LAWMALL
.COM

Text of Robinson-Patman Act

Email This Section to Interested Businesses, Associates, Friends or Relatives

The Robinson-Patman Act, a federal antitrust statute enacted in 1936, has various sections. This website deals mainly with Section 2(d) and 2(e). Each of the sections of the Robinson-Patman Act is available in my extensive Robinson-Patman Act Website, at Text of the Robinson-Patman Act.

There are three types of private actions for monetary recovery under the Robinson-Patman Act.

2(a)/2(f) Price Discrimination

The main purpose of the statute was to eliminate price discrimination, pursuant to which major retailers were able to obtain substantially lower prices per unit from manufacturers far beyond any per-unit savings enjoyed by the manufacturer because of the larger volume involved in the purchases by the major retailer. Section 2(a) prohibited the manufacturer from engaging in such price discrimination, and the favored purchaser was also prohibited from inducing or knowingly receiving the discriminatory price by Section 2(f). In a 2(f) action against a major retailer, the plaintiff has a significantly more difficult case to prove because at the outset the plaintiff has to allege and prove liability of the manufacturer under Section 2(a) and that the manufacturer has no defenses (which in a simple 2a case the manufacturer would have the burden to prove). In addition to this increased burden of the plaintiff, the plaintiff then has to prove that the major retailer defendant either induced the discriminatory price or knowingly received the discriminatory price. A claim for monetary recovery can only be brought by a direct purchaser from the same manufacturer or supplier as the favored major retailer is buying from.

2(d)/2(e) Discrimination in Advertising and Promotional Payments or in Services

Section 2(d) and 2(e) prohibit a manufacturer or supplier from providing various types of advertising and promotional fees, allowances or other payments, or services, to a major retailer without providing a proportionate program (one of proportionate value, even if the program is entirely different) to competitors of the favored customer. Section 2(d)/2(e) claims can be brought by direct or indirect purchasers, and for indirect purchasers (usually a retailer or jobber buying from a wholesaler) may be the only claim for monetary relief against a manufacturer that is giving favorable pricing in a variety of ways to its major-retailer customers. The indirect purchaser has an interest in proving that any discriminatory payment or service to a competing major retailer is part of an advertising and promotional program, and that no part (or very few parts) of the discriminatory payments and services are a discriminatory price under Section 2(a).

2(g) Action for Commercial Bribery

Although Section 2(g) sounds off the wall, it is there and should be used whenever appropriate. Section 2(g) prohibits a manufacturer from paying something of value to a customer's employees (to bribe the employee to purchase from the manufacturer) without the knowledge or consent of purchaser. An example of a legal "commercial bribe" exists in the tire industry, where various tire manufacturers pay a TIFF or fee (often directly into a bank or credit card account of the customer's tire salesman), to encourage the salesman to sell the manufacturer's tire rather than some other manufacturer's tire. The salesman's employer knows about these payments, which makes the payments lawful and not in violation of Section 2(g) of the Robinson-Patman Act. HOWEVER, this does not mean that such payments are not illegal under some other statute, one protecting consumers, because the consumer is induced to buy the recommended tire for reasons other than quality, price and service. The payment by the manufacturer to the customer's salesman get the salesman to recommend the manufacturer's tire when they are more costly, with less quality, and have a lesser warranty, for example. When a 2(g) claim can be made, it is extremely valuable because it does not have to be proven with the same elaborate rituals that are required of Section 2(a)/2(f) claims, and the damages are trebled together with an award of legal fees.