Robinson-Patman Act

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The Robinson–Patman Act of 1936 (or Anti-Price Discrimination Act, Pub. L. No. 74-692, 49 Stat. 1526 (codified at 15 U.S.C. § 13)) is a United States federal law that prohibits anticompetitive practices by producers, specifically price discrimination. It grew out of practices in which chain stores were allowed to purchase goods at lower prices than other retailers. An amendment to the Clayton Antitrust Act, it prevented unfair price discrimination for the first time, by ensuring that the seller offer the same price terms to customers at a given level of trade. The Act provided for criminal penalties, but contained a specific exemption for "cooperative associations".

In general, the Act prohibits sales that discriminate in price on the sale of goods to equally-situated distributors when the effect of such sales is to reduce competition. Price means net price and includes all compensation paid. The seller may not throw in additional goods or services. Injured parties or the US government may bring an action under the Act.

Liability under section 2(a) of the Act (with criminal sanctions) may arise on sales that involve:

  • discrimination in price;
  • on at least 2 consummated sales;
  • from the same seller;
  • to 2 different purchasers;
  • sales must cross state lines;
  • sales must be contemporaneous;
  • of "commodities" of like grade and quality;
  • sold for "use, consumption, or resale" within the United States; and
  • the effect may be "substantially to lessen competition or tend to create a monopoly in any line of commerce."

"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."

Defenses to the Act include cost justification and matching the price of a competitor. In practice, the "harm to competition" requirement often is the make-or-break point.

Sales to Military Exchanges and Commissaries are exempt from the act.

The United States Department of Justice and the Federal Trade Commission have joint responsibilities for enforcement of the antitrust laws. Though the FTC has some overlapping responsibilities with the Department of Justice, and although the Robinson Patman Act is an amendment to the Clayton Act, the Robinson Patman act is not widely considered to be in the core area of the antitrust laws. The FTC is active in enforcement of the Robinson Patman Act and the Department of Justice is not.

This act is one in a category of regulatory enactments which attempt to control price discriminations—or different prices for identical products. Similar prohibitions on discrimination have been found in specialized regulatory systems, such as those relating to transportation and communications.

Such statutes typically have exceptions, or restrictions on range of application, similar to those set out in the Robinson Patman Act, to allow for differences in costs of output and distribution, and differences in the degree of competition facing a vendor.

In the late 1960s, in response to industry pressure, federal enforcement of the Robinson-Patman Act reduced considerably.[1] Since then, enforcement of the law has been driven largely by private action of individual plaintiffs. In the mid-1970s, there was an unsuccessful attempt to repeal the Act. On the other hand, over 20 states have price discrimination statutes similar to Robinson-Patman.[2]

Neoliberal critics have more recently claimed that reliance on competition is preferable to police such differences in customer treatment than to rely on detailed government intervention in the mechanics of pricing and service or product delivery, with all the costs of practice detection and policing which such intervention entails.

In this so-called 'gale of creative destruction', the possibilities of above average returns generates technical and organizational innovation. In theory, market forces—the responses of potential competitors—then assure widespread dissemination of the consumer surplus generated by such innovation.

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