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Customer Support. Close Modal. This site uses cookies. Texaco, Inc. It also must prove that the discrimination may substantially lessen competition. Treble Damages. In addition, a private plaintiff can bring suit under 15 U. See Innomed Labs , supra , F. See id. See Volvo Trucks , supra , U. Truett Payne, supra, U. See Syufy Enterprises v. Multicinema, Inc. Criminal Prosecution. In rare cases, the Antitrust Division of the United States Department of Justice theoretically can prosecute criminal claims for unlawful price discrimination.
In practice, the offense is not prosecuted as a criminal offense, nor should you hold your breath until the Department of Justice announces its next indictment for felony price discrimination. I was able to find one case in which the defendant was convicted of both felony price discrimination and felony price-fixing.
Price-fixing is criminally prosecuted on a routine basis, and in this case it appears that the prosecutor added on the charge for price discrimination, and the defendant was convicted of both offenses. United States , F. I am unaware of any other case in which the Department of Justice initiated criminal proceedings to suppress price-discrimination, but on the contrary understand that it has publicly confirmed that it will not investigate or pursue criminal charges for alleged price discrimination.
In the modern era, California law offers more relief to antitrust plaintiffs in general and to price-discrimination suitors in particular. California has its own statutes that govern price discrimination. These statutes are similar, but not identical to the Robinson-Patman Act, and the California courts have enforced them by adopting some but not all of the above-summarized federal standards.
Compare 15 U. Matsushita Electric Corp. Capitol Records Distributing Corp. For example, price-discrimination under California law does not arise under the same circumstances as establish the offense under federal law, but rather arises when a seller sells the same products to different commercial customers located in different locations at differing prices, but only if the price discrimination results in harm to competition or at least the effectual exclusion from competition of the disfavored commercial customer, but subject to various affirmative defenses of the kind available to defendants in federal cases.
In addition, California law establishes a separate offense for offering hidden net prices that allow the favored customer to obtain an unfair advantage over its direct competitors. Here is the exact statutory prohibition, quoted in full:.
The secret payment or allowance of rebates, refunds, commissions, or unearned discounts, whether in the form of money or otherwise, or secretly extending to certain purchasers special services or privileges not extended to all purchasers purchasing upon like terms and conditions, to the injury of a competitor and where such payment or allowance tends to destroy competition, is unlawful.
Most notably, the offense of predatory pricing under California law remains a tenable claim, while the modern federal doctrine is so restrictive as to render the practice an offense in theory only, as explained above. Under California law, it suffices to show that the defendant lowered its prices below its own costs with the intent of driving competitors out of business. It need not be shown that any percentage of overall competition was thereby eliminated, or that the defendant can and will impose supra-competitive pricing with impunity after eliminating its rivals.
Predatory pricing therefore remains a potent claim under California law. As a contemporary commentator explained, the prohibitions added in on secret rebates and unearned discounts now section and below-cost sales now section are designed to protect the retailer whose more powerful neighbor is attempting to drive him out of business. Thus, California and federal cases have recognized that the UPA in many respects does not mirror federal predatory pricing law.
It has been observed that the UPA, in contrast to the federal antitrust statutes, is precisely drawn to eliminate defined commercial practices such as predatory pricing. Therefore, changing judicial perspectives on antitrust enforcement have far less influence on the development of California predatory pricing law than on the development of the federal counterparts.
See Lloyd Design Corp. Mercedes Benz of North America, Inc. Even if a plaintiff or the FTC can establish a prima facie case of price discrimination, a supplier can defeat the charges by showing either of the following: 1 Its lower prices are justified by economies of scale for filling large orders; or 2 it has offered lower prices in order to meet the prices offered by a direct competitor.
See also Texaco, supra, U. Your business might usefully seek relief for price discrimination only if 1 it has been harmed by obvious price discrimination that cannot be justified by a pro-competitive explanation, and 2 the effect of the price discrimination is that the favored customer is underselling and thereby undermining a substantial part of competition in at least one of its markets. It is a very difficult claim to prove. It is the sort of claim that likely is best asserted alongside other, related antitrust offenses.
