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An Empirical Analysis of secondary line price discrimination

motivations Hagit Bulmash

Abstract The prohibition of secondary line price discrimination stated in the Robinson-Patman Act probably still affects more business decisions than any other antitrust law. The article applies a new methodology, developed in the study, of systematic content analysis of all court

decisions published between the years 1990-2000 inclusive, traced using the lexis.com database, in order to expand our knowledge regarding such discrimination .The article presents two empirical claims concerning the Act. First, the article analyzes the preliminary procedures conducted in secondary line private complaints, showing that the procedures themselves can harm competition among suppliers, encourage collusion and increase monopoly prices. Second, the article fills in the factual background to show how the Act harms consumers and competition, and, by contrast, how the use of secondary line discrimination can encourage competition. The results present the reasons why suppliers employ such discrimination and its affect on business behavior and competition. They also explain the motivations of those discriminated purchasers to

file a complaint for such discrimination. The results show empirically why the Robinson-Patman Act should be repealed in its entirety and why it would not be sufficient to dismiss private complaints filed to courts, or to interpret it in keeping with broader antitrust policies. JEL codes: C18, C40, K21, K41, L12, L21, L42, L51

I. INTRODUCTION

Secondary line price discrimination occurs when a supplier (such as a manufacturer or large

wholesaler) sells a similar product to competing purchasers, usually retailers, distributors and

resellers (referred to collectively as "purchasers"), at two different prices. Those purchasers

compete with one another in distributing the supplier's product (intra-brand competition).

According to section 2(a) of the Robinson-Patman Act,1 any supplier which acts in such a

discriminatory manner between purchasers will be held liable, and section 102(c) of the TFEU2 forbids any such behavior by a dominant supplier in the EU.3 The prohibition extends beyond the

Robinson-Patman Act and section 102(c): Regulation by the Authorities. The prohibition of

secondary line price discrimination is used as a behavioral remedy in mergers and in restricting

anticompetitive conduct by a monopoly supplier or oligopoly suppliers. It is not surprising, then,

that according to the ABA Arguably, more business decisions are affected by the Robinson-

Patman Act than by any other antitrust law because so many interstate sales and dealer-oriented

promotions of commodities are subject to its terms.4

Although for many decades there has been considerable theoretical debate between scholars,

legislators and businesses regarding the prohibition of secondary line price discrimination, no

systematic empirical research has been undertaken to examine the strength of these theories and

the way the secondary line prohibition is used in the real world. Those in favor of the Act tend to argue that the prohibition helps to protect "mom and pop" stores and small businesses from the

chain stores, increases intra-brand competition and encourages competition. Those opposing the

Act tend to argue that the prohibition decreases competition, increases inefficiency and prices, and,

eventually harm consumers' welfare.

Research fellow, Affiliate of the Zvi Meitar Center for Advanced Legal Studies, Buchmann Faculty of Law, Tel Aviv

University and Vice President of the Antitrust Committee of the Israeli Bar. Email: bulmashh@post.tau.ac.il. I especially

wish to thank David Gilo for invaluable comments. I also wish to thank, Irit Haviv-Segal, Michal Gal, Avi Weiss, Ehud

Kamar, Itai Ater, Yaron Yehezkel, Edward Iacobucci, Samuel Bulmash and Tomer Daniel for their helpful comments. I

gratefully acknowledge financial support from the Zvi Meitar Center. 1 15 U.S.C.A. § 13(a)

2 The Treaty on The Functioning of The European Union ("TFEU") (ex article 82 TEC)

3 For the effect of price discrimination on market power, see Richard .A. POSNER, ANTITRUST LAW: AN ECONOMIC

PERSPECTIVE (1976); William L. BALDWIN, MARKET POWER, COMPETITION AND ANTITRUST POLICY 424 (1987) .For the

effect of secondary line discrimination in competitive markets, see: James D. Dana, Advance Purchase Discounts and Price

Discrimination in Competitive Markets, J. O. POL. ECON. 395 (1998). 4 Robert T. Joseph, From the Section Chair, 17 Antitrust, 3 (2003), available at: www.americanbar.org/content/dam/aba/

publishing/antitrust_magazine/antitrust_17-3_full.authcheckdam.pdf.

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The absence of such research makes it difficult to evaluate those economic and legal theories,

since there is no factual background to support them.5 The present study was designed to fill that

gap, to expand our knowledge regarding such forbidden behavior and its consequences for society,

competition and economic welfare, and to test the strength of the theoretical criticism of the

prohibition of secondary line discrimination.

Using the electronic database lexis.com, the research tracked 100 published federal court cases between the years 1990 and 2000 inclusive, in which a disfavored purchaser alleged illegal

secondary line price discrimination under section 2(a) of the Robinson-Patman Act.

Appendix A provides a list of the cases, divided by years.

Here, as opposed to the use to which empirical studies of court files are commonly put, the

facts found in those files are used to compile objective and useful knowledge on the business

behavior and contracts of plaintiffs, defendants and third parties. As such, the empirical tool is

being used not only to understand how courts act, but also to learn how suppliers resort to

secondary line discrimination in practice, why it is being used in such a way, and how purchasers

use the prohibition in contractual relationships and in private litigation.

