There is a prohibition of sale where the price is discriminated against on the sale of goods to the distributors situated equally by the Robinson-Patman Act. Discriminatory pricing has an impact on sales because it decreases competition by providing preferred customers an edge in the market regardless of how efficient they are. All the compensation price is included in the net price and compensation for advertisement and other services. the vendor should not throw in additional items to reduce the effective price. The government of the United States or the parties suffering an injury can bring a legal action under this act in such cases.
To claim action against price discrimination following requirements must be met.
Commodity: The act applies only to commodities or purchases which involve commodities. The act does not apply to services or leases.
The similarity in kind and quality: The commodities or goods are required to be of like grade and quality.
Injury to competition: Price discrimination must have affected the market or cause injury to the competition. The private plaintiff must show actual harm or injury to an individual’s business. The effect of such price discrimination in the sale must have been in interstate commerce.
Apart from these, competitive injury occurs in two ways, such as primary line and secondary line. In the primary line manufacturer reduces the price for the buyer within a particular region, which causes injury to the competitors of that market. In the secondary line, an advantage over the price is given to favored consumers of the supplier over other competing consumers.
Affirmative Defenses to Claim Price Discrimination
When a customer of the supplier receives a pricing advantage over other consumers, the injury is caused at the level of the buyer. The harm caused to the market at the buyer’s level is reflected by the significant discrimination of price in the market. The court may limitedly consider the inference of harm caused to competition in circumstances where either the buyer or the seller is in the power of the market.
Two legal defenses are available to the above mentioned alleged Robinson-Patman violations:
Cost justification: The difference in the price of sale has been justified on the ground of different costs in the manufacturing, sale, or delivery of such goods or commodities.
Good faith defense: The concession in price has been given to specific customers in good faith to meet the competitor’s price.
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