Private Damage Actions Under the Robinson-Patman Act

• Author: Christine Piette Durrance,Roger D. Blair
• DOI: 10.1177/0003603X15602404
• Published date: 01 December 2015
• Date: 01 December 2015

Article

Private Damage Actions Under

the Robinson-Patman Act

Roger D. Blair* and Christine Piette Durrance**

Abstract

Over the past four decades, there has been virtually no public enforcement of the Robinson-Patman

Act. Neither the Department of Justice nor the Federal Trade Commission has pursued cases involving

price discrimination. Consequently, private enforcement is all that is left. But private enforcement is

fraught with difficulties. In this article, we examine the difficulties that private plaintiffs face in pursuing

damages flowing from unlawful price discrimination. We trace these difficulties to the Supreme

Court’s decisions in Brooke Group and J. Truett Payne.

Keywords

Robinson-Patman Act, price discrimination, primary-line injury, secondary-line injury, private

enforcement

I. Introduction

In 1911, the Supreme Court decided Standard Oil

1

and American Tobacco.

2

Allegations of predatory

pricing played a prominent role in each case. According to the Court, the evidence showed that below-

cost pricing was used to drive small competitors into submission. The predator allegedly used profits

earned in markets where it faced no competition to finance localized bouts of predatory pricing. The

intent was to monopolize those markets and then raise prices to the monopoly level thereby recouping

the investment in predation. Troubled by such conduct, Congress included a prohibition of price dis-

crimination in the Clayton Act.

3

Subsequently, the chain store movement also proved to be troublesome.

4

Large chains, epitomized

by A&P, used economies of scale and their buying power to gain a competitive advantage over small

*Department of Economics, University of Florida, Gainesville, FL, USA

**Department of Public Policy, University of North Carolina at Chapel Hill, Chapel Hill, NC, USA

Corresponding Author:

Roger D. Blair, Department of Economics, University of Florida, PO Box 117140, 342 MAT, Gainesville, Florida, USA.

Email: rdblair@ufl.edu

1. Standard Oil Co. of N.J. v. United States, 221 U.S. 1 (1911).

2. United States v. Am. Tobacco Co., 221 U.S. 106 (1911).

3. Clayton Act, 15 U.S.C. §§ 12–27, 29 U.S.C. §§ 52–53 (1914).

4. Herbert Hovenkamp, The Robinson-Patman Act and Competition: Unfinished Business,68A

NTITRUST L. J. 125, 137 (2000).

The Antitrust Bulletin

2015, Vol. 60(4) 384-401

ªThe Author(s) 2015

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DOI: 10.1177/0003603X15602404

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mom-and-pop stores.

5

In order to protect the smaller rivals, Congress amended section 2 of the Clayton

Act by enacting the Robinson-Patman Act in 1936.

In recent decades, there has been virtually no public enforcement of the Robinson-Patman Act. The

Department of Justice has not filed a Robinson-Patman case since 1972.

6

For its part, the Federal Trade

Commission has filed only one case in the last twenty-five years.

7

Consequently, enforcement of the Robinson-Patman Act is entirely a private matter.

8

In most cases,

private suits are filed under § 4 of the Clayton Act, which provides for private damages. But these suits

have become increasingly difficult, due to the Supreme Court’s decisions in Brooke Group

9

and

J. Truett Payne.

10

In Section II, we examine the prohibitions contained in the Robinson-Patman Act. In doing so, we

distinguish primary-line and secondary-line cases. We then discuss antitrust injury in Section III. In

Section IV, we turn our attention to the theory of primary-line injury and the impact of Brooke Group

on private plaintiffs. We focus on secondary-line injury in Section V and analyze the significance of

J. Truett Payne on private plaintiffs in Section VI. Section VII closes the article with some concluding

remarks.

II. The Robinson-Patman Act

Section 2 of the Sherman Act condemns business conduct that has resulted in monopoly or is apt to do

so. More specifically, section 2 provides that:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other per-

son or persons, to monopolize any part of the trade or commerce among the several States, or with foreign

nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceed-

ing $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10

years, or by both said punishments, in the discretion of the court.

11

Since the Act’s broad language would seem to condemn both reasonable

12

and unreasonable conduct,

the Supreme Court explained that the rule of reason would be employed to distinguish reasonable busi-

ness conduct from unreasonable business conduct.

Congress did not find this reliance on the judiciary to be comforting. It apparently was concerned

that the courts might miss something and decided to single out price discrimination and other things for

specific prohibition in the Clayton Act.

13

In 1914, the Clayton Act was enacted in an effort to provide some specificity that the Sherman Act’s

broad language lacked. In the wake of Standard Oil

14

and American Tobacco,

15

section 2 of the Clay-

ton Act took dead aim at price discrimination. Rightly or wrongly, Congress envisioned large

5. MORRIS A. ADELMAN,A&P:ASTUDY IN PRICE-COST BEHAVIOR AND PUBLIC POLICY (1959).

6. HERBERT HOVENKAMP,FEDERAL ANTITRUST POLICY:THE LAW OF COMPETITION AND ITS PRACTICE at 629 (4th ed., 2011).

7. Id.

8. Ryan Luchs, Tansev Geylani, Anthony Dukes, & Kannan Srinivasan, The End of the Robinson-Patman Act? Evidence from

Legal Case Data,56M

GMT.SCI. 2123 (2010). Although private plaintiffs may not fare well when cases go to trial, they may

still enjoy recoveries through settlements, which the authors did not examine.

9. Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993).

10. J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557 (1981).

11. 15 U.S.C § 2.

12. Reasonable conduct would include improved products, improved methods of production, better service, enhanced

durability, and other means of competing on the merits.

13. Most prominently, these include conditional sales (§ 3) and mergers that may be anticompetitive (§ 7).

14. Standard Oil, 221 U.S. at 1.

15. Am. Tobacco, 221 U.S. at 106.

Blair and Durrance 385