The robinson patman act rp, an antitrust statute aimed at protecting small businesses, limits price setting in distribution channels. It was designed to protect small retail shops against competition from chain stores by fixing a minimum price for retail products. The robinsonpatman act seeks to limit the ability of large, powerful buyers to gain price discounts through the use of their buying power. A brief overview of the introduction of the bill by joseph t. Robinsonpatman act and its implications for marketers. In order for substantive portions of the robinson patman act. States, uncertainty exists as to whether the robinsonpatman act r. A apply to resellers b protect final consumers c prohibit selling the same product to different retailers at different prices d prohibit offering such extras as discounts, rebates, premiums, and coupons to some but not all customers. The robinson patman act, passed in 1936, is a somewhat obscure federal law that makes it illegal to discriminate in price between different purchasers of commodities of like grade and. In the marketing world today, from a pricing standpoint, we dabble more in terms of map, list price, msrp, invoice price, ir, pos rebate.
The robinson patman act makes it illegal to charge different prices to buyers when the marginal cost of the seller for the goods is the same. To avoid costly penalties under rp, managers take a variety. The article discusses the implications of robinsonpatman act in the field of marketing as a whole and those employed in related industries. Robinsonpatman act definition, price discrimination. The sherman act and robinson patman act counts relate to the same course of conduct. Robinsonpatman act legal definition of robinsonpatman act. Robinson became the procurement arm for nash finch company as it rapidly expanded in iowa, minnesota, wisconsin, illinois, and texas. If, based on the information extracted from the pricing software, the algorithm is designed to offer different prices to different competing buyers for the same product and such discrimination appears to produce anticompetitive effects, a disfavored buyer might have a successful robinson patman act. Pharmacies, dea and robinsonpatman340b drug programs. Robinson in the united states senate and by wright patman. The robinson patman act requires that a seller offer all competing resellers similar programs in a proportionately equal manner.
Dual distribution and vertical integration under the robinson. The sixth and seventh circuits provide practical robinson. Olgayurovski after more than 15 years in consumer packaged goods industry, i became a software entrepreneur. Pdf the antitrust implications of relationship marketing. The robinson patman act of 1936, also called the antiprice discrimination act, made it illegal for companies to engage in price discrimination. Ch 5 test 1 flashcards by debbie nguyen brainscape. Promotional allowance program rules and regulations. Meeting competitionby practical law antitrust related content maintained usa nationalfederala standard document to be used to provide evidence that a seller attempted to verify a competitors lower price legally if it is ever subject to a price discrimination claim under the robinsonpatman act.
Incentives and bonuses are considered part of the price. The robinson patman act of 1936 or antiprice discrimination act, pub. Ftc revised promotional guides under the robinsonpatman act. Alaska is the only state without a law school, so for many clerks, the first true exposure to both alaska and alaskan law occurs when the clerkship begins. Like much other new deal legislation, the principal purpose of the robinsonpatman act the act was protectionist. Loftont application of the robinson patman act to vertically integrated businesses poses questions of uncommon complexity. Recent changes to the ftcs robinsonpatman act guidance. Ftc revised promotional guides under the robinson patman act findlaw. The basic purpose of enacting robinsonpatman act is to reduce the failure rate and prevent small sellers from the larger sellers from offering a different price to a different. Charge different types of customers differently through product differentiation, bundling, and the like, but be exceptionally careful about communicating differences in price. Mcnair the several types of legislative restriction on freedom in pricing, including the robinson patman act, state. Recently, i considered how vendors providing goods can use the robinson patman act to rebuff a customers request for extended terms or, alternatively, use the act s meet the competition exception. The act was passed to address abuses of power in interactions among business components within the channel of distribution. Terms pushback strategy tps meets the robinsonpatman.
The robinsonpatman act has given rise to some truly awful court decisions that have created a sellerbuyer environment of sometimes unforgiving price rigidity, as well as complex and difficulttocomply. There is a rarely litigated but often irritating antitrust and distribution law known as the robinson patman act. Implications of the robinsonpatman act for marketing. Discount systems under the robinsonpatman act edwin b. Wise, a vicepresident and director of national, with. One of the most important laws that keeps competition vigorous on the retail level is the robinsonpatman act. Find out more about this topic, read articles and blogs or research legal issues, cases, and codes on.