The empirical results show that the discriminatory behavior of the parties is an economically

efficient way of doing business. For example, most of the products in these 100 court cases require

special investments in marketing and services. Applying theoretical analysis, I explain how the ability to discriminate among purchasers of those products enables a supplier to prevent free-

riding. By contrast, the price discrimination prohibition and the treble damages remedy decrease a

supplier's ability to prevent free-riding between its purchasers, and therefore the supplier must

apply other vertical restraints.

Furthermore, contrary to both popular belief and the legislature's intentions, the empirical

research shows that the great majority of complaints were made against larger purchasers that bore

little resemblance to those "bad" chain-stores the legislature wished to restrict in order to protect

"mom and pop" stores.

By analyzing empirically the seniority of the favored and disfavored purchasers, their size,

how many years the disfavored purchasers sold the suppliers' products, the characters of the

distribution and the nature of the products, the results indicate a lack of any discrimination harmful to consumers or competition, or alternatively that the plaintiffs weren't efficient enough to be

worth keeping. For example, the empirical results show that most of the plaintiffs distributed the

suppliers' products for more than 5 years, and the favored purchasers were new purchasers asking

to distribute the suppliers' products and to compete with the plaintiff. These results indicate that

banning discriminatory pricing for newer purchaser decreases intra-brand competition in most of

the cases, protects old purchasers that are afraid of competition, and encourages inefficient

purchasers that are unable to meet the needs of consumers.

Moreover, the research found that in the great majority of cases the discrimination claims

arose from other disputes, or at least were alleged in court after many years of contractual

relationship during which no such claims for price discrimination were made, and the complaints

were filed by the disfavored purchasers only after the suppliers chose to terminate the contractual

relationship. As will be shown in detail in Chapters IV and V, these findings indicate that the plaintiffs were unable to use their distribution skills to gain a competitive advantage over their

rivals, or any other skills that might have encouraged the supplier to keep on doing business with

them. By contrast, the results raise a great concern that the prohibition encourages those disfavored

purchasers to take advantage over the skills and investments of other favored purchasers, and to

claim in court that there cannot be a price difference between them.

Courts and the authorities tend to believe that by granting judgment in favor of the supplier or

not enforcing the Robinson-Patman Act, they can decrease the harm to consumers and competition

caused by the prohibition of secondary line price discrimination. However, I show empirically in

the article why courts' interpretation of the legislation does little to reduce the harm, even though

judges tend to criticize the use of the prohibition in their decisions.

5 The antitrust modernization commission noted in its final report the lack of empirical researches on the Robinson-Patman

Act. See Report and Recommendations, Final Report of the Antitrust Modernization Commission, 322 (2007) [hereinafter

AMC, FINAL REPORT], stating that "In general, estimates of the effects of the Act [the Robinson-Patman Act] have been

based largely on anecdotal evidence and informed judgments about the way in which markets operate, rather than on

systematically collected empirical evidence, which appears to be extremely limited".

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In chapter IV I present for the first time how the preliminary procedures conducted in

secondary line price discrimination cases can harm inter-brand competition between suppliers. As

the research indicates, a supplier's inability to dismiss the purchaser's claim before it comes to a

jury trial, by means of preliminary motions, discourages horizontal competition between suppliers,

helps cartel members coordinate prices, makes it easier to maintain coordinated behavior between

rivals, and enables monopoly suppliers to maintain high prices. The results of the empirical research are in accord with the article's two goals. First, they

provide empirical answer for the long-going debate over the Robinson-Patman Act : in Chapter IV

I demonstrate the effect that the complaints and procedures of secondary line discrimination cases

have on competition, regardless of the motivations of the parties to discriminate; in Chapter V I

test the motivations of the suppliers and the purchasers regarding secondary line price

discrimination, as well as the strength of the theoretical economic and legal criticism and

justification of such discrimination. Those results show how the Robinson-Patman Act harms

consumers and competition, and how the use of secondary line discrimination can encourage

competition. As such, the results highlight why it is acutely necessary to modernize the antitrust

laws and repeal the entire Robinson-Patman Act and section 102(c) of the TFEU, and why it

would not suffice merely to decrease the enforcement of the Act and dismiss private complaints

filed to federal and state courts, or to interpret the Robinson-Patman Act in line with broader antitrust policies, accommodating it to all legal restrictions on the distribution process in

accordance with dominant Sherman Act policies.

The second goal of the article is to provide a unique methodology of systematic content

analysis of court files as a way of compiling information on contractual relationships, which may

help researchers understand the motivations of the parties to a dispute and their business thinking.

It can also be helpful towards understanding how the courts' behavior affects the motivations of

the parties to contract and act, and how the courts' interpretations and acts eventually affect

business thinking.6 Since the article compares contracts and contractual relationships among

competing firms in a unique way, the methodology can be used by legal, economic and

management scholars to support and test the strength of theoretical thinking regarding business

conduct in other fields of research, such as contract, damages, marketing, etc. The remainder of this study is structured as follows: Chapter II discusses the legal framework

for secondary line prohibition. Chapter III presents the empirical methodology. The results and

their implications are presented in chapters IV and V, and the conclusions and summary of this

study appear in Chapter VI.

