Price Discrimination Reporter - a FREE Publication for Small Businesses Competing with Superstores


(Published by Attorney Carl E. Person, 325 W. 45th St., New York NY 10036)

for information call 212-307-4444 or fax 212-307-0247

How to Calculate Your Business Damages Caused by Price Discrimination in Violation of the Robinson-Patman Act

The federal Robinson-Patman Act (RPA) does not permit damages for unlawful price discrimination to be proven the way most retailers would view the amount of their losses. Most retailers would say, in their opinion, that damages should be calculate d by the difference in price between what the disfavored retailer paid and what the favored retailer paid to the same wholesaler or manufacturer for the same goods, and then just multiply the difference in cost by the number of units purchas ed by the disfavored retailer. Thus, most retailers would assume that if they have paid $1 more per unit than their competitor and did so for 1,000,000 units, that the retailers' damages would be $1,000,000. This is not how RPA damages are to be calculated.

The Correct Way to Calculate Damages Is to Calculate Your Lost Profits Caused by the Price Discrimination; Then Treble Your Damages and Add Attorneys' Fees

Instead, damages are to be calculated ordinarily by looking at the losses the disfavored retailer has sustained by reason of the price discrimination. For example, if you as the disfavored retailer can attribute declining sales and declining profits to t he higher price you are paying for goods (higher than your competitor is paying at the same time for the same goods), then you add up your losses for the four year period prior to the filing of your lawsuit, and then treble that total amount, and add an a mount for legal fees. Also, you would add to these damages the damages sustained by your business during the course of the lawsuit (say 2 years), and ordinarily you would make a claim for so many years (say 4 to 6 years or so) of future damages beyond th e date of the jury verdict.

Damages for a Total of 10 Years Is Not Unrealistic in Many Robinson-Patman Act Cases

The total amount of damages typically could be for a period of say ten years (4 years prior to filing; 2 years of litigation; plus 4 years of post-verdict damages), which total amount would be trebled (and attorneys' fees then added. [I should add that th e 4-year period after verdict is more difficult to obtain than the damages which have actually occurred.]

Loss of $300,000 in Annual Sales Can Translate into Overall Recovery of $4,250,000 - Less of Course If Your Case Is Settled

Thus, if you can show that a 20% lower price to your competitors caused your to lose $300,000 in sales per year (on the average) for each of the 4 years prior to the filing of your action under the RPA plus 2 years during litigation, and that you suffered pre-tax losses of $120,000 (on the average) for each of such 6 years, plus 4 years post-verdict, then your losses (before trebling) would be $1,200,000, or $3,600,000 after trebling, and an estimated $4,250,000 when legal fees are added (which are not tr ebled, I should add).

Of course, if your case is settled without going to trial, or without going through the appellate process (and any retrials), you are probably talking about a lower recovery.

Federal Trade Commission Guidelines Are Helpful in Understanding What Practices by Manufacturers and Wholesalers Are Illegal

The FTC 1995 Guides are very helpful in spelling out the retailers' rights under the RPA. Please call me if you want me to mail you a complimentary copy or if you have any questions about the RPA.

Additional Information about Robinson-Patman Act Problems in the NYC Area Are Available Upon Request

NYC (as with other parts of the country) is suffering from widespread price discrimination which is making it difficult for mom and pop (i.e., independent) stores to remain in business. Additional reports on price discrimination problems in NYC are avail able upon request. Just call attorney Carl E. Person, 212-307-4444. Carl E. Person is a lawyer for small businesses in the NYC area and elsewhere which are suing manufacturers and/or wholesalers for violations of the RPA.

Information about Price Discrimination Wanted

If you have information about discriminatory pricing in any industry in New York City, please call Carl E. Person, 212-307-4444.

Carl E. Person, Editor

Copyright © 1996 and 1997 by Carl E. Person