Some retailers have asked whether they can bring suit if they are knowingly paying to one or more of their suppliers (or manufacturers) a lower price per unit than some of their smaller retail competitors are paying. The retailers asking this question are being hurt by the lower prices charged to superstores, but recognize that they in turn are hurting retailers smaller than them.
They wonder whether they should sue for fear that (i) the defendants in such suit would have a defense against the suing retailer based upon this situation, which would probably be uncovered during discovery; and (ii) whether the suing retailer would be liable to the smaller, disfavored retailers in any way.
The answer to this is determined from logic first, and then from looking at the statute (RPA) and then the case law.
Logically. From a logical standpoint, it is inconceivable that there would be a complete defense for a superstore or manufacturer if it were discovered that the suing retailer was not paying the highest price of all competing retailers purchasing from the defendant superstores and/or manufacturers/suppliers.
If this were a defense, then all liability under the RPA could be obviated by the simple expedient of selling to one competing retailer at the highest price (and selling as little as possible, to reduce any liability to that retailer), and then selling to all other retailers at lower prices, but discriminating in such sales anyway the manufacturers/suppliers chose. The RPA could not be construed by the courts to permit this to take place.
The lower price paid by the plaintiff would be a factor in determining whether the plaintiff was in fact injured by the lower prices paid by the competing superstores, and the extent of the plaintiff's damages. But it could not be a bar (defense) to the RPA antitrust action.
There would be no practical liability by the plaintiff retailer to the smaller competitors, because these retailers would choose to sue the superstores, and possibly the manufacturers, and certainly not the medium size competitors such as the plaintiff we hypothesize.
The Statute - RPA. The RPA does not provide any specific defense to a defendant who is violating the statute that it does not have to abide by the statute (or have liability under the statute) if it is able to find one competitor of a retailer plaintiff to whom the defendant is selling the same goods at a higher price. Thus, there would be no defense in the statute as a bar to any action by the plaintiff even if the plaintiff is receiving (or especially, knowingly receiving) a higher discount than one or more (smaller) competing retailers.
Of course, there would be no claim at all if the plaintiff retailer is not itself paying more per unit than at least one competitor, presumably one or more superstores which are receiving the most favorable price of all competing retailers.
Judicial Decisions.There is a doctrine in law called the "unclean hands" doctrine in which a plaintiff is denied any recovery because it comes into court with unclean hands (i.e., being guilty of some illegal or related misconduct), and the doctrine says (when the doctrine applies at all) that the court will leave the wrongdoers where they are and deny relief to them all in such a situation.
This unclean hands doctrine has repeatedly been held not to apply in antitrust cases. The importance of antitrust law enforcement for the nation far exceeds any benefit from depriving a plaintiff recovery because of some pecadillo, such as obtaining a more favorable price than smaller competitors. The defendant manufacturer is not excused from its liability to all disfavored purchasers merely because some of the disfavored purchasers were disfavored more or less than others.
Empire Rayon Yard Co. v. American Viscose Corp., 354 F.2d 182, 1965 U.S. App. LEXIS 3670, 1965 Trade Cas. (CCH) P71.632 (2nd Cir. 1965) involved a plaintiff yarn converter/jobber against a yarn manufacturers (American Viscose) which was refusing to give a jobber/wholesale discount to the plaintiff while giving such discount to two competitors of the plaintiff. The plaintiff was already buying yarn on a wholesale basis from another yarn manufacturer (American Enka), and this was claimed by the defendant to be "unclean hands" of the plaintiff. The district court bought that argument and dismissed the antitrust case, but the decision was reversed by the United States Court of Appeals for the Second Circuit, which stated:
"We are cited no authority supporting defendants' claim that plaintiff's complaint, because of plaintiff's arrangements with American Enka, is barred by the doctrine of unclean hands, and we find none. Plaintiff's authorities support its position that the doctrine is inapplicable in this kind of case."
The United States Supreme Court itself held, in Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 140, 20 L. Ed. 2d 982, 88 S. Ct. 1981 (1968), that a plaintiff is not deprived of the right to bring an antitrust suit if
"it is shown that the plaintiff did not aggressively support and further the monopolistic scheme . . . his understandable effort to make the best of a bad situation should not be a ground for completely denying him the right to recover what the antitrust acts ["i.e.", statutes] give him.
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"When those with market power and leverage persuade, coerce, or influence others to cooperate in an illegal combination to their damage, allowing recovery to the latter is wholly consistent with the purpose of Section 4 [of the Clayton Act], 15 U.S.C. Section 15, since it will deter those most likely to be responsible for organizing the forbidden schemes."
So, in answer to the initial question, there is no defense merely because a plaintiff retailer is aware that it is getting a better price than some of its competitors. If superstores are getting a better price than the plaintiff, and if this is injuring the plaintiff, it has a right to recover damages for the defendant's violation of the RPA. The prices paid by the plaintiff will be involved in the issue of whether the plaintiff was damaged and, if so, the extent of the plaintiff's damages.
This issue of the amount of damages exists as the major issue in most RPA litigation, and the prices paid by the plaintiff will generally be measured against the prices paid by the superstore competitors which the plaintiff alleges are hurting the plaintiff's business. The issue that the plaintiff was paying less than a small competing store across the street can be interpreted to show that the plaintiff was making more sales and (gross) profits than it would otherwise, which reduces the plaintiff's damages automatically without any need for explanation (or defense).
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