II. DEFINITION OF SECONDARY LINE PRICE DISCRIMINATION

Secondary line price discrimination occurs when an upstream firm sells its products at different

prices to downstream firms, putting the purchaser who received the higher price in a position of

competitive disadvantage.

In the U.S. the secondary line price discrimination prohibition is found in section 2(a) of the

Robinson-Patman Act:

It shall be unlawful for any person engaged in commerce, in the course of such commerce,

either directly or indirectly, 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,

or to injure, destroy, or prevent competition with any person who either grants or

knowingly receives the benefit of such discrimination, or with customers of either of

them…

To prove a Robinson-Patman violation, a plaintiff must show (1) at least two actual sales (2)

of products of like grade and quality (3) sold reasonably contemporaneously (4) at different net

6 The theoretical methodology was made use of in antitrust cases as to resale price maintenance (RPM) by Pauline Ippolito,

Resale Price Maintenance: Empirical Evidence from Litigation, 34 J.L. & ECON. 263 (1991). The empirical study

conducted in the research on secondary line prohibition shows how the methodology can be used to follow contractual

relationships and understand the impact that courts have on competitive behavior, and it extends the collection of

information from court files to legal electronic databases. In many respects, then, the article expands the use of the

methodology, as will be detailed in Chapters IV and V.

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prices, (5) giving rise to a reasonable possibility of harm to competition. To recover damages

under the Clayton Act, a plaintiff must also show that he suffered antitrust injury as a result of the

price differences.7

In the EU secondary line price discrimination by a dominant firm is forbidden under Section

102(c) of the TFEU:

Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in

so far as it may affect trade between Member States. Such abuse may, in particular,

consist in: (c) applying dissimilar conditions to equivalent transactions with other trading

parties, thereby placing them at a competitive disadvantage. 8

III. ANALYTIC FRAMEWORK OF THE METHODOLOGY – EMPIRICAL CONTENT

ANALYSIS OF COURT FILES

Content analysis of court files is a relatively new and not widely used methodology.9 As opposed

to the use to which content analysis of court files is commonly put by (mostly legal) scholars, in

this article the methodology is used not to look at the court's interpretation of the legislation or

engage in statistical prediction of success, case outcome, settlements, costs and monetary awards

or recovery, but rather to examine the parties' behavior and incentives to violate the legislation and

how they and third parties tend to act on a daily basis regarding the tested phenomena – secondary line price discrimination.

In this chapter, I first provide a short introduction to the methodology of content analysis of

court files, explaining why the methodology was chosen for secondary line price discrimination

and its advantages as an objective way to find out factual business practices which would

otherwise remain undisclosed. Second, the chapter sets an overview of the data collected by the

research on private court files.

A. Why use content analysis of court files in secondary line price discrimination? According to the TFEU and the Robinson-Patman Act, secondary line price discrimination is

illegal. Therefore, any attempt to collect information on the use of price difference and price

discrimination among purchasers is bound to fail, since no supplier or favored purchaser will

provide such information voluntarily, or fill questionnaires or answer questions exposing it to legal

procedures.

Such information can be found, however, in private complaints and files, making them a good

source for the purpose of exploring the practice of price discrimination. Private legal procedures

are the main public venue where one can find contracts between parties, the day-to-day behavior

of companies and managers, the behavior of the parties before, during and after validation of a

contract, the supplier's and purchasers' behavior towards one another and third parties, and the

special advantages of each purchaser, which motivated the supplier to behave in a discriminatory

manner. Since the Federal Trade Commission and the Department of Justice have significantly reduced the public enforcement of secondary line price discrimination in the last three decades,

secondary line private cases are an ideal tool for understanding the influence of the legislation on

business practices, and an ideal example of how the methodology can be used. Parties to a dispute

7 J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 562 (1981). For the complexity of the Robinson-Patman act,

see also Caribe BMW v. Bayerische Motoren Werke Aktiengesellschaft, 19 F.3d 745 (1st Cir. P.R. 1994): "It is difficult to

reconcile the Robinson-Patman Act's strictures with traditional practices of corporations that seem to make sense from a

practical viewpoint...And the complexity of Robinson-Patman Act law has increased as courts have tried to introduce a

degree of flexibility into the Act as applied." See also Feesers Inc. v. Michael Foods, Inc. 591 F.3d 191(3d Cir. 2010) cert.

denied, 131 S.Ct. 160 (2010). An historical summary of the enforcement of the act can be found in Richard A. Posner's, A

Statistical Study of Antitrust Enforcement, 13 J. L. & ECON. 365, 369-70, 404-09 (1970); William E. Kovacic, The Modern

Evolution of U.S. Competition Policy Enforcement Norms, 71 ANTITRUST L. J. 377, 410 (2003). 8 For an elaboration on the prohibition in the EU, see: Guidance on the Commission's Treaty to Abusive Enforcement

Priorities in Applying Article 82 of the EC - Exclusionary Conduct by Dominant Undertaking, 864 Final (Brussels, 2009);

Penelope Papandropoulos, How should price discrimination be dealt with by competition authorities, Dorit and Economie,

3 CONCURRENCES 34-38 (2007); THE PROS AND CONS OF PRICE DISCRIMINATION, KONKURRENSVERKET ed. SWEDISH

COMPETITION AUTHORITY (2005) 9 A description of content analysis and its application to legal studies can be found in Mark A. Hall & Ronald F. Wright,

Systematic Content Analysis of Judicial Opinions, 96 CAL. L. REV. 63 (2008).