The supreme court has ruled that price discrimination claims under the robinsonpatman act should be evaluated consistent with broader antitrust policies. July 1, 2008 the robinson patman act is a depressionera law designed to reduce the ability of manufacturers to engage in price discrimination. It might surprise many in the real world which for these purposes means everyone other than antitrustcompetition lawyers, but to the antitrust bar, the robinson patman act. Sep 16, 20 robinsonpatman act is not a very commonly used phrase in the marketers arsenal. The robinsonpatman act is an amendment to the 1914 clayton antitrust act and is supposed to prevent unfair competition. To violate the robinsonpatman act, the sellers price discrimination must have an anticompetitive effect.
Theres more to life than just work let the aba help balance your personal life with tips on wellness, relationships, worklife balance. Antitrust laws are at the heart of our competitive free market system, and while they are the principal means of keeping monopolies incheck, there are many other laws that act behind the scenes to ensure a competitive market. This incentive insights takes a look at how the robinson patman and sarbanesoxley acts affect your promotional allowance programs. Third circuit rules against customer in robinsonpatman. Introduction the robinsonpatman act is the black sheep of antitrust. Meeting competitionby practical law antitrust related content maintained usa nationalfederala standard document to be used to provide evidence that a seller attempted to verify a competitors lower price legally if it is ever subject to a price discrimination claim under the robinson patman act. Even the supreme court has acknowledged that the law by no means represents an exemplar of legislative clarity. Robinson patman act informally labeled the antichain store law, the rpa passed in 1936 as an amendment to the clayton antitrust act. In 1936, section 2 of the clayton act was amended by the robinson patman act, and it became a far more complex statute. Today, i design and sell shopperations, a webbased, collaborative planning software for marketers on both cpg and retail sides, to enable transparency, accountability and stronger shopper marketing promotional analytics.
The robinson patman act of 1936, an amendment to section 2 of the clayton act, specifies the conditions under which price discrimination is illegal. The robinsonpatman act of 1936, also called the antiprice discrimination act, made it illegal for companies to engage in price discrimination. But, i think every marketer who engages in pricing actions of sorts should be aware of this act. At its core, the dynamic pricing model is the concept of selling the same product at different prices to different groups of people.
Apr 01, 2015 there is a rarely litigated but often irritating antitrust and distribution law known as the robinson patman act. An overview of the robinsonpatman act of 1936 with notable examples the robinsonpatman act is a depressionera law aimed at maintaining a healthy level of competition in the market. Marketing functions and costs and the robinsonpatman act. Commodities under the robinsonpatman act follow this and additional works at. The act applies to commodities, but not to services, and to purchases, but not to leases. The robinsonpatman act is part of the antitrust legislation of the clayton act of 1914.
Robinson patman act is not a very commonly used phrase in the marketers arsenal. The robinsonpatman act of 1936, also referred to as the antiprice discrimination act, is a part of united states federal law that prohibits producers of products from participating in anticompetitive practices. If, based on the information extracted from the pricing software, the algorithm is designed to offer different prices to different competing buyers for the same product and such discrimination appears to produce anticompetitive effects, a disfavored buyer might have a successful robinsonpatman act claim. An overview of the robinsonpatman act of 1936 with. Pa protects small software retailers against price discrimination. Legality of price discrimination the wiglaf journal. The robinsonpatman act of 1936 or antiprice discrimination act, pub. One robinson patman count, number, charges raymond j. The act specifically limits price discrimination and it is an amendment to the clayton antitrust act, which was the first law of its kinds to prevent unfair price discrimination. In order for substantive portions of the robinson patman act to be invoked, there must be. Although, as indicated above, the robinson patman act has many faults, we do not think this particular criticism is a fair one since, despite its bias in favor of pricing uniformity, the robinson patman act still provides room for the design of creative marketing programs that provide incentives to buyers as long as those incentives are not. The supreme court has ruled that price discrimination claims under the robinson patman act should be evaluated consistent with broader antitrust policies.
