Robinson-Patman Act

• Author: Ronan P. Harty
• Pages: 523-602

523

CHAPTER 5

ROBINSON-PATMAN ACT

A. Introduction

Section 2 of the Clayton Act, as originally enacted in 1914, was the first federal

law specifically directed at price discrimination. That section was expressly limited to

geographic pricing practices and focused primarily on practices that were harmful to

rivals rather than customers or suppliers. The perceived inadequacies of Section 2 led

to its amendment in 1936 by the Robinson-Patman Act,1 now the principal federal

statute directed at price discrimination.2 With the Robinson-Patman Act, “Congress

sought to target the perceived harm to competition occasioned by powerful buyers,

rather than sellers; specifically, Congress responded to the advent of large chainstores,

enterprises with the clout to obtain lower prices for goods than smaller buyers could

demand.”3 The act often has been criticized by the courts for imprecision in the

statutory language, which has resulted in a large body of case law interpreting its

ambiguities and nuances.4

The Robinson-Patman Act5 contains six basic provisions: Sections 2(a) through (f).

Section 2(a) prohibits a seller from discriminating in price between different buyers if

the discrimination adversely affects competition. Two provisos address affirmative

defenses: cost justification and changing conditions. Section 2(b) establishes an

affirmative defense if the discrimination arises from meeting competition. Section 2(c)

prohibits a party to a sales transaction from granting to or receiving from the other

party certain commissions or brokerage fees, except for services rendered. Sections

2(d) and 2(e) prohibit a seller from providing or paying for promotion or advertising

in connection with a product’s resale unless equivalent benefits are offered to all

1. Act of June 19, 1936, 15 U.S.C. §§ 13-13b, 21a.

2. The other federal statutes that have been applied to price discrimination and predatory pricing—§ 5

of the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 45, and § 2 of the Sherman Act, 15

U.S.C. § 2—are discussed in Chapters 8 and 2, respectively.

3. Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 175 (2006); see also FTC v.

Morton Salt Co., 334 U.S. 37, 43 (1948) (Congress sought to prevent large buyers from “secur[ing]

a competitive advantage over a small buyer solely because of the large buyer’s quantity purchasing

ability”).

4. See Boise Cascade Corp. v. FTC, 837 F.2d 1127, 1138-39 (D.C. Cir. 1988) (“The imprecision

infecting the statutory language has frequently led courts construing the measure to repair to the

backdrop against which the Robinson-Patman amendments were crafted in 1937.”); see also Cash

& Henderson Drugs Inc. v. Johnson & Johnson, 799 F.3d 202, 209 (2d Cir. 2015); Smith Wholesale

Co. v. R.J. Reynolds Tobacco Co., 477 F. 3d 854, 865-66 (6th Cir. 2007). For a detailed discussion

of the original purpose of the Act, see WRIGHT PATMAN, COMPLETE GUIDE TO THE ROBINSON-

PATMAN ACT (1963).

5. Section 1 of the Robinson-Patman Act is codified as § 2 of the Clayton Act, 15 U.S.C. § 13.

524 ANTITRUST LAW DEVELOPMENTS (NINTH)

competing buyers. Section 2(f) makes it unlawful for a buyer “knowingly to induce or

receive” a discriminatory price prohibited by the act. Section 36 establishes criminal

sanctions for unreasonably low pricing, although that provision has not been enforced

since the early 1960s.