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know that they will not be prosecuted by the authorities for illegal price discrimination, have no

fear of providing full information to the court regarding the practice of price discrimination, and

consider the litigation in the same way as any other business action.

Collecting public information from court files can, in most cases, be cheaper than trying to

collect the same information in other ways. The electronic databases of legal documents, such as

lexis.com, westlaw.com (for cases in the U.S. and EU) and PACER (for U.S. federal court documents), make it easier to get all the court files, especially since all documents filed to courts

are now being filed electronically, and the ones that are in hard copy are scanned to the court

computer and to the electronic databases. As such, the files are open to the public, and the

information in them can be easily accessed and used.

B. How the empirical research was conducted

The fact that the Robinson-Patman Act makes it illegal to discriminate, even if the supplier has no

market power, is helpful for examining the motivations and business conduct of all suppliers, not

just dominant ones. One or a few court files cannot demonstrate the wide range of motivations that suppliers may

have to differentiate between their purchasers, or provide an explanation of the parties' behavior.

Therefore, the empirical research was conducted on all federal cases filed in U.S. federal district

courts by private plaintiffs between 1990 and 2000 inclusive (11 years), which were traced using

the lexis.com database.10

In the 100 tracked cases the disfavored purchaser filed a claim (or a

counterclaim) against a supplier of breaching the prohibition of section 2(a) of the Robinson-

Patman Act, by engaging in unlawful secondary line price discrimination. For each claim and

court file, the research collected all published decisions and the docket of the file. Since the

dockets themselves and the courts' decisions did not conceal any commercial data of the parties,

and since there are many cases with number of court decisions, in sum, more than 500 documents

with full information were content-analyzed in the research. In those documents, much information was available regarding the business relationships between the parties and between the

supplier and third parties, as well as information relating to the products and the market. The data

were carefully collected according to the empirical questions asked in the research.

Since the research uses private complaints, it is important both to understand the motivations

and economic incentives of parties to sue and settle and to analyze the plaintiffs' and defendants'

incentives and perceptions of the litigation procedure.11 The empirical research takes the

motivations of the parties into account, while analyzing the effect that the courts' rulings have on

the motivations to discriminate.

IV. PRELIMINARY PROCEDURES OF ROBINSON-PATMAN ACT CASES HARM

COMPETITION MORE THAN THE DISCRIMINATION ITSELF

In this chapter I evaluate the harm caused to competition by the preliminary procedures that take

place in almost all Robinson-Patman Act cases. As the results show, in order to decrease the harm of the Act, critique of it by judges or a reduction of its enforcement would not suffice. The results

show that the ability to file a claim of secondary line discrimination causes more harm to

competition and consumers than the harm caused by the prohibition on secondary line price

discrimination, and that the preliminary procedures have an unanticipated anticompetitive effect

previously overlooked by theoretical research. Therefore, the Robinson-Patman Act and all similar

state law secondary line prohibitions and section 102(c) of the TFEU should be repealed in their

entirety.

Pretrial motions by antitrust defendants, such as a motion to dismiss the complaint under the

Federal Rule of Civil Procedures 11, 12(b)(6) and 68, or a request for summary judgment by the

defendant under the Federal Rule of Civil Procedures 56, are meant to examine the plaintiffs'

complaint's probability of success in a trial before a jury. The purpose of a motion to dismiss for failure to state a claim is to assess the legal feasibility of the complaint, not to weigh the evidence

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The 100 cases were tracked in two steps: first, the research used the key words "price discrimination" and "robinson-

patman" to search those files. After receiving a list of all those files, each case had to be read in order to select only those

cases in which a secondary line discrimination allegation was made according to the Robinson-Patman Act. 11

Steven C. Salop & Lawrence White, Economic Analysis of Private Antitrust Litigation, 74 GEO. L.J. 1001 (1986).

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that might be offered in support thereof. Such a motion may therefore be granted only if the

plaintiff appears unable to prove material facts in support of its claim that entitle him to relief. In a

motion to dismiss for failure to state a claim, the defendant usually does not present its factual

argument, which will not be considered in a motion of this type.

Rule 56, which provides for summary judgment, states that any party may move for partial or

complete summary judgment, and the judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law. In a summary judgment, the parties file the

pleadings and accompanying evidentiary materials, and therefore the court file conveys a broader

picture of the factual dispute between the parties.12

The research shows that a supplier's ability to dismiss the purchaser's claim before coming to

trial, by using preliminary motions, affects the motivations of the parties to discriminate. It also

shows that the courts' decisions in those preliminary motions have a great impact not only on the

probability of success in secondary line cases, but also on the motivation of suppliers to

discriminate among purchasers. The courts' decisions affect competition in many other ways

besides the estimation of risks and success.

As will be detailed below, the research shows how the fact that 30 percent of all secondary line complaints continued to jury trial can abet collusion between suppliers, encourage free-riders

between purchasers, and raise consumer prices. All of these anticompetitive results are

incompatible with consumers' welfare and antitrust goals, as will be detailed in the next section.

