I. INTRODUCTION... 4 II. OVERVIEW OF THE ACT A. Codification... 4 B. Section C. Section D. Exemptions... 5 E. Enforcement...

Transcription

1 I. INTRODUCTION... 4 II. OVERVIEW OF THE ACT... 4 A. Codification... 4 B. Section C. Section D. Exemptions... 5 E. Enforcement... 5 III. PRICE DISCRIMINATION UNDER THE ROBINSON-PATMAN ACT... 5 A. Introduction to the Prima Facie Case Statutory language of Section 2(a) Most notable recent development... 6 B. Elements of a Section 2(a) Violation Summary of the elements of a Section 2(a) violation Two completed sales to two different purchasers Reasonably contemporaneous By the same seller Engaged in commerce Of commodities Of like grade and quality For use, consumption or resale within the United States or any territory thereof At different/discriminatory prices With injurious effect C. Defenses to a Section 2(a) Prima Facie Case Itemized Section 2(a) Cost Justification Defense Section 2(a) Changing Conditions Defense Section 2(b) Meeting Competition Defense IV. EXEMPTIONS FROM THE PRICE DISCRIMINATION PORTION OF THE ROBINSON-PATMAN ACT A. The Cooperative Exemption The statute Interpretation B. Charitable Institution Exemption The statute... 36

2 2. Case Law Interpretation FTC Official Guidance FTC Unofficial Guidance V. SECTION 2(c) BROKERAGE PAYMENTS A. The Violation Relevant statutory language The elements B. Court Interpretations of Prima Facie Case Price discrimination not required The services rendered exception to Section 2(c) violations Section 2(c) and Commercial Bribery No requirement of antitrust injury VI. SECTIONS 2 (d) AND 2(e) DISCRIMINATORY ALLOWANCES OR SERVICES A. The Statute and the Elements Section 2(d) -- allowances Section 2(e) -- services Interpreted Elements of a prima facie violation of Section 2(d) or Section 2(e) No anti-competitive injury requirement The Fred Meyer Guides B. The Scope of a Section 2(d) or Section 2(e) Violation Promotional services or facilities Resale required Proportionality Among competitors C. Defenses to Section 2(d) or Section 2(e) Violation Meeting competition defense Cost justification defense D. Section 2(a) Compared to Sections 2(d) and (e) E. Slotting Allowances FTC official comment Unofficial FTC guidance R.J. Reynolds Tobacco Co. v. Philip Morris Inc., 60 F.Supp. 2d 502 (M.D.N.C. 1999). (Philip Morris preliminarily enjoined, under Section 1 of the Sherman Act, from using new Retail Leaders display allowance program that gave convenience store outlets promotional allowances conditioned on their acceptance of various displays and restrictions on competitors displays

3 4. In re McCormick & Company, Inc., Docket No. C-3939 (Agreement Containing Consent Order April 27, 2000) Federal Trade Commission enters into Agreement Containing Consent Order that certain price discrimination practices of McCormick & Company, including certain slotting allowances, constitute secondary-level price discrimination in violation of Section 2(a) Federal Trade Commission also held public hearings on slotting allowance issues, and issued a report entitled Slotting Allowances in the Retail Grocery Industry: Selected Case Studies of Slotting Allowances in Five Product Categories (Nov. 2003) VII. SECTION 2(f) BUYER LIABILITY A. The Violation Statutory language Elements Liability derivative B. Jurisdictional Elements C. Enforcement Automatic Canteen Knowledge required D. Allowances or Services VIII. PRICE DISCRIMINATION AND STATE LAW A. Comparison with the Robinson-Patman Act IX. BIBLIOGRAPHY A. Legislative History B. Principal Commentaries APPENDIX A APPENDIX B APPENDICES 3

4 I. INTRODUCTION The Robinson-Patman Act was enacted in 1936 to solidify and enhance the Clayton Act s attack on discriminatory pricing. The Act was designed to address specific types of harmful pricing behavior, in particular the favoring of then newly developing chain stores over long established, independent, but smaller retailers. The Act itself has been criticized as being convoluted and unnecessarily complex, as well as out of step with the rest of the antitrust laws. Although cases under the Act are now infrequently brought by the Federal Trade Commission and the Department of Justice, there has been a significant amount of private litigation in recent years. It has, however, become increasingly difficult for plaintiffs to win Robinson-Patman Act cases. This has been due primarily to the difficulties a plaintiff faces in proving antitrust injury. II. OVERVIEW OF THE ACT A. Codification The Robinson-Patman Act is codified at 15 U.S.C. 13, 13a, 13b, and 21a. An amendment was added in 1938 at 15 U.S.C. 13c. The Act itself has three main sections, starting with section 2 (there is no section 1 of the Act). The Act is usually referred to according to its internal sections 2, 3 and 4, and not its United States Code sections. B. Section 2 2(a) --Prohibits price discrimination; sets forth the defenses of cost justification and changing conditions. 2(b) --Sets forth the third defense against price discrimination of meeting competition. 2(c) --Outlaws both the payment and receipt of brokerage fees, except for services actually rendered. 2(d) --Prohibits discriminatory payments for services or facilities provided by the customer on behalf of the seller. 2(e) --Prohibits discriminatory provision of services or facilities by the seller to the customer. price. 2(f) --Creates liability for knowingly receiving or inducing a discriminatory See 15 U.S.C NY

5 C. Section 3 Section 3 (15 U.S.C. 13a) creates criminal liability for three areas of discriminatory pricing covered generally by section 2. These areas are 1. Participating in a sale of goods of like grade, quality, and quantity while also providing the purchaser with a discount, rebate, allowance, or advertising service charge not provided to the purchaser s competitors. 2. Charging different prices in different geographic areas in the United States, with the purpose of destroying competition, or eliminating a competitor, in the area where a lower price is charged. 3. Selling goods at unreasonably low prices for the purpose of destroying competition or eliminating a competitor. Although this section is still part of the Act, it is hardly ever enforced. D. Exemptions Section 4 of the Act (15 U.S.C. 13b) and the 1938 amendment to the Act (15 U.S.C. 13c) create two exemptions from the preceding provisions of the Act. Under section 4, cooperative associations, and under section 13c, non-profit institutions, are exempt from the provisions of the Act. E. Enforcement Finally, another section of the Act, 15 U.S.C. 21a, is an enforcement provision, assigning jurisdiction to enforce compliance under the Act generally to the Federal Trade Commission, unless involving common carriers, banks, air carriers, or common carriers engaged in wire or radio communication, in which case other agencies have jurisdiction. III. PRICE DISCRIMINATION UNDER THE ROBINSON-PATMAN ACT A. Introduction to the Prima Facie Case 1. Statutory language of Section 2(a) It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line 5