phrase “populist legislation and strong regulatory oversight of business practices” applies equally to other legislation – most notably Sarbanes-Oxley – and that a more likely result (somewhere near certainty) is increased enforcement of Sarbox and tighter scrutiny of accounting practices such as those dealt with in FASB 01-9 and 02-16. Those who were hoping for revisions that would weaken Sarbox can kiss that dream goodbye.
Whatever form the regulation takes, I’d be willing to bet my house (not that it’s worth anything at present), that there will be increased regulation of trade promotion in 2009-10. How long the increased pressure will last is another issue, but marketers would be well advised to take a look and see if there are any embarrassing pieces of paper lying around.