Therefore, the conclusion must be that the Robinson-Patman Act must be dismissed, and any

attempt to reduce the enforcement will not solve the anticompetitive affect caused by the

preliminary procedures as shown in detail in the research.

A. Results for secondary line price discrimination The empirical data of the preliminary procedures are shown under two categories. First, the

research looks at all the cases in which preliminary motions were filed. Second, the research looks

at those of them in which the secondary line allegation was the main complaint.

The data show that in 55 cases (of the 100 cases), the supplier asked for involuntary dismissal

regarding the secondary line allegation. In 15 of those cases, the court denied the request. In five

cases the request was partially granted. In 35 cases (65 percent of the cases in which preliminary

motions were filed) the court granted the supplier a motion to dismiss. In 15 cases, then, the

supplier was required to present its pleadings, depositions and affidavits regarding the allegation of

price discrimination.

In 52 cases the supplier asked for a judgment as a matter of law (summary judgment) as to the

secondary line complaint. In 35 of those cases (67 percent) the court granted in full a judgment in

favor of the defendant. In four cases the court granted partial judgment in favor of the defendant. In total, in 33 percent of cases in which summary judgment was requested, the court denied such a

motion of the supplier (in full or in part).

Overall, although courts tend to criticize the use of the Robinson-Patman Act by

plaintiffs, 30 percent of the cases came before a court or jury for final judgment. Of those, in

only three cases the jurors found the defendant liable for illegal secondary line price

discrimination and awarded damages to the disfavored purchaser. One damages award was in

the amount of $7.8 million for the discrimination claim,13 another was $2.5 million, and the third

amounted to $400,000. In all of those cases the court tripled the award ruled by the juries. An

additional 18 cases were resolved by a settlement agreement between the supplier and disfavored

purchaser.14

12

Elaboration on the use of preliminary procedures in antitrust cases can be found in Stephen Calkins, Symposium: Private

Antitrust Litigation Summary Judgment, Motions to Dismiss, Tendencies in the Antitrust System, and other Examples of

Equilibrating, 74 GEO. L.J. 1065, 1118 (1986); Stephen Calkins, Equilibrating Tendencies in the Antitrust System, in

PRIVATE ANTITRUST LITIGATION 185 (Lawrence J. White ed., 1988). 13

This case can be considered as primary rather than secondary line price discrimination, although the complaint was filed

and judged as secondary line discrimination. 14

The research does not determine whether a settlement will be classified automatically as a success for the purchaser

plaintiff, since that can only be done after estimating the costs and losses to the purchaser due to the litigation, and the

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The results are much more significant looking at the 41 cases in which the allegation of

secondary line price discrimination was the main complaint. Fifty percent of those cases were

litigated to judgment. The other 50 percent ended in dismissal (voluntary by the plaintiff, due to

settlement, or by a successful motion to dismiss by the defendant) or after successful preliminary

motions for summary judgment filed by the suppliers.

B. How the results of the litigation affect competition

These outcomes regarding preliminary motions affect a supplier's ability to discriminate among its

purchasers. Since litigating the illegal practice of secondary line price discrimination requires a

comparison between the prices and contract terms of the seller with the favored purchaser and

those with the plaintiff, secondary line complaints are one of the few ways in which a purchaser

and third parties can get to see financial and business data of the supplier defendant and favored

purchasers. Therefore, in any such litigation between a supplier and disfavored purchaser, and

during depositions of documents, pleadings, interrogations and affidavits, a supplier (and favored

purchaser too, if it has been sued) must reveal these secret data to the plaintiff and to the public. It can also be a good way for third parties (other purchasers, competing suppliers and consumers) to

look at contractual data between a supplier and its purchasers and other unpublished financial and

commercial data of the supplier and favored purchasers, especially when the court file's records

are published by electronic means.

That can affect competition in several ways: First, the price discrimination prohibition makes

it unlawful to reduce prices to some purchasers. A monopoly supplier thereby has an incentive to

maintain a high monopoly price and is discouraged from reducing prices. The prohibition

increases the monopoly's profits and raises prices for purchasers and consumers. The monopoly

would reduce its monopoly price to some purchasers only if it knew that it would not be sued for

illegal price discrimination. Being able to keep the commercial and financial terms in secret would

allow a monopoly supplier to discount its prices to some purchasers. Some consumers would have the chance to buy the monopoly product at less than the monopoly price. But if a monopoly knows

that purchasers can gain access to its data by filing a complaint of secondary line discrimination

and receiving the information easily by litigation, it will not discriminate in price or reduce its

monopoly prices.

The results show that although the courts may tend to grant a motion to dismiss a secondary

line complaint, there is still a large probability that the motion to dismiss the claim will be denied

and the supplier will have to expose its commercial secrets in public. The prohibition itself, then,

and the court's rulings in preliminary motions, make it difficult for consumers to receive the

monopoly product at less than the monopoly price.

