Proof of Robinson-Patman Act Damages
| Pages | 309-326 |
CHAPTER 10
PROOF OF ROBINSON-PATMAN ACT DAMAGES
The Robinson-Patman Act (the Act) generally prohibits price
discrimination in the sale of commodities “where the effect of such
discrimination may be substantially to lessen competition or tend to create
a monopoly.”1 This chapter provides an overview of basic principles
regarding the proof of damages under the Act.2
In practice, a plaintiff may prove a violation under the Act, yet fail to
recover damages under Section 4 of the Clayton Act. Courts distinguish
between two basic types of Robinson-Patman Act damages claims: (1)
those brought by a competitor of the defendant seller claiming that the
defendant reduced its prices in a given market in order to drive the
competitor out of the market or otherwise harm it (a so-called primary line
claim); and (2) those brought by an allegedly disadvantaged customer of
the defendant seller claiming that it has been harmed by preferential
pricing provided to one or more favored buyers with whom it competes
for downstream sales (a so-called secondary line claim). Other, less
common, fact patterns also exist.3
The primary line and secondary line distinction impacts the nature of
the evidence offered on issues such as liability and standing, but plays a
minor role, if any, in the proof of damages. Because most Robinson-
Patman cases discussing damages involve claims by a seller’s customers,
most of the cases discussed in this chapter are secondary line cases.
A. Flexible Sta ndards of Proof
In a 1948 decision in Federal Trade Commission v. Morton Salt Co.,4
the Supreme Court held that in injunctive actions brought to enforce
1. 15 U.S.C. § 13(a).
2. Although the fact of da mage, antitrust standing, and antitrust injury are
critical elements in establishing entitlement to damages, they are addressed
in Chapters 1 and 2 of this book.
(2006). Courts also r ecognize third and fourth line claims, whi ch involve a
disfavored purchaser who has been unable to compete with customers of
the favored purchaser or with their customers. See Texaco Inc . v.
Hasbrouck, 496 U.S. 543 (1990) (third line injur y); Perkins v. Standard Oil
Co., 395 U.S. 642 (1969) (fourth line injury).
4. 334 U.S. 37 (1948).
309
310 Proving Antitrust Damages
Section 2(a) of the Act, the factfinder may infer the fact of injury to
competition from proof of substantial price discrimination over time.5 This
decision followed from the specific language of Section 2(a), which does
not require that actual injury be proven to sustain liability for price
discrimination.6
Following Morton Salt, courts adopted two distinct approaches in
applying the holding of Morton Salt to proof of damages in civil actions
under the Act. One approach, referred to as the “automatic” or “general”
damages approach, permitted damages to be inferred. In other words, once
the plaintiff established discrimination, damages could be awarded based
on the discriminatory price difference multiplied by the number of units
sold to the plaintiff without further proof of the plaintiff’s actual losses.7
The other approach required proof of “specific” damages caused by the
discrimination.8 In other words, it required plaintiffs to provide actual
proof of the harm they had suffered.
In its landmark holding in J. Truett Payne Co. v. Chrysler Motors
Corp.,9 the Supreme Court rejected the automatic damages theory, but
acknowledged that “once a violation has been established,” the plaintiff’s
burden to prove actual damages “is to some extent light ened.”10 The case
involved a suit against Chrysler for price discrimination by Payne, a
former Chrysler dealer that had gone out of business. Payne’s evidence of
injury consisted of the owner’s uncorroborated testimony of lost sales and
the opinion of an economics professor based on that testimony. A jury
awarded Payne $111,247.48 in damages that were trebled, but the Fifth
Circuit reversed and directed dismissal of the case. That court ruled that
Payne had failed to offer sufficient evidence of lost sales and profits
flowing from the alleged discrimination without reaching the question of
whether Payne had offered sufficient evidence to establish that a violation
had in fact occurred.11
On appeal to the Supreme Court, Payne argued that the automatic
damages rule should apply and thus any insufficiency of the evidence
5. Id. at 49-50.
6. Id.
Elizabeth Arden Sales Corp. v. Gus Blass Co., 150 F.2d 988 (8th Cir.
1945).
1980); Enterprise Indus. v. Tex. Co., 240 F.2d 457 (2d Cir. 1957).
9. 451 U.S. 557 (1981).
10. Id. at 568.
11. Id.
To continue reading
Request your trial