While the Federal Trade Commission (FTC) and the Department of Justice (DOJ)

both have jurisdiction to enforce the act, in practice the FTC is the only agency that

has exercised it. The FTC has brought only a few cases since the 1980s and has not

brought a Robinson-Patman Act case since 2000.7 In 2017, the FTC issued an advisory

opinion setting forth a broad interpretation of the Nonprofit Institutions Act exemption

to the Robinson-Patman Act.8 The general trend in recent case law, including at the

Supreme Court, has been to narrow the Robinson-Patman Act’s scope and expand

defenses such as functional availability and meeting competition.9

B. The Commerce Requirement

The Robinson-Patman Act applies only to persons “engaged in commerce” and

acting “in the course of such commerce.”10 Section 2(a) also requires that “either or

any of the purchases involved in such di scrimination” be “in commerce.”11 As a

practical matter, proof of the additional “in commerce” requirement of Section 2(a) for

any of the involved purchases will necessarily satisfy the other commerce requirements

of the act.12

In Gulf Oil Corp. v. Copp Paving Co.,13 the U.S. Supreme Court explained that “the

distinct ‘in commerce’ language of the . . . Robinson-Patman Act . . . appears to denote

only persons or activities within the flow of interstate commerce—the practical,

economic continuity in the generation of goods and services for interstate markets and

their transport and distribution to the consumer.”14 Thus, “[s]ales that merely ‘affect’

interstate commerce do not meet the Robinson-Patman Act ‘in commerce’ standard.”15

6. 15 U.S.C. § 13a.

7. McCormick & Co., FTC Dkt. C-3939, available at https://www.ftc.gov/enforcement/cases-

proceedings/9610050/mccormick-company-inc.

8. Letter from Markus H. Meier, Assistant Dir., Bureau of Competition, Fed. Trade Comm’n, to

Jennifer R. Bolster, Esq., Hancock Estabrook, LLP, Crouse Health Hospital Advisory Opinion 5

(Oct. 20, 2017), availa ble at https://www.ftc.gov/policy/advisory-opinions/letter-markus-h-meier-

assistant-director-bureau-competition-concerning.

9. See Feesers, Inc. v. Michael Foods, 591 F.3d 191, 198 (3d Cir. 2010) (discussing Supreme Court

jurisprudence).

10. “Although § 2(e) does not explicitly state similar requirements, the jurisdictional bases of § 2(a) have

been incorporated into § 2(e).” L&L Oil Co. v. Murphy Oil Corp., 674 F.2d1113, 1116 (5th Cir.

1982).

11. See part B.3 of this chapter for a discussion of export sales under § 2(a).

12. See, e.g., Precision Printing Co. v. Unisource Worldwide, Inc., 993 F. Supp. 338, 346 (W.D. Penn.

1998); Ashkanazy v. I. Rokeach & Sons, 757 F. Supp. 1527, 1546 (N.D. Ill. 1991); Liquilux Gas

Servs. v. Tropical Gas, 303 F. Supp. 414, 416 n.2 (D.P.R. 1969); Int’l Tel. & Tel. Corp., 104 F.T.C.

280, 419 (1984).

13. 419 U.S. 186 (1974).

14. Id. at 195 (emphasis added); see also Able Sales Co., Inc. v. Compania de Azucar de P.R., 406 F.3d

56, 61 (1st Cir. 2005); Rotec Indus., Inc. v. Mitsubishi Corp., 348 F.3d 1116, 1120 (9th Cir. 2003);

L&L Oil, 674 F.2d at 1116.

15. Chawla v. Shell Oil Co., 75 F. Supp. 2d 626, 646 (S.D. Tex. 1999) (citing Gulf Oil, 419 U.S. at 195).

Biocad JSC v. F. Hoffmann-La Roche, Ltd., 2017 U.S. Dist. LEXIS 162398, at *17-18 (S.D.N.Y.

2017) (quoting Zenith Radio Corp. v. Matsushita Elec. Indus., 402 F. Supp. 244, 248 (E.D. Pa. 1975)

(“[N]o cause of action arises under the [Robinson-Patman] Act unless both commodities involved

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The jurisdictional scope of the Robinson-Patman Act is therefore narrower than that

of the Sherman Act.16

1. Interstate and Intrastate Sales

The in commerce language of Section 2(a) establishes a threshold jurisdictional

requirement that at least one of the discriminatory sales at issue must have crossed a

state line.17 The sales used to establish the in commerce requirement must be the same

sales challenged as discriminatory.18 As this is a jurisdictional requirement, “the

burden to prove the interstate character of the sales is on the party asserting subject

matter jurisdiction.”19

An interstate sale in either the victim’s market or in the market where the defendant

allegedly provided more favorable pricing will satisfy the requirement.20 “It is

immaterial which one crossed a state line. As long as one or both did so, the

jurisdictional requirement is satisfied.”21 This jurisdictional requirement may be

in the alleged price discrimination are sold for use, consumption or resale within the United

States.”)).