The fact that in only three percent of the cases judgment was delivered in favor of the plaintiff

does not solve that problem, since in over 50 percent of the cases the suppliers were required to

provide the commercial data during discovery and preliminary procedures. Second, according to Gilo, suppliers have difficulty committing to charging all downstream

companies their profit-maximizing wholesale prices, even in cases where the supplier enjoys a

monopoly position or is a member of an oligopoly. That difficulty is known as the "commitment

paradox." Due to the commitment paradox, wholesale prices can be low for all downstream firms,

not just for one or a few favored purchasers. The secondary line price discrimination prohibition

helps a supplier to avoid the "commitment paradox".15 The outcomes of the research shows that

since there is a good chance that suppliers will be forced to disclose commercial information, the

courts unintentionally have dissipated the commitment paradox and increased the harm of the

secondary line prohibition, allowing monopolies to maintain their high profits and decreasing

consumer welfare.

gains to the supplier from the discriminatory behavior. These data are not in the court files and demand a very complicated

economic analysis of each case. 15

See David Gilo, Retail Competition Percolating Through to Suppliers and the Use of Vertical Integration, Tying, and

Vertical Restraints To Stop It, 20 YALE J. REG. 29 (hereinafter GILO). The commitment paradox is beneficial to consumers,

as it encourages the supplier and retailers to cut prices. Moreover, by dissipating the supplier's market power, the

commitment paradox is welfare-enhancing, as it helps remove the welfare distortions inherent in pricing above marginal

cost.

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Moreover, cartel and coordinated behaviors by competing companies in oligopoly markets are

generally considered one of the most serious concerns of competition authorities.16 Collective

actions and parallel acts not necessarily in collusion between or among firms can harm

competition as much as cartels, although they are generally not punishable and not prohibited. A

coordinated or parallel price between competitors is easier to achieve and maintain if the prices of

the sales to the purchasers are transparent and easy to follow. According to Tirole, the secondary line prohibition by itself can harm competition if it leads to such a cartel or helps to maintain

coordinated behavior among competing rivals.17

As the results show, purchasers' success in crossing successfully motions to dismiss prevents

suppliers from selling products to favored purchasers at a price below the coordinated price

between all suppliers in cases of oligopoly markets and in cases of class cartel and collective acts.

18 Since litigation of price discrimination forces suppliers to reveal their wholesale prices in

disclosure procedures, they will not easily give any purchaser favorable terms. Keeping the

supplier's information secret, by dismissing cases at a preliminary stage, helps to reduce collusion

damages and encourages price reduction. The high probability that the complaint will not be

dismissed causes suppliers to be wary of giving any purchaser a secret discount.

Despite the low probability of success in secondary line price discrimination, nevertheless the

fact of the matter is that 30 percent of the cases carried beyond the preliminary procedures, thereby forcing the supplier to expose its secret data in public.

Moreover, the expensive costs of litigating antitrust cases rise dramatically if the case reaches

a jury. No supplier wants to get there. No favored purchaser wishes to become an easy target of a

lawsuit by its rivals. Therefore, the data in the research show that the criticism of the prohibition as

being harmful to competition is well justified. The court's interpretation of the legislation, as the

results show, does not help much to reduce the harm, although judges tend to criticize the use of

the prohibition in their decisions.

In sum, the results of the research indicate that the secondary line prohibition harms

consumers and competition and decreases the probability of breaching a cartel or coordinated

behavior and decreasing monopoly prices. It forces companies, not just a monopoly, to maintain a

high united price for all. The courts' rulings do not help to solve the anticompetitive affect of the prohibition.

V. RESULTS OF THE EMPIRICAL RESEARCH AND HOW THEY AFFECT THE

THEORETICAL UNDERSTANDING OF SECONDARY LINE PRICE

DISCRIMINATION

Theoretical criticism of the prohibition of secondary line price discrimination can be divided into

three categories of anticompetitive failure: horizontally - between competing suppliers - the

prohibition affects the ability of a single supplier to become a member of a cartel, or to secretly

breach the coordinated behavior among oligopoly companies (inter-brand competition); and

vertically - between the supplier and the downstream purchasers, and among those purchasers

(intra-brand competition) - the prohibition encourages opportunistic behavior by purchasers when

investments are made by only one or a few purchasers, raises the entry costs and barriers for a new

purchaser, and prevents additional competition between purchasers. It raises the production and distribution costs of the product, causing the resale price to increase and depressing investment in

special services. Moreover, the prohibition also solves the "commitment paradox".19

Consumers may also be harmed when purchasing products supplied or manufactured by a

dominant supplier - The secondary line prohibition discourages dominant suppliers from reducing

their monopolistic prices or granting discounts to purchasers.20 It also makes it difficult for strong

16

Cooper, James C.; Froeb, Luke; O'Brien, Daniel P.; Tschantz, Steven., Does Price Discrimination Intensify Competition -

Implications for Antitrust, 72 ANTITRUST L. J. 327 (2005). 17

JEAN TIROLE, THE THEORY OF INDUSTRIAL ORGANIZATION, 139 (1988(. 18

George J. Stigler, A Theory of Oligopoly, 72 J. POL. ECON. 44, 47 (1964). 19

GILO, supra note 15, at 25 20

It is traditionally believed that supplier with market power can permanently discriminate among purchasers. See Frederic

M. SCHERER & David ROSS, INDUSTRIAL MARKET STRUCTURE AND ECONOMIC PERFORMANCE 489 (3rd

ed., 1990).

