Many state legislatures have statutes that parallel the price discrimination provisions of the RPA.
The Federal Trade Commission (FTC) recently filed the first government lawsuit for price discrimination under the Robinson-Patman Act (RPA) in 24 years. In a partisan 3-2 vote, the FTC approved the filing of a complaint against the largest distributor of wine and spirits in the country, Southern Glazer’s Wine and Spirits LLC. The enforcement action is consistent with our previous thinking that the FTC was considering reviving RPA enforcement. The public version of the complaint is available on the FTC's website.
The RPA is a Great Depression-era antitrust statute that was enacted to help smaller retailers compete against larger retailers by prohibiting sellers, under certain circumstances, from offering different prices to different buyers. The RPA states that:
It shall be unlawful for any person engaged in commerce… to discriminate in price between different purchasers of commodities of like grade and quality… where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce.
Many state legislatures have statutes that parallel the price discrimination provisions of the RPA.
The FTC filed its complaint in the U.S. District Court for the Central District of California. The complaint alleges that Southern Glazer’s—a distributor of well-known brands such as Bacardi, Grey Goose and Jim Beam—sells liquor and wine to large spirits outlets at “drastically” lower prices than it charges smaller, independent “mom and pop” retailers. The complaint alleges further that this price discrimination harms competition.
The complaint seeks preliminary and permanent injunctive relief ordering Southern Glazer’s to cease and desist from price discriminating by selling its products to any purchaser at a net price higher than that charged to any competing purchaser, where the discrimination may cause competitive harm. The complaint does not seek civil penalties. Suits by private plaintiffs, which often follow government enforcement actions, typically subject defendants to claims for treble damages and reimbursement of plaintiffs’ attorneys’ fees.
Commissioners Andrew Ferguson and Melissa Holyoak penned lengthy dissents from the FTC’s decision to file suit. Commissioner Ferguson wrote that the FTC’s theory of the RPA in this case makes it unlikely to legally succeed. Commissioner Holyoak wrote that Southern Glazer’s price differences are pro-competitive for consumers and do not harm competition.
Once the FTC files litigation, it usually does not voluntarily dismiss a suit, even when the composition of the FTC is set to change. President-elect Donald Trump has announced plans to appoint Mark Meador to the FTC and elevate Andrew Ferguson to chair, which would shift the balance to 3-2 in favor of Republican-appointed commissioners.
Companies should consult with experienced antitrust counsel when considering important pricing decisions in this developing regulatory environment.
For More Information
If you have any questions about this Alert, please contact Sean P. McConnell, Christopher H. Casey, Michael L. Fox, William Shotzbarger, any of the attorneys in our Antitrust and Competition Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.