This historyplex post will give you all the details, and even a few examples of the robinsonpatman act. The robinson patman act, a new dealera law aimed at curbing price discrimination, has long been considered a dormant corner of antitrust and pricing. The tension between the robinsonpatman act and accepted antitrust policy has resulted in hostility in the courts often shared by juries to robinsonpatman. The robinsonpatman act is part of the antitrust legislation of the clayton act. The robinson patman act is part of the antitrust legislation of the clayton act of 1914. Bryan cave leighton paisner price discrimination update. Large volume buyers who might use their buying power to extract special deals, including quantity discounts, free promotional materials or purchase allowances, were targeted by the robinson patman act. In the 1940s, the ftc found nash finch company to have a price advantage, and under the robinson patman act of 1936, c. Price discrimination is a practice where a company. Mar 27, 2017 the robinsonpatman act, a new dealera law aimed at curbing price discrimination, has long been considered a dormant corner of antitrust and pricing. Robinsonpatman act or why walmart has not yet taken over. The tension between the robinsonpatman act and accepted antitrust policy has resulted in hostility in the courts often shared by juries to robinsonpatman claims made by unhappy customers and competitors. In practice, robinson patman claims must meet several specific legal tests.
Robinsonpatman act is not a very commonly used phrase in the marketer s arsenal. The act requires a business to sell its products at the same. The robinson patman act the act or law, the antitrust law prohibiting price discrimination, has long been a source of. Millertydings act of 1937 united states britannica. Under a sales contract, whether written or oral, there is a guarantee that the item sold is merchantable and fit for the purpose intended. We have extraordinary experience in applying the antitrust and trade regulation laws to a wide variety of technology industries. The robinson patman act is an amendment to the 1914 clayton antitrust act and is supposed to prevent unfair. Ftc revised promotional guides under the robinson patman act. Robinson patman act enacted in 1936, the robinson patman act principally deals with discrimination in prices charged to competing purchasers for products of like grade and quality. The act prohibits sellers from setting different prices for competing. Recent changes to the ftcs robinson patman act guidance. The robinson patman act the act or law, the antitrust law prohibiting price discrimination, has long been a source of confusion and a target of criticism by courts, commentators, and practitioners.
Technically, this is the same definition as price discrimination, an illegal practice with roots in the robinsonpatman act of 1936. The history of the robinson patman act actually begins in 1914, when section 2 of the clayton act became the first federal statute that expressly prohibited certain forms of price discrimination. Jul 06, 2016 the robinsonpatman act could help small businesses, but the robinsonpatman act, passed in 1936, is a somewhat obscure federal law that makes it illegal to discriminate in price between different purchasers of commodities of like grade and quality. The usual clayton act standard for measuring injury applies to robinson patman violationsthat is, a.
In the antitrust area, bill advises clients on compliance with the robinson patman act, sherman act, clayton act and state unfair trade practice laws. This often is because legitimate complaints against a supplier providing favorable pricing to a complaining customers competitors either are. The robinsonpatman act was a pretty feeble legal tool to challenge a websites interface decisions, but given the cash and emotions at stake, im sure plaintiffs will think creatively about other. Several decisions of the federal trade commission illustrate the difficulty of achieving meaningful enforcement of the antidiscrimination. To violate the robinson patman act, the sellers price discrimination must have an anticompetitive effect. In the 1940s, the ftc found nash finch company to have a price advantage, and under the robinsonpatman act of 1936, c. Robinsonpatman act is one of the provisions, which constitutes the u. The robinson patman act, amending the clayton act, was passed by congress in june, 1936.
Legally, the main law on the books, the robinson patman act of 1936, is exceptionally outdated and has more holes than my favorite swiss cheese. Although the act remains an important antitrust statute, private. The practice is more effective in retail sales than at other levels of marketing. The robinsonpatman act is an amendment to the 1914 clayton antitrust act and is supposed to prevent unfair. Regularly advises our health system clients regarding the appropriate use and transfer of prescription drugs to health system patients and among health system programs, advising them regarding compliance with the robinson patman act, the npia and the prescription drug marketing act. The robinson patman act, an amend ment to section 2 of the clayton act, prohibits firms engaged in interstate commerce from charging different prices for goods of like. A federal law passed in 1936 to outlaw price discrimination. At the federal level in 1936 congress enacted the robinson patman act to prohibit price discrimination by suppliers to small businesses. The robinson patman act is an antitrust law, ignored for the most part by the federal trade commission and the justice department. Mcnair the several types of legislative restriction on freedom in pricing, including the robinson patman act, state fair trade resale price maintenance acts, and various laws actual and proposed to prevent selling below cost, and to restrict or prevent the.
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