News, Developments and Practical Advice from Antitrust Leaders

Antitrust Advocate

Home | Antitrust Advocate

<img class="alignright wp-image-1635 size-medium" src="https://antitrustadvocate.bakerhostetlerblogs.com/wp-content/uploads/sites/14/2015/09/Pills_Money_iStock_000001346498Large-300x200.jpg" alt="Pills_Money_iStock_000001346498Large" width="300" height="200" />Described as the Rodney Dangerfield of the antitrust laws, the Robinson-Patman Act—which prohibits anticompetitive price discrimination—gets no respect. The Justice Department and the Federal Trade Commission unapologetically refuse to enforce the Act, and the FTC has called for its repeal. Courts often treat the Act with undisguised disdain; one court (quoting a law review article) said that “[n]o one, it appears, dwells longer than necessary in the land of Robinson-Patman.” The Act’s continued vitality derives from private antitrust cases, usually brought by customers who allege that a supplier has charged them higher prices than their competitors.

The antitrust laws welcome lower prices as the result of economic efficiency. The Robinson-Patman Act, however, discourages selective discounting in the name of fairness rather than efficiency. The antitrust laws seek to protect market-wide competition, not necessarily individual competitors. The Robinson-Patman Act, however, operates like a business tort law, and while it purports to protect competitive markets, it often is summoned to aid particular businesses.

The United States Court of Appeals for the Second Circuit recently affirmed summary judgment that ended a Robinson-Patman Act case that had been pending since the early 1990s. The case was brought by a number of independent pharmacies that had opted out of a class action against drug manufacturers, alleging that the manufacturers had charged the independent pharmacies higher prices for their drugs than for the same drugs sold to staff-model health maintenance organizations and pharmacy benefit managers.

A mainstay of Robinson-Patman Act litigation is the presumption that if price discrimination has been substantial and long-lasting, a court may presume injury to competition and therefore that a violation of the Act has been proved. That presumption is not conclusive, however. A defendant may show that even if price discrimination occurred, the higher prices paid by the disfavored purchasers did not actually deprive them of customers—a difficult but not impossible task.

In this case, the trial court matched a sample of discriminatory sales with their actual impact on the disfavored pharmacies, and concluded that the pharmacies’ losses of customers to favored buyers from the discrimination were trivial. That proof broke the connection between the price discrimination and competitive injury, and caused the trial court to conclude (and the appeals court to affirm) that the Act had not been violated.

Vindication of the defendants must have been bittersweet, however, after decades of litigation and expense. As long as Congress chooses to leave the Act on the books, suppliers have to pay attention to its requirements as part of a well-designed antitrust compliance program. The path to a successful price discrimination claim may be steep and rocky, but a disfavored customer armed with the right set of facts can still traverse it.

Discriminating Tastes: Court Puts Long-running Robinson-Patman Act Case To Rest