Robinson-Patman Act

Citation: Robinson-Patman Act, 15 U.S.C. §§13, 13a, 13b, 21a.

Overview
The Robinson-Patman Act makes it unlawful, with certain exceptions, to knowingly sell goods “in commerce,” for use or sale within the United States, at differing prices to contemporaneous buyers of those goods. The “in commerce” language of the Act has been held to mean that the interstate commerce requirement is satisfied only when at least one of the two (or more) sales is made “in the stream of commerce” &mhdash; i.e., across state lines. The Act is the exception to the notion that the antitrust laws protect competition, not competitors in that it generally prohibits precisely the kind of price differentiation which would normally be thought to result from vigorous competition.

Defenses and Exception
Allegations of Robinson-Patman Acrt violations may be defended by asserting and proving either that the differing prices reflect only the cost of the seller's manufacture or delivery (the “cost justification” defense); or, that the seller is attempting either (1) to meet the competition of another seller, or (2) enable the buyer to meet the competition of a competitor of the buyer ("meeting competition” defense). In addition, there is also a broad exception to the prohibition against price discrimination when one of the sales is made to any of certain entities listed in the Nonprofit Institutions Act, 15 U.S.C. §13c. and the goods are purchased for the institution’s “own use”; nonprofits may not, however, take advantage of their privileged Robinson-Patman Act status to purchase commodities at favorable prices in order to compete commercially with entities not so entitled. Further, lower courts have found that health maintenance organizations (HMOs) qualify as organizations entitled to take advantage of the Nonprofit Institutions Act, on the theory that they perform services that traditionally have been considered as “charitable”; the Supreme Court has not had occasion to rule on the status of HMOs.

Remedies
Disfavored purchasers who prove a Robinson-Patman Act violation are not, however, automatically entitled to damages on that account. The Supreme Court has held that since, technically, Robinson-Patman Acr prohibits any price differential whose effect “may be substantially to lessen competition," (emphasis added), not all proven Robinson-Patman act violations actually damage those who prove them: “[t]o recover treble damages . . . a plaintiff must . . . make some showing of actual injury attributable to something the antitrust laws were designed to prevent” &mdash; i.e., a causal connection between the violation and the injury allegedly suffered.

Attempts to amend/repeal the Act
Although there have been some attempts at amending or repealing the Act, none has been successful. The Antitrust Division of the Department of Justice has always believed the statute to be inflationary; that it artificially deprives consumers of the advantages of the lower prices that are the aim of the antitrust laws; and that, inter alia, it “reduces pricing flexibility [and] discourages the development of efficient distribution systems.” Small businesses, and others, have contended, on the other hand, that their survival depends on the prevention of unjustified price differentials.