Robinson-Patman Act

The Robinson-Patman Act of 1935, as amended, is found in Section 2 of the CLAYTON ANTITRUST ACT. Adopted in the middle of the GREAT DEPRESSION, Robinson-Patman was intended to protect small retailers from the growing number of price-cutting chain stores. In that basic purpose it clearly failed, yet the act remains on the books and is still used by small businesses to challenge chain-store practices. The Robinson-Patman Act prohibits seller PRICE DISCRIMINATION in goods (not SERVICES) that may tend to create a MONOPOLY or substantially lessen COMPETITION. It is also unlawful to knowingly induce or receive an illegal discriminatory price (buyer LIABILITY). However, volume discounts and discounts granted to meet a competitor’s price are lawful. Price discrimination is lawful if the differences are justifiable by differences in the cost of manufacturing, sale, or delivery of goods. These “defenses” for price discrimination are often invoked in legal battles over how cost differences were measured. The Robinson-Patman Act additionally prohibits discriminatory payments by sellers for services or facilities furnished by customers or discriminatory furnishing of services or facilities to purchasers. Discriminatory ADVERTISING allowances, for example, could violate these provisions. Victims of Robinson-Patman Act offenses often sue in federal court for “treble damages,” an automatic trebling of their actual DAMAGES. The remedy of treble damages found in the Clayton Act is a powerful incentive to file such suits.