Price discrimination

“ For example, it might be argued that the existence of predatory intent bears upon the likelihood of injury to competition, [21] and that a price reduction below cost tends to establish such an intent. [22] Practically all of the legislative materials and court decisions relied upon by respondent are explicable on this basis, since hardly any of them are concerned specifically with the meaning of price discrimination. ”

“ Congress chose to deter such indirect price discrimination by prohibiting the granting of sales promotional allowances to one customer unless accorded on proportionally equal terms to all competing customers. ”

“ We believe that good faith meeting of a competitor's price only rebuts the prima facie case of violation established by showing the price discrimination. Whether the proven price discrimination is of a character that violates § 2 (a) then becomes a matter for the determination of the Commission on a showing that there may be injury to competition. ”

“ Nondiscriminatory pricing tends to weaken competition in that a seller, while otherwise maintaining his prices, cannot meet his antagonist's price to get a single order or customer. But Congress obviously concluded that the greater advantage would accrue by fostering equal access to supplies by competing merchants or other purchasers in the course of business. [5]
The first enactment to put limits on discriminatory selling prices was the Clayton Act in 1914, 38 Stat. 730, § 2. Section 11 enabled the Commission to use its investigatory and regulatory authority to handle price discrimination. ”

“ The frozen pie market in Salt Lake City was highly competitive. At times Utah Pie was a leader in moving the general level of prices down, and at other times each of the respondents also bore responsibility for the downward pressure on the price structure. We believe that the Act reaches price discrimination that erodes competition as much as it does price discrimination that is intended to have immediate destructive impact. In this case, the evidence shows a drastically declining price structure which the jury could rationally attribute to continued or sporadic price discrimination. ”

“ We hold that the key word 'justification' can be read no more broadly than to allow rebuttal of the respective offenses in one of the ways expressly made available by Congress. Thus, a discrimination in prices may be rebutted by a showing under any of the § 2 (a) provisos, or under the § 2 (b) proviso [9] -all of which by their terms apply to price discriminations. On the other hand, the only escape Congress has provided for discriminations in services or facilities is the permission to meet competition as found in the § 2 (b) proviso. We cannot supply what Congress has studiously omitted. ”

“ In addition, there has been widespread understanding that, under the Robinson-Patman Act, it is a complete defense to a charge of price discrimination for the seller to show that its price differential has been made in good faith to meet a lawful and equally low price of a competitor. ”

“ These assumptions, we now conclude, were firmly rooted in the structure of the statute, for it is only by equating price discrimination with price differentiation that § 2 (a) can be administered as Congress intended. ”

“ Respondent concedes that a competitive relationship among purchasers is not a prerequisite of price discrimination, but maintains that at least there must be 'proof that the lower price is below cost or unreasonably low for the purpose or design to eliminate competition and thereby obtain a monopoly.' Since such a finding is lacking here, respondent argues that it cannot be said that there was price discrimination. ”

“ Or, to put it differently, when the market is functionally divided all competing retailers have the opportunity of obtaining the same price from wholesalers, and the supplier's functional price discrimination alone does not cause any injury to competition. ”

“ Petitioners point out that there is no discrimination under their basing point system between buyers at the same points of delivery, and urge that the prohibition of § 2 (a) is directed only at price discriminations between buyers at the same delivery points. There is nothing in the words of the statute to support such a distinction, since the statute is not couched in terms of locality. And its purpose to prevent injuries to competition through price discriminations would preclude any such distinction, not required by its language. ”

“ Whether the respondents engaged in price discrimination '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 * * *.' [1] Phrased more simply, did the respondents' actions have the anticompetitive effect required by the statute as an element of a cause of action? ”

“ The need to allow sellers to meet competition in price from other sellers while protecting the competitors of the buyers against the buyers' advantages gained from the price discrimination was a major cause of the enactment of the 1936 Robinson-Patman Act. ”

“ Since, as we have indicated, an independent and important goal of § 2 (a) is to extend protection to competitors of the discriminating seller, the limitation of that protection by the alien factor of competition among purchasers would constitute a debilitating graft upon the statute.
Although respondent's starting point is the same as that of the Court of Appeals-that a price discrimination is not synonymous with a price difference-its test of price discrimination is somewhat broader. ”

“ Thus, the decision as to whether or not an order against one firm to cease and desist from engaging in illegal price discrimination should go into effect before others are similarly prohibited depends on a variety of factors peculiarly within the expert understanding of the Commission. ”

“ While allowance of the discriminatory price cut here may produce localized and temporary flexibility, it inevitably encourages maintenance of the long-range and generalized price rigidity which the discrimination in fact protects. So long as the wholesaler can meet challenges to his pricing structure by wholly local and individualized responses, it has no incentive to alter its overall pricing policy. Moreover, as indicated, the large supplier's ability to 'spot price' will discourage the enterprising and resourceful retailer from seeking to initiate price reductions on his own. ”

“ In allowing a 'cost justification' for price discriminations and not for others, Congress could very well have felt that sellers would be forced to confine their discriminatory practices to price differentials, where they could be more readily detected and where it would be much easier to make accurate comparisons with any alleged cost savings. ”

“ The complaint in this case alleges both sales 'at unreasonably low prices' and price discriminations in violation of § 3 of the Robinson-Patman Act. For the reasons set forth in our Nashville Milk Co. opinion, 355 U.S. 373, 78 S.Ct. 352, we hold that the complaint should have been dismissed insofar as it rests on alleged unlawful selling at unreasonably low prices, and that the respondent was entitled to a trial as to the charges of unlawful price discrimination. ”

