Why Most Large Retailers, Wholesalers and Manufacturers Are Violating the RPA and Discriminating against Small Retailers

Initial Publication: 3/1/98; Last Update: 3/1/98

It sounds unbelievable that most large retailers, wholesalers and manufacturers are conducting their businesses in such a way as to make them liable under the RPA for tens or hundreds of millions of dollars in damages (or more) to the nation's small businesses and others (purchasers and small towns and villages).

One wonders how this could come about. Let me try to count the ways:

  1. The U.S. Justice Department has a policy of refusing to consider any enforcement of the statute, something which the courts have even stated in one or more published opinions.
  2. The Federal Trade Commission has done virtually nothing in recent years to stop unlawful price and service discrimination, unlike the the activist FTC of years earlier under administrations more favorable to small business.
  3. The RPA cannot be enforced in the state courts, because federal lawmakers gave exclusive jurisdiction to the federal courts to enforce all antitrust statutes, including the RPA.
  4. The federal courts are aware that the two agencies of the federal government charged with the duty of enforcing the statute are not doing so.
  5. The highest courts in the United States have apparently come to the conclusion that antitrust law enforcement is not in the best interests of the United States and therefore are too often willing to find reasons why the antitrust statutes do not apply even when clearly violated under standards applied years ago.
  6. Lower court judges are aware that the higher courts do not seem to enthusiastic about antitrust law enforcement and in some instances may be influenced by this when deciding RPA cases [whereas, it should be noted there are other judges who do say that as long as the RPA is the law of the land they will enforce it].
  7. The ever-increasing concentration of the U.S. and worldwide economy creates more and more political power opposing any meaningful enforcement of the nation's antitrust laws, including the RPA.
  8. Antitrust actions are time-consuming and costly for someone, whether the plaintiff who pays attorneys by the hour for their work, or for the attorneys who do their work on a contingent-fee basis, or a combination of both, so that the reduced effectiveness of enforcement in the eyes of plaintiffs makes them less willing to go into court.
  9. Court delays and costs applicable to all litigation act as a deterrent as well.
  10. IMPORTANTLY, the defendant ordinarily maximizes it unlawful profits by extending the length of the litigation, believing (as is often true) that the amount it will pay in attorneys' fees, costs and damages, if any, will amount to less than interest on the amount of actual damages suffered by the plaintiff (which is a rough measure of the profitability of the unlawful activities to to the defendant); thus, as long as it is profitable to delay litigation, you can expect that most litigation will be delayed, so that the defendant can maximize its overall profits in spite of the lawsuit.
  11. ANOTHER IMPORTANTLY, the large retailers, wholesalers and manufacturers who engage in unlawful price and service discrimination do so to maximize their profits.
  12. Such violators (usually those with market power derived from mergers and acquisitions, patents or strong trade marks) find it more profitable to exploit their market fully by charging each customer what the market (i.e., customer) will pay, which results in large retail customers having the market power to demand and get the lowest prices and the small retailer having to pay the highest prices, the very thing which the RPA was enacted to stop.
  13. The violators are doing no more than exploiting their practical monopolies in each and every subpart of their market, to extract the greatest profitability for them in spite of the RPA, knowing that that the total costs of an occasional suit will be far less that the profits they derive in continued, massive violation of the RPA.
  14. The violators know more than the victims about the economic consequences, which means that until the victims of unlawful price and service discrimination start enforcing their rights in the federal courts (the only courts which will entertain antitrust lawsuits) in sufficient numbers, there is no economic incentive for a profit-driven business to change its business practices. They will continue to defend and pay damages, even millions of dollars to a single plaintiff, to avoid losing the hundreds of millions of dollars they earn each year, unlawfully, through systematic violation of the RPA.
  15. Victims must first realize that the RPA is similar to a savings account for them (increasing each time they make payments for goods or other "commodities" at unlawfully high prices. Until the victims realize they own this savings account (in the form of a valuable claim for treble damages) which they can go back to from time to time to make withdrawals, often in the millions of dollars, the violators will continue to violate the law, and permit the few smart victims to make their million-dollar withdrawals.
  16. Most attorneys are not commercial litigators and do not go into the nation's many thousands of courts to litigate commercial disputes; and far fewer attorneys are licensed to go into the nation's 100 some odd United States District Courts.
  17. The lawyers who go into federal courts generally charge more than lawyers who do not so practice before the federal courts.
  18. Perhaps clients who are being advised by lawyers who do not go into federal courts are discouraged by this fact alone, from retaining different lawyers to file a suit in federal court.
  19. Perhaps lawyers who don't go into federal court are reluctant to turn over their clients to lawyers who do go into federal court.
  20. Perhaps the antitrust statutes should be changed to permit RPA (and other) antitrust litigation to be brought in the state courts.
  21. Perhaps plaintiffs are afraid to sue because of fear that they will no longer be able to obtain supplies of the goods at any price; that the defendant will thereafter refuse to deal with them. An answer to this is to sue the superstore or category-killer competitor instead of the monopolizing manufacturer or its wholesaler.

Anyway, these are some of my thoughts on the subject. I see no reason why legitimate RPA claims of a prospective plaintiff should not be commenced. The 9000-x-1-day's-damages rule 9000 x 1 Day's Damages Rule is a very good reason for a small-business (disfavored-purchaser) victim to bring suit, and for an attorney to maintain the action on a contingent-fee basis to a major extent, at least.

Every time the disfavored purchaser pays the inflated invoice, the bank account is enhanced, not by the amount of the discrimination or difference in price, and not by three times the amount of the difference, but by three times the amount of the gross profits (after direct expenses) lost by the victim as a result of the RPA violation. How to Calculate Your RPA Damages.

Of course, the bank account has withdrawals at work. At the end of 4 years from the date of the first discriminatory purchase, the plaintiff's savings account starts losing these theoretical deposits each day, something like the violator taking the accrued savings back as a withdrawal because of the plaintiff victim's failure to commence suit within the 4-year period under the applicable statute of limitations.

Any person smart enough to engage in business should be smart enough to recognize that periodic lawsuits to recover for overcharge damages would maximize the victim's profits.

Of course, there always lurks around the issue of whether the defendants would continue to do business with you if you kept suing the defendant. And then, if you can't stay in business because of the price discrimination, what do you care?

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Copyright © 1998 by Carl E. Person