However, recent studies show that the ability to discriminate is not necessarily a proof for market power. See Edward C.

9

purchasers to obtain better prices that will allow them to reduce the prices for consumers,

especially in cases in which the supplier has market power over its competitors. 21

In this chapter, I will present the empirical outcomes, followed by an analysis of the

theoretical justification of price discrimination listed above.

A. The parties and general information

Using the electronic database, the research traced 100 published federal cases between 1990 and

2000 inclusive, in which a disfavored purchaser alleged illegal secondary line price discrimination

under section 2(a) of the Robinson-Patman Act. The average number of cases is 9 cases per year.

Table 1 presents the number of cases each year. A distribution of the cases by districts is given in

Table 2.

Table 1. Number of cases with a secondary line price discrimination claim under the Robinson-Patman Act,

by year

Number of Cases (N = 100) Year

01 1991

7 1991

8 1992

9 1993

01 1994

00 1995

5 1996

01 1997

9 1998

9 1999

01 2111

Table 2. Distribution of the cases by federal court districts

Number of Cases (N = 100) District

1 S.D.ALA

14 S.D.NY

7 N.D.ILL

1 M.D.FI

1 E.D.TEX

10 E.D.PA

1 W.D.TENN

1 D.KAN

1 N.D.NY

1 N.D.CAL

2 S.D.TEX

5 D.P.R

2 S.D.OHIO

1 E.D.N.C

2 N.D.J

Prescott, Efficiency of the Natural Rate, 86 J. POL. ECON. 1129 (1975); Benjamin Eden, Marginal Cost Pricing When Spot

Markets and Complete, 98 J. POL. ECON. 1293 (1993). 21

For a summary of the theoretical criticism, see: Roman Inderst & Greg Shaffer , Market Power, Price Discrimination, and

Allocative Efficiency in Intermediate-Goods Markets 40 RAND J. ECON. 658, 672 (2009); Richard A. Posner, THE

ROBINSON-PATMAN ACT: FEDERAL REGULATION OF PRICE DIFFERENCES (1976); Michael L. Katz, The Welfare Effects of

Third-Degree Price Discrimination in Intermediate-Goods Markets, 77 AM. ECON. REV. 154 (1987); Daniel P. O'Brien &

Greg Shaffer, The Welfare Effects of Forbidding Discriminatory Discounts: A Secondary-Line Analysis of Robinson-

Patman, 10 J.L. ECON. & ORG. 296, 318 (1994). Final conclusions and a call for a repeal of the act based on theoretical and

anecdotal empirical evidence see AMC, FINAL REPORT, supra note 5, at 311-326. According to Levine, the "political

pressure generated by resentment of price discrimination is usually expressed as calls for measures that eliminate the market

power assumed to underlie it". Michael E. Levine, Price Discrimination without Market Power, YALE J. REG. 1 (2002)

11

1 M.D.FLA

2 N.D.TEX

1 D.UTAH

2 W.D.TEX

1 E.D.ARK

1 W.D.PA

2 E.D.MICH

1 W.D.VA

1 E.D.MO

2 N.D.GA

2 S.D.GA

3 C.D.CAL

2 M.D.PA

2 D.CONN

1 D.COLO

4 E.D.LA

2 S.D.IND

1 D.OR

1 S.D.MISS

1 W.D.LA

3 W.D.MICH

1 D.MD

1 D.R.I

3 E.D.N.Y

1 D.ME

1 W.D.VIR

1 W.D.WASH

1 D.N.H

2 W.D.KY

1 S.D.FL

1 M.D.N.C

1 D.MASS

In nine cases, the complaints were filed as a class action on behalf of a group of purchasers or

as a complaint filed by a united group of plaintiffs (but not as a class action). The size of the

plaintiff body ranged from a group of six purchasers up to hundreds grouped under one

organization. The main group complaints were filed by bookstore and drugstore organizations

against publishers of books, manufacturers of drugs, and wholesalers and discount stores of these

products (as being the favored purchaser). The other 91 complaints were filed by a small number

of plaintiffs.22 Table 3 shows that 85 cases, the great majority, were initiated by the disfavored purchaser.

Only in 15 cases did the disfavored purchaser allege illegal price discrimination as a counterclaim

in a suit brought by the supplier. This means that most of the purchasers were willing to take the

risk of filing a complaint against the supplier, and to face the possibility of paying legal fees and

legal costs to the defendant if they lost in trial.

Table 3. Distribution of cases by the initiator of the complaint

Disfavored Purchaser Supplier Year

10 0 1991

7 1 1991

22

According to the interpretation of the Robinson-Patman Act by circuit courts, it has become difficult (but not impossible)

to file class actions claiming for a breach of the secondary line prohibition, since every purchaser must show its individual

competitive injury caused due to the discrimination.

