Robinson-Patman Act

• Author: Jeffrey Lehman, Shirelle Phelps

Page 372

The Robinson-Patman Act is a 1936 statute (15 U.S.C.A. § 13(a?f) that amended Section 2 of the CLAYTON ACT (Oct. 15, 1914, ch. 323, 38 Stat. 730), which was the first antitrust statute aimed at price discrimination. The Robinson-Patman Act prohibits a seller of commodities from selling comparable goods to different buyers at different prices, except in certain circumstances.

The Robinson-Patman Act seeks to limit the ability of large, powerful buyers to gain price discounts through the use of their buying power. Although the act remains an important antitrust statute, private parties do not use it nearly as often as they use the Sherman Act, in part due to the Robinson-Patman Act's convoluted and complicated language. The government, which may bring an action under the Robinson-Patman Act through the FEDERAL TRADE COMMISSION (FTC), rarely initiates actions under the statute.

In fact, the Robinson-Patman Act has been severely criticized throughout its history, both for its poor drafting and the economic theory behind it. Even the Supreme Court has criticized the act on more than one occasion, stating in 1952 that it is "complicated and vague in itself and even more so in its context. Indeed, the Court of Appeals seems to have thought it almost beyond understanding" (FTC v. Ruberoid Co., 343 U.S. 470, 72 S. Ct. 800, 96 L. Ed. 1081 [1952]). Nevertheless, the Robinson-Patman Act remains an important deterrent and remedy to market power abuses by large and powerful buyers.

The Robinson-Patman Act was passed during the Great Depression following the emergence of large, successful grocery-store chains. Small, independent grocery stores and their suppliers lobbied Congress to do something about the large chains, which were alleged to have exercised their superior buying power to achieve price discounts, driving small grocers out of business. The United States Wholesale Grocers Association drafted the original bill of what was to become the Robinson-Patman Act. Many critics of the act point out that Congress passed the act with the protection of small grocers and their wholesalers in mind, rather than the welfare of competition or the consumer.

The Robinson-Patman Act was intended to remedy perceived shortcomings in the Clayton Act. The federal courts had determined that the Clayton Act did not apply to price discrimination based on quantity, which was precisely what the small, independent businesses were worried about. The act considerably expanded the scope of the Clayton Act by specifically prohibiting discounts based solely on quantity, except in certain situations. The act's provisions apply both to sellers who offer discriminatory prices and buyers who knowingly receive them. The act is also intended to remedy secondary line injury, which is injury to competitors of a buyer who receives a discriminatory price, in addition to primary line injury, which refers to injury to competitors of a seller who offers a discriminatory price. Both private parties and the FTC may use the statute. A private party can obtain, in appropriate circumstances, treble damages from

Page 373

a price discriminator?in other words, three times the party's actual damages.

To invoke the provisions of the Robinson-Patman Act, certain jurisdictional elements must be established. The act applies only (1) to sales (2) in commerce (3) of commodities (4)...