The Robinson–Patman Act of 1936 (or Anti-Price Discrimination Act, Pub. L. No. 74-692, 49 Stat. 1526 (codified at 15 U.S.C. § 13)) is a United States federal law that prohibits anticompetitive practices by producers, specifically price discrimination. It was designed to protect small retail shops against competition from chain stores by fixing a minimum price for retail products.
Contents
The law grew out of practices in which chain stores were allowed to purchase goods at lower prices than other retailers. An amendment to the Clayton Antitrust Act, it prevented unfair price discrimination for the first time, by requiring that the seller offer the same price terms to customers at a given level of trade. The Act provided for criminal penalties, but contained a specific exemption for "cooperative associations".
Contents
In general, the Act prohibits sales that discriminate in price on the sale of goods to equally-situated distributors when the effect of such sales is to reduce competition. Price means net price and includes all compensation paid. The seller may not throw in additional goods or services. Injured parties or the US government may bring an action under the Act.
Liability under section 2(a) of the Act (with criminal sanctions) may arise on sales that involve:
"It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section."
Defenses to the Act include cost justification and matching the price of a competitor. In practice, the "harm to competition" requirement often is the make-or-break point.
Sales to Military Exchanges and Commissaries are exempt from the act.
The United States Department of Justice and the Federal Trade Commission have joint responsibilities for enforcement of the antitrust laws. Though the FTC has some overlapping responsibilities with the Department of Justice, and although the Robinson–Patman Act is an amendment to the Clayton Act, the Robinson–Patman Act is not widely considered to be in the core area of the antitrust laws. The FTC is active in enforcement of the Robinson–Patman Act and the Department of Justice is not.
This act is one in a category of regulatory enactments which attempt to control price discriminations—or different prices for identical products. Similar prohibitions on discrimination have been found in specialized regulatory systems, such as those relating to transportation and communications.
Such statutes typically have exceptions, or restrictions on range of application, similar to those set out in the Robinson–Patman Act, to allow for differences in costs of output and distribution, and differences in the degree of competition facing a vendor.
Early enforcement of the Robinson–Patman Act was difficult, and even today continues to be widely unenforced. This was in part because of its complexity, which limited consumers’ ability to understand it. Even for the consumers who did have the education in antitrust law needed to understand the Robinson–Patman Act, it was unclear how its enforcement could benefit them.
In the late 1960s, in response to industry pressure, federal enforcement of the Robinson–Patman Act ceased for several years. Enforcement of the law was driven largely by private action of individual plaintiffs. This most likely led to a decrease in enforcement because of the difficulty individuals tend to have understanding the Act. In the mid-1970s, there was an unsuccessful attempt to repeal the Act. The Federal Trade Commission revived its use of the Act in the late 1980s, alleging discriminatory pricing against bookstores by publishers, but enforcement has declined again since the 1990s. On the other hand, over 20 states have price discrimination statutes similar to Robinson–Patman.