State Price Discrimination Law

• Pages: 103-208

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CHAPTER III

STATE PRICE DISCRIMINATION LAW

The Robinson-Patman Act (RPA) proscribes price discrimination

and other related practices that lessen or injure competition or tend to

create a monopoly. Seeking to adopt these prohibitions, numerous states

have enacted their own price discrimination statutes to achieve the same

or similar results.

States have taken varying approaches in their price discrimination

regimes. Some states have enacted statutes identical to the RPA. Others

have enacted narrower statutes aimed at curbing specific abuses such as

locality discrimination, below-cost sales, and secret rebates. On the

other hand, some state statutes prohibit price discrimination through

broad, stand-alone statutes, including statutes targeted at specific

industries. While these statutes all seek to prevent price discrimination,

their objectives and terms vary significantly, and they cover many

different practices and industries. As a result, sellers should exercise

caution when doing business in different states.

Section A of this chapter discusses those state statutes that are

directly analogous to the RPA in that they contain some, if not all, of the

same prohibitions as their federal counterpart. Section B addresses state

price discrimination statutes that have different aims and applications,

including locality discrimination, below-cost sales, and secret rebates.

Finally, Section C focuses on the broad, stand-alone and industry-

specific statutes that include price discrimination as one of their

components but that do not closely parallel the RPA.

A. Statutory Analogues to the Robinson-Patman Act

Several states have passed statutes that are intended to be direct

analogues to the Robinson-Patman Act.1 These statutes effectively adopt

1. See N.M. STAT. ANN. §§ 57-14-1 to 57-14-9 (West 2009) (New Mexico

Price Discrimination Act); OR. REV. STAT. §§ 646.040 to 646.090 (2009)

(Oregon Anti-Price Discrimination Law); UTAH CODE ANN. §§ 13-5-1 to

104 Price Discrimination Handbook

the language of the RPA by prohibiting price discrimination in the sale of

commodities in addition to identifying other prohibited practices relating

to brokerages, commissions, and the payment for or furnishing of

services and facilities. The statutes also parallel the RPA by holding

individuals liable for inducing price discrimination and providing

statutory defenses to claims, such as a recognized defense that the

discriminatory pricing was the result of a good faith effort to meet

competition in the market.

Several other states have enacted price discrimination statutes that

adopt only certain portions of the federal statute.2 These statutes aim at

the RPA’s central focus of forbidding price discrimination that is

directed at harming competition, injuring competitors, or the formation

of a monopoly. Unlike the federal statute, these state analogues tend to

focus on this single aspect of price discrimination and modify or omit

other provisions covering brokerages, commissions, the furnishing of or

payment for services and facilities, and buyer liability.

The common factor among state statutes in this category is their

focus on discrimination among resellers. They share with the RPA the

objective of maintaining a “level playing field” among resellers who

compete with each other at the same level of commerce. Thus, like the

RPA they restrict an upstream seller (whether a manufacturer or

distributor) from favoring one reselling customer (whether a wholesaler

or a retailer), if such “favoritism” grants to that customer an advantage

over other customers with whom it competes in the sale of the good in

question.

Several of the analogue state statutes explicitly point to federal law

with regard to their interpretation. For example, the Connecticut,

Maryland, Montana, Oklahoma, and Virginia statutes explicitly provide

that consideration and weight are to be given to federal courts’

13-5-18 (West 2008) (Utah Unfair Practices Act); VA. CODE ANN. § 59.1-

9.7 (West 2009) (Virginia Antitrust Act).

2. CONN. GEN. STAT. § 35-45(a)-(b) (analogues to Section 2(a) and 2(b) of

the Act); IDAHO COD E ANN. §§ 48-201 to 48-206 (Idaho Anti-Price

Discrimination Act, contains identical language to Section 2(a) of the

Robinson-Patman Act, analogues to RPA § 2(b)-(f)); MD. CODE ANN.,

COM LAW § 11-204(5) (Maryland Antitrust Act, parallel to § 2(a)-(b), (d),

(e)); MONT. CODE ANN. §§ 30-14-901 to 30-14-904 (2007) (no analogue

to RPA § 2(c)); OKLA. STAT. tit. 79, § 204 (2009) (no direct analogues to

RPA §§ 2(c) through 2(e)); P.R. LAWS ANN. tit. 10, § 263 (2006) (no

analogue to RPA § 2(c)); WIS. STAT. ANN. § 133.04 (2008) (no analogues

to RPA 2(b)-(f)).

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interpretation of the RPA when interpreting their state price

discrimination statutes.3 In addition, courts in New Mexico, Oregon,

Utah, and Wisconsin specifically have looked to federal law to interpret

their price discrimination statutes.4 Federal law and interpretations of it

thus provide useful guidance in states with RPA analogue statutes.

1. Differences in Scope of Statutes

While the analogue statutes are by definition similar to the RPA,

several depart from the scope of the federal statute in a variety of ways.

Sellers in states with analogue statutes should pay careful attention to the

standards imposed by these nuanced statutes and cannot assume that the

standards are the same as those set forth in the RPA.

For example, unlike the RPA, the Maryland, New Mexico, Oregon,

and Virginia laws include services, in addition to commodities, within

their scope of coverage.5 Notably, where Section 2(d) of the RPA has

been construed to apply to advertising and promotional allowances,

Maryland’s counterpart statute also applies to the provisions of services.6

Therefore, it is important for service providers to consider the possible

application of state price discrimination laws to their activities, even

where those laws are otherwise nearly identical to the RPA.

3. CONN. GEN. STAT. § 35-44(b); MD. CODE ANN. § 11-202; MONT. COD E

ANN. § 30-14-903; OKLA. STAT. tit. 79, § 212; VA. CODE ANN. § 59.1-

9.17 (Virginia Antitrust Act shall be construed in harmony with

comparable federal statutory provisions).

4. Jay Walton Enters. v. Rio Grande Oil Co., 738 P.2d 927, 930 (N.M. Ct.

App. 1987) (“Because of the similarities between the Price

Discrimination Act and the Robinson-Patman Act, we look to federal law

for assistance in interpretation and application of the state act.”);

Redmond Ready-Mix v. Coats, 582 P.2d 1340, 1346 (Or. 1978) (federal

decisions interpreting the Robinson-Patman Act were persuasive in

interpreting state anti-discrimination law); Rio Vista Oil, Ltd. v.

Southland Corp., 667 F. Supp. 757, 763 (D. Utah 1987) (Utah antitrust

laws are generally to be construed in harmony with the federal antitrust

scheme); see also Grams v. Boss, 294 N.W.2d 473, 479 (Wis. 1980),

abrogated on other grounds by Olstad v. Microsoft Corp., 700 N.W.2d

139 (Wis. 2005) (finding that the Wisconsin Antitrust Act was enacted to

mimic the federal Sherman Act and that federal decisions interpreting the

act are controlling).

5. MD. CODE ANN., COM. LAW § 11-204(a)(3); N.M. STAT. ANN. § 57-14-2;

OR. REV. STAT. § 646.040; VA. CODE ANN. § 59.1-9.7.

6. MD. CODE ANN., COM. LAW § 11-204(a)(4).