Many Trade Associations Are Indifferent or Adverse

Last Update: October 24, 1999

Trade associations can be effective in help their members enforce their rights and should be considered the first place which members should turn to for help in fighting industry-wide RPA violations. But trade associations can be a mixed blessing.

This article is being written with great care not to malign the excellent trade associations and their leaders, attorneys, advisors and members, but at the same time to point out that not all trade associations are pulling for all of their members. There often are conflicts among the members themselves which prevent trade associations from providing the kind of assistance needed by their smaller members.

The problem often develops that a trade association is dominated by the more successful, larger members, who have little incentive in doing anything to change that success. Accordingly, the association leadership may make noises about price discrimination and other unfair practices but not want to do anything about the situation, for fear of rocking the boat or even losing the favorable prices, discounts, fees and allowances which they are secretly, or not so secretly, enjoying.

One major thing to consider about trade associations in the area of RPA litigation is the rule of law which states that RPA actions cannot be maintained as a class action. This means that for any meaningful RPA lawsuit to be commenced, it must be commenced by the specific trade association members in their own name, and not hiding under the name of the trade association.

Yes, it is true that trade associations have been given standing to maintain certain types of Robinson-Patman Act lawsuits, but this is for future injunctive relief to try to stop the price discrimination or service discrimination in the future, but there would be no recovery by either the trade association or its members for the damages caused to the members in prior years or during the time of the association's lawsuit.

In one instance, a trade association sued some manufacturers for years, and obtained injunctive relief of benefit to its members prohibiting further price discrimination. Whether the manufacturers will abide by this injunction remains to be seen. Meanwhile, years have passed by, and the failure of any trade association members to sue for damages for themselves has resulted in a loss of damages to them for the years they have not sued. You must remember that, ordinarily, the period for determining an antitrust plaintiff's damages is for the four-year period prior to the date of the filing of the plaintiff's complaint. You are urged to file suit to protect yourself from losing these years of damages. Meanwhile, the industry has become more concentrated during the period of the trade association litigation, and the trade association has lost many of its members.

The failure of trade association members to sue is par for the course, because there are very few RPA suits being commenced, whether by members or non-members of trade associations. In another option in the RPA menu, you will find a discussion of all reported cases during 1998 to the present which involve the Robinson-Patman Act, for you to get a feel for what is happening. Bear in mind, that many RPA cases are settled or adjudicated at the District Court level without any reported judicial decisions.

Every day which passes without the filing of an RPA lawsuit is money which the injured business is probably throwing away. The 4-year statute of limitations (prior to the date of filing of the RPA lawsuit) eliminates all damages which occurred earlier than the 4-year period. It would seem to be a good business practice to sue earlier rather than later or not at all, assuming the business has a valid RPA claim.

When trade associations are representing major members of the industry, there is the probability that the major members are obtaining unlawful discounts, fees and allowances which practices give them no incentive to sue at all, and much incentive to be discouraging about the commencement of any suit.

Any member of a trade association should realistically assess the interests of the leadership to determine whether the association and its leadership is truly and fairly representing the injured members, or is only functioning as an agent of the large manufacturers to block any RPA lawsuits.

A single injured retailer can maintain its own RPA lawsuit, and does not need the advice or assistance of the trade association, especially when it is trying to be neutral or is trying to stop any RPA litigation to prevent the loss of price and service discrimination benefits which the larger association members are receiving.

Perhaps the best thing to do, if you are a small member of a trade association, is to speak privately with some of the leaders to determine what their interest is in seeking enforcement of the Robinson-Patman Act. If they have little or no interest, you should strike out on your own, and perhaps get one or more small members to join with you in making a claim. Perhaps you can encourage the leadership of the trade association to terminate memberships of the largest members who are violating the RPA.

For those of you who are thinking about the problem, you should understand that you do not have to sue your competitors, even if they are obtaining unlawful discounts, fees and allowances. The manufacturer or wholesaler which pays the unlawful amounts is liable without or without the presence of the favored competitors as a party defendant in the lawsuit.

On the other hand, it is sometimes best to sue the major (superstore) competitors, especially when there are no dominant manufacturers. In such a case, the needed relief would come from suing the major competing retailers for ind ucing the numerous small competing manufacturers to pay the unlawful discounts, fees and allowances to the superstore retailers and not to the competing smaller retailers.

This strategy would allow you to maintain better relationships with your suppliers and the manufacturers, which is an important point for you to remember.

Finally, the topic of different prices to different customers raises the issue of whether a member who pays a higher price than a superstore can sue if such member does pay less than some of the other competitors. Can You Sue If You Are Guilty of Paying a Lower Price than 75% of Your Competitors, but Paying a Higher Price than Your Superstore Competitors?

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