“ Yet it is also true that not every functional discount is entitled to a judgment of legitimacy, and that it will sometimes be possible to produce evidence showing that a particular functional discount caused a price discrimination of the sort the Act prohibits. ”

“ In a footnote to that opinion, the Court of Appeals indicated that price differences were among the distinctions to be considered. Id., at 371, n. 5. Cf. Rowe, Price Discrimination Under the Robinson-Patman Act 71-72 (1962) .↑ See also Minneapolis-Honeywell Regulator Co., 44 F.T.C. 351, 396-397: 'To accept (the contrary) proposition would mean that any seller of a commodity which generally sells at a premium price may freely discriminate among its customers so long as it does not undercut the prices of competitors' ”

“ It is true that many of the primary line cases that have reached the courts have involved blatant predatory price discriminations employed with the hope of immediate destruction of a particular competitor. ”

“ It is therefore apparent that the discriminatory price that buyers are forbidden by § 2 (f) to induce cannot include price differentials that are not forbidden to sellers in other sections of the Act, and, what is pertinent in this case, a buyer is not precluded from inducing a lower price based on cost differences that would provide the seller with a defense. This reading is, indeed, not seriously disputed by the parties. For we are not dealing simply with a 'discrimination in price' ”

“ But it does not follow that respondents may never absorb freight when their factory price plus actual freight is higher than their competitors' price, or that sellers, by so doing, may not maintain a uniform delivered price at all points of delivery, for in that event there is no discrimination in price.
Congress has left to the Commission the determination of fact in each case whether the person, charged with making discriminatory prices, acted in good faith to meet a competitor's equally low prices. ”

“ Plainly enough, under this statement, a discrimination in price may mean either a price differential in sales to two competitors, or a price differential in sales to two competitors which, because of an absence of cost or other justification, puts the unfavored competitor at a disadvantage. ”

“ Because of experience under the Clayton Act, Congress refused to continue its competitive price proviso. Yet adoption of petitioner's position would permit a seller of nationally distributed goods to discriminate in favor of large chain retailers, for the seller could give to the large retailer a price lower than that charged to small retailers, and could then completely justify its discrimination by showing that the large retailer had first obtained the same low price from a local low-cost producer of competitive goods. ”

“ To deny effect to that discrimination in a suit by the vendor does not require that a court hold void the entire transaction and permit the buyer to retain the goods free of any charge. It requires only that the court refuse to permit the recovery of that part of the purchase price which discriminates against the buyer who purchased the same kind and quality of goods as his competitors. ”

“ Neither the Act nor the Order protects anyone from lawful competition, nor is it essential that they should do so. [31] We do not find an unreasonable discrimination in excepting producers' cooperatives from the requirement to pay a uniform price.
B. Unpriced Milk. Another discrimination is said to reside in that part of the Order which limits minimum prices to milk 'sold in the marketing area or which passes through a plant in the marketing area.' Other milk, though from the same production area, is 'unpriced milk' and does not figure in the computation of the uniform price. ”

“ Morton Salt Co., 334 U.S. 37, 45, 68 S.Ct. 822, 827, 92 L.Ed. 1196, the Court said, 'Congress meant by using the words 'discrimination in price' in § 2 that in a case involving competitive injury between a seller's customers the Commission need only prove that a seller had charged one purchaser a higher price for like goods than he had charged one or more of the purchaser's competitors.' [15] The commentators have generally shared this view. ”

“ It is argued that this conclusion results in a discrimination against a manufacturer who indulges in his own advertising and selling campaigns in favor of one whose products are advertised by his customers and that Congress could not have intended such a discrimination. But this discrimination, to the extent that it may exist, is an unavoidable consequence of an excise tax based on the wholesale selling price. Such, cost factors as labor, materials and advertising naturally vary among competing manufacturers ”

“ A discrimination in violation of this bill is in practical effect a commercial bribe to lure the business of the favored customer away from the competitor, and if one bribe were permitted to justify another the bill would be futile to achieve its plainly intended purposes.' 80 Cong.Rec. 9418. (Italics added.) When we let Standard classify a 'retailer' as a 'jobber' and grant a discriminatory price pursuant to arbitrary requirements merely because a competitor employs the same system, [2] we make this provision of the Robinson-Patman Act ineffective. ”

“ In the Corn Products Refining Company case we hold that this price system of respondents' competitor in part involves unlawful price discriminations, to the extent that freight differentials enter into the computation of price, as a result of the selection as a basing point of a place distant from the point of production and shipment. Thus it is the contention that a seller may justify a basing point delivered price system, which is otherwise outlawed by § 2, because other competitors are in part violating the law by maintaining a like system. ”

“ The only other section of the Act is § 3, with which we are concerned here. It prohibits three kinds of trade practices, (a) general price discriminations, (b) geographical price discriminations, and (c) selling 'at unreasonably low prices for the purpose of destroying competition or eliminating a competitor.' The important thing to note is that this section, in contrast to § 1 of the Robinson-Patman Act, does not on its face amend the Clayton Act. Further, § 3 contains only penal sanctions for violation of it provisions ”

“ If the strong presumption of regularity and rationality of legislative decisionmaking must give way in the face of evidence that race has played a significant part in a legislative decision, I simply cannot believe that Congress intended Title VII to accord more deference to a private employer in the face of evidence that its decisional process has been substantially infected by discrimination. ”