Federal Price Discrimination Law

The first federal statute to specifically address price discrimination
was Section 2 of the Clayton Act,1 although Congress’ efforts to
eliminate price discrimination predate even this act.2 In 1936, Congress
amended Section 2 of the Clayton Act via passage of the Robinson-
Patman Act (RPA).3 Section 2 of the Clayton Act, as amended by the
RPA, remains the principle federal statute prohibiting price
discrimination and is the focus of this chapter.
The RPA is not the only federal statute that may be applied to certain
discriminatory pricing practices. Section 2 of the Sherman Act,4 which
prohibits monopolization, attempted monopolization and conspiracies to
monopolize, addresses one form of price discrimination, predatory
pricing. Plaintiffs injured by predatory pricing might bring claims under
both the RPA and Section 2 of the Sherman Act.5 Practices that violate
the RPA might additionally violate Section 5 of the Federal Trade
Commission Act,6 which prohibits unfair methods of competition.7 Even
if certain discriminatory pricing practices do not violate the RPA, the
1. Clayton Act, ch. 323, § 2, 38 Stat. 730 (1914) (current version at 15
U.S.C. § 13).
2. See An Act to Regulate Commerce, ch. 104, § 2, 24 Stat. 379, 379 (1887)
(repealed 1978) (known as the Interstate Commerce Act, it regulated,
among other things, railroads’ abilities to charge discriminatory fares).
3. An Act of June 19, 1936, ch. 592, 49 Stat. 1526 (1936) (codified at 15
U.S.C. §§ 13-13b).
4. 15 U.S.C. § 2.
5. See, Int’l Air Indus. v. Am. Excelsior Co., 517 F.2d 714, 720 n.10 (5th
Cir. 1975) (noting the “identical” substantive issues present in Section 2
of the Sherman Act and in the Robinson-Patman Act with respect to the
plaintiff’s primary-line injury claims); see also A.A. Poultry Farms v.
Rose Acre Farms, 881 F.2d 1396, 1404 (7th Cir. 1989) (conduct may
violate the Robinson-Patman Act even if it does not establish predatory
pricing under Section 2 of the Sherman Act).
6. 15 U.S.C. § 45.
7. See, e.g., Alterman Foods v. FTC, 497 F.2d 993 (5th Cir. 1974).
14 Price Discrimination Handbook
FTC has imposed Section 5 liability when the pricing practices
nevertheless run counter to the public policy behind the RPA.8
Congress also has proscribed price discrimination through various
regulatory statutes and bodies. For example, the Federal Power Act9
gives the Federal Energy Regulatory Commission authority to review
rates and practices under its jurisdiction to ensure they are just and
reasonable and not unduly discriminatory or preferential.10 Similarly,
Congress prohibits common carriers from “mak[ing] any unjust or
unreasonable discrimination in charges, practices” and otherwise
prevents preferential treatment.11
Because the RPA is the only federal statute that addresses price
discrimination exclusively, this chapter dedicates its pages to exploring
the elements, defenses, treatment and application of the RPA alone.
Section A of this chapter dissects the RPA, while Section B is dedicated
to issues that arise in litigating RPA claims.
A. The Robinson-Patman Act
The RPA was passed during the Great Depression in response to the
perceived problem that the increased market power and coercive
practices of chain stores and other big buyers threatened the existence of
small independent retailers.12 A lengthy investigation conducted in the
1930s by the Federal Trade Commission (FTC or Commission) disclosed
that several large chain buyers were effectively avoiding Section 2 of the
Clayton Act by taking advantage of gaps in its coverage.13 Because of
their purchasing power, these chains were able to exact price
concessions, based on differences in quantity, which far exceeded any
related cost savings to the seller.14 The RPA was enacted to address
these issues.
The RPA contains five provisions setting forth substantive violations
and one provision establishing affirmative defenses. First, Section 2(a)
of the statute prohibits price discrimination between purchasers of
commodities of like grade or quality that are likely to result in substantial
injury to competition. This provision also contains two affirmative
8. Grand Union Co. v. FTC, 300 F.2d 92, 94-95, 98 (2d Cir. 1962).
9. 16 U.S.C. §§ 791a-825r.
10. 16 U.S.C. §§ 824d(a)-(b), 824e(a)-(b).
11. Telecommunications Act of 1996, 47 U.S.C. § 202(a).
12. Great Atl. & Pac. Tea Co. v. FTC, 440 U.S. 69, 75-76 (1979).
13. FTC v. Simplicity Pattern Co., 360 U.S. 55, 69 (1959).
14. Id.
Federal Price Discrimination Law
defenses dealing with changed market circumstances and cost-justified
discriminations. As discussed below in Section A(3)(c), where a price or
price sheet has been offered to all competing customers and is within
each of their economic reach, there is no actionable price discrimination.
Second, Section 2(d) and (e) prohibits, respectively, a supplier from
making payments to a customer to promote the resale of the supplier’s
product that are not offered to similar customers and from providing only
a preferred customer with services promoting the resale of the supplier’s
Third, Section 2(c) addresses other methods by which a supplier
might provide economic support to a reseller, by prohibiting a party to a
sales transaction from granting or receiving a “commission, brokerage,
or other compensation, or any allowance or discount in lieu thereof,
except for services rendered.” Section 2(c) is somewhat unique in that it
applies a per se illegality standard because the case law has not required
a showing of potential injury to competition, and the statutory RPA
defenses have not been deemed applicable to a 2(c) claim.
Fourth, the original RPA bill prohibited only activity by sellers, with
no mention of liability for buyers.15 Section 2(f), creating buyer liability
for knowingly inducing or receiving price discriminations by sellers, was
added after a belated floor amendment near the conclusion of the Senate
Fifth, Section 3 of the RPA provides for criminal penalties,
enforceable only by the U.S. Department of Justice.
Finally, Section 2(b) sets forth the so-called “meeting competition”
provision, the third affirmative defense specifically addressed in the
RPA. Each defense rebuts a price discrimination claim even if there is
harm to competition or to a competitor.
Unusual among the antitrust laws, the RPA historically has had as a
central focus the protection of competitors, rather than the competitive
process itself. Nevertheless, the Supreme Court has stated that the RPA
should be construed consistently with the other antitrust laws.17 Indeed,
in recent years the Court has repeatedly narrowed the conflict between
the RPA and other antitrust laws by making it more difficult for plaintiffs
15. Great Atl. & Pac. Tea Co., 440 U.S. at 76.
16. Id. (citations omitted).
17. Brooke Group v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 220
(1993) (quoting Great Atl. & Pac. Tea, 440 U.S. at 80 n.13).

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