A defendant has many protections against liability for price discrimination, but they are not assured of success in every case. Most substantial businesses should confer with antitrust counsel from time to time to ensure that their pricing policies do not run afoul of the price discrimination laws. A plaintiff should bring a claim for unlawful price discrimination only if its business or a major line of its business is under mortal threat from clear, indefensible price discrimination.
If the claim concerns predatory pricing, the plaintiff should make every possible effort to establish proper grounds for litigating the claim under California law in a California Superior Court the allowed grounds would be that the challenged conduct significantly affects competitors or consumers located in California.
Even so, if a business has suffered significant losses that have no reasonable connection to California, it should seek relief under federal law or under the law of other states where the harm occurred, since the federal courts have exclusive jurisdiction over federal antitrust claims, while California antitrust law governs only California defendants or non-local defendants whose conduct has had a significant impact on competitors or customers in California.
In the modern era, price discrimination can be tenable or even compelling under specific circumstances, but where these circumstances are not present the claim has become highly disfavored, vulnerable to challenge on a variety of technical grounds, and generally problematic.
It is a civil claim best asserted by a private company that either has already been run out of business or faces an imminent threat of clear ruin because of an obvious, indefensible instance of differing prices that are calculated to destroy competition in downstream markets.
Under this circumstance, it remains a strong claim under federal law. Under California law, a plaintiff can also obtain damages and relief for predatory pricing and secret rebates. I hope that this article is useful to those who are interested in this topic.
For your immediate reference, you will find below the key statutory provisions of the Robinson-Patman Act, which is the federal law that governs unlawful price discrimination.
The Robinson-Patman Act of established the current federal offense of unlawful price discrimination. This Act modified the Clayton Act and is codified at 15 U. Here are its key excerpts, quoted verbatim :. It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States … and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered….
And provided further, That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade: And provided further, That nothing herein contained shall prevent price changes from time to time where in response to changing conditions affecting the market for or the marketability of the goods concerned, such as but not limited to actual or imminent deterioration of perishable goods, obsolescence of seasonal goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned.
Upon proof being made, at any hearing on a complaint under this section, that there has been discrimination in price or services or facilities furnished, the burden of rebutting the prima-facie case thus made by showing justification shall be upon the person charged with a violation of this section….
Provided, however, That nothing herein contained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor…. It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.
It shall be unlawful for any person engaged in commerce, in the course of such commerce, to be a party to … any transaction of sale … which discriminates to his knowledge against competitors of the purchaser, in that, any discount, rebate [or] allowance is granted to the purchaser over and above any discount, rebate [or] allowance available at the time of such transaction to said competitors in respect of a sale of goods of like grade, quality, and quantity….
Feb 17, Antitrust Litigation and Counseling. Senator Amy Klobuchar D-Minn. Feb 21, Antitrust Litigation and Counseling. The Extraordinary Qualcomm Case. The defining antitrust issues of our time are at stake in the landmark case of Fed Trade Comm'n v. Qualcomm Inc. Qualcomm specifically concerns standard-essential patents and Sep 8, Antitrust Litigation and Counseling.
The United States Department of Justice has reportedly begun an antitrust investigation of four major automakers for possible unlawful collusion in violation of United States antitrust law. The cause of this investigation? The automakers tentatively agreed with the Get Consultation Call Now. Under the Nonprofit Institutions Act, eligible nonprofit entities may purchase — and vendors may sell to them — supplies at reduced prices for the nonprofit's own use, without violating the Robinson-Patman Act.
Q: I operate two stores that sell compact discs. My business is being ruined by giant discount chains that sell their products for less than my wholesale cost. What can I do? A: Discount chains may be able to buy compact discs at a lower wholesale price because it costs the manufacturer less, on a per-unit basis, to deal with large-volume customers.
If so, the manufacturer may have a "cost justification" defense to the differential pricing and the policy would not violate the Robinson-Patman Act. Q: One of my suppliers is selling parts at its company-owned store at retail prices that are below the wholesale price that it charges me for the parts. Isn't this illegal? A: The transfer of parts from a parent to its subsidiary generally is not considered a "sale" under the Robinson-Patman Act.
Thus, this situation would not have the required element of sales to two or more purchasers at different prices. Main Menu. You are here. Guide to Antitrust Laws. In practice, Robinson-Patman claims must meet several specific legal tests: The Act applies to commodities, but not to services, and to purchases, but not to leases.
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