16. See, e.g., Gulf Oil, 419 U.S. at 194-95; McCallum v. City of Athens, Ga., 976 F.2d 649, 657-58 (11th

Cir. 1992); William Inglis & Sons Baking Co. v. ITT Cont’l Baking Co., 668 F.2d 1014, 1043 (9th

Cir. 1981); Littlejohn v. Shell Oil Co., 483 F.2d 1140, 1144 (5th Cir. 1973) (en banc) (“The language

of the act—requiring discriminatory sales be ‘in commerce’—is far narrower in scope than the

‘effect on commerce’ test applicable under the Sherman Antitrust Act.”); Boyd v. AWB Ltd., 544 F.

Supp. 2d 236, 239 (S.D.N.Y. 2008) (“In contrast to § 1 of the Sherman Act, the ‘in commerce’

language of the Robinson-Patman Act extends only to persons or activities ‘within the flow’ of

commerce among the states or with foreign nations.”).

17. Gulf Oil, 419 U.S. at 195; Able Sales, 406 F.3d at 61; Bailey v. Allgas, Inc., 284 F.3d 1237, 1244

n.13 (11th Cir. 2002).

18. See, e.g., Mayer Paving & Asphalt v. General Dynamics Corp., 486 F.2d 763, 769 (7th Cir. 1973)

(secondary line claim dismissed because the statute “requires that only the purchases by Mayer

Paving competitors and by Mayer Paving itself be considered in determining whether ‘either or any’

discriminatory sale is ‘in commerce’”); Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203, 208

(5th Cir. 1969) (“at least one of the sales alleged to be discriminatory must actually be in interstate

commerce”); Chawla, 75 F. Supp. 2d at 647 (rejecting plaintiffs’ jurisdictional argument based on

their own interstate retail sales because the transactions challenged as discriminatory were wholesale

sales to retailers).

19. Able Sales, 406 F.3d at 61.

20. See, e.g., Coastal Fuels of P.R. v. Caribbean Petrol. Corp., 79 F.3d 182, 189 (1st Cir. 1996) (“For a

transaction to qualify, the product at issue must physically cross a state boundary in either the sale

to the favored buyer or the sale to the buyer allegedly discriminated against.”); Ashkanazy v.

I. Rokeach & Sons, 757 F. Supp. 1527, 1546-47 (N.D. Ill. 1991) (§ 2(a) “applies only if at least one

of the two transactions which, when compared, generate a discrimination crosses a state line”)

(internal quotation marks omitted). To establish jurisdiction, it may not be necessary to prove that

the favored and disfavored purchasers compete with each other, although such proof is a required

part of the plaintiff’s prima facie case. In Godfrey v. Pulitzer Publ’g, 161 F.3d 1137 (8th Cir. 1998),

the Eighth Circuit rejected the argument that proof of competition with the alleged favored purchaser

is a jurisdictional requirement. Relying upon the plain language of § 2(a), the court rejected the

“somewhat seductive” logic of an earlier Seventh Circuit decision that held only purchases that might

injure competition are in commerce. See id. at 1142 (discussing Mayer Paving & Asphalt Co. v.

General Dynamics Corp., 486 F.2d 763 (7th Cir. 1973)).

21. William Inglis & Sons Baking Co., 668 F.2d at 1043-44 (citing Moore v. Mead’s Fine Bread Co.,

348 U.S. 115, 120 (1954)).