---
title: "History Shows Private Labels Are Beneficial; Congress Shouldn’t Prevent Retailers From ‘Self-Preferencing’ Their Own Brands "
summary: |-
  Prohibiting large online platforms from giving preference to their own products would protect competing companies at the expense of consumers and the economy, according to a new report.
date: "2022-11-30"
content_type: "Press Releases"
canonical_url: "https://itif.org/publications/2022/11/30/private-labels-are-beneficial-congress-shouldnt-prevent-retailers-from-self-preferencing/"
---

# History Shows Private Labels Are Beneficial; Congress Shouldn’t Prevent Retailers From ‘Self-Preferencing’ Their Own Brands 

WASHINGTON—Prohibiting large online platforms from giving preference to their own products would protect competing companies at the expense of consumers and the economy, according to a [study](https://itif.org/publications/2022/11/30/history-shows-how-private-labels-and-self-preferencing-help-consumers/) conducted by the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy.

ITIF’s report traces the history of private-label products from the 19th century to present and finds at every stage they have stimulated innovation in the retail sector, lowered prices and increased variety for consumers, and improved economic efficiency. Critics of large retailers have repeatedly intervened to protect competitors by enacting legal barriers to disincentivize private label marketing—but they have been overturned by courts and consumer preferences.

“The current attack on self-preferencing is just the latest in a long line of attempts to throw sand in the gears of private label marketing by large retailers,” said Trelysa Long, a research assistant with ITIF’s Schumpeter Project on Competition Policy, who authored the report. “Banning self-preferencing amounts to an attack on private labels themselves because self-preferencing is integral to the private-label model. A big reason retailers can sell private labels for less than name brands is that by putting their own products front and center they can spend less on other forms of marketing. If self-preferencing is prohibited, the number of private brands will be reduced, which will only hurt consumers and the economy.”

Long identifies instances throughout history where private labels have brought consumers lower costs at higher quality. Today, the use of private labels is ubiquitous; they represent one-sixth of the packaged goods market. U.S. consumers turn to them in everything from groceries to electronics, pet supplies, and baby-care products. Private labels typically cost 20 to 30 percent less than brand-name alternatives, improving people’s quality of life by serving as a counter-inflationary force in the economy.

ITIF concludes that legislation such as the American Innovation and Choice Online Act (AICOA), which would prohibit large online platforms from self-preferencing, threaten the innovation and efficiency that private labels provide. Moreover, while critics are primarily concerned about self-preferencing on large online platforms, the report notes that the fastest-growing private label brands are from chain grocers and big box retailers such as Aldi, Costco, Sam’s Club, and Trader Joe’s, not just the likes of Amazon—and reasonable forms of self-preferencing are legal offline, so they should be online, too.

The report notes that antitrust enforcement is warranted in cases of extreme self-preferencing, such as exclusionary conduct, but existing antitrust laws already address those scenarios.

“Looking at the history of private labels, it proves there is no reason to enact legislation today limiting self-preferencing practices,” says Long. “To do so would be to protect for-profit producers at the expense of consumers.”

[Read the report.](https://itif.org/publications/2022/11/30/history-shows-how-private-labels-and-self-preferencing-help-consumers/)

---
*Source: Information Technology & Innovation Foundation (ITIF)*
*URL: https://itif.org/publications/2022/11/30/private-labels-are-beneficial-congress-shouldnt-prevent-retailers-from-self-preferencing/*