11

7 1 1992

8 1 1993

12 0 1994

8 3 1995

4 1 1996

8 2 1997

8 1 1998

4 5 1999

9 1 2111

85 15 Total

Note: In cases the supplier initiated the complaint, the secondary line complaint was filed by the disfavored

purchaser as a counterclaim

B. Contractual relationships and additional allegations in the complaints

1. Empirical results

In 84 cases there was evidence as to the existence of a written contract between the suppliers and

the purchasers. Sixty of the contracts (71 percent) were terminated before the complaint was filed,

of which 49 (82 percent of the terminated contracts) were terminated by the supplier, and five

contracts ended after the purchaser closed its business. Only six contracts (12 percent) ended at the

initiative of the disfavored purchaser. Table 4 shows the results divided by years. Table 4. Distribution of cases by the contractual relationships and the way they ended

Percentage of

Terminated Cases by

the supplier of the

Written Contracts

Number of Cases the

Written Contract

Terminated by the

Supplier

Number of Written

Contractual

Relationships

Year

62.5 5 8 1991

50 2 4 1991

57.1 4 7 1992

66.6 6 9 1993

55.5 5 9 1994

66.6 6 9 1995

80 4 5 1996

50 5 11 1997

28.5 2 7 1998

85.7 6 7 1999

50 4 8 2111

58.3 49 88 Total

As Table 5 shows, of all the cases, only 14 were solely secondary line price discrimination cases. Thirteen cases included additional antitrust complaints (mostly violations of sections 1 and

2 of the Sherman Act). Thirty-one cases included non-antitrust claims in addition to the secondary

line complaint (without any additional antitrust complaint), and 42 cases included allegations of

non-antitrust and antitrust violations in each case, in addition to the secondary line allegation.

Table 5. Distribution of cases based on the additional allegations in the complaint

Additional

Antitrust

Allegations and

Non-Antitrust

Allegations

Additional Non-

Antitrust

Allegations

without

Antitrust

Additional

Antitrust

Allegations

without

Non-Antitrust

Only Illegal

Secondary Line

Discrimination

Allegations

Year

12

Allegations Allegations

6 3 0 1 1991

3 2 1 1 1991

3 3 1 1 1992

7 2 0 1 1993

3 5 2 2 1994

2 4 1 3 1995

2 2 0 1 1996

5 2 1 3 1997

4 3 2 1 1998

4 1 4 1 1999

3 4 1 2 2111

42 31 13 08 Total

Table 6 shows the number of illegal practices alleged in each complaint. The largest group

includes 63 cases with four and above allegations of illegal practices. Fifteen cases include three

complaints in each case. The rest include up to two complaints. In most of the cases, then, the allegation of price discrimination wasn't the sole complaint made by the plaintiff purchaser against

the supplier. The average complaints per case were more than 3.47.

Table 6. Number of complaints in each case

No

Information

Four and

More

Complaints

Three

Complaints

Two

Complaints

One Complaint Year

0 7 2 0 1 1991

1 3 1 1 1 1991

0 7 0 1 0 1992

0 8 1 0 0 1993

0 8 2 2 0 1994

3 4 3 0 1 1995

0 2 2 1 0 1996

1 7 0 1 1 1997

2 6 1 0 0 1998

1 5 1 2 0 1999

0 6 2 1 1 2111

8 63 (68.4%) 15 (16.3%) 9 (9.7%) 5 (5.4%) Total

Tables 7a-7b show the nature of the additional antitrust and non-antitrust allegations in the

complaints, in addition to the price discrimination complaint. In 41 cases, the plaintiffs alleged

illegal dealer termination. Forty-eight cases included a claim for breach of contract by the supplier.

Twenty-four cases included a claim for fraud by the supplier. Additional allegations were unfair trade, damages and unjust enrichment (25 cases), and interference with trade or business (32

cases).23

Table 7a. Illegal antitrust practices alleged in complaints

Monopoly or

Monopolization

Restraint

of Trade

Conspiracy Merger

and

Joint

Venture

Tying or

Excusive

Dealing

Refusal

to Deal

Vertical

Price

Fixing

Horizontal

Price

Fixing

Year

2 4 2 0 2 1 2 2 1991

2 3 1 2 1 2 0 0 1991

2 2 5 0 1 3 0 0 1992

23

The total of the allegations is more than 100 because individual cases can have more than one alleged illegal practice.

13

5 3 5 1 4 3 3 2 1993

2 2 2 0 1 0 1 1 1994

3 1 3 0 0 2 1 0 1995

1 1 0 0 1 1 1 0 1996

1 0 0 0 1 0 3 0 1997

3 3 0 0 2 1 0 0 1998

4 1 2 0 2 1 0 1 1999

3 3 2 0 2 3 1 0 2111

28 (21.8) 23 (17.9) 22 (17.1) 3 (2.3) 17 (13.2) 17 (13.2) 12 (9.3) 6 (4.6%) Total

Table 7b. Illegal non-antitrust practices alleged in complaints

No

Information

Unfair Trade

or Unjust

Enrichment

Fraud Breach of

Contract

Interference

with Trade

or Business

Dealer Termination Year

0 1 1 3 3 3 1991

0 3 1 2 0 3 1991

0 3 3 4 5 3 1992

0 4 4 9 3 7 1993

2 4 4 6 4 5 1994

0 4 3 5 4 3 1995

0 4 0 3 2 2 1996

0 0 1 5 3 4 1997

1 2 2 5 2 2 1998

2 0 3 1 4 5 1999

0 0 2 5 2 4 2111

5 (2.8) 25 (14.2) 24 (13.7) 48 (27.4) 32 (18.2) 41 (23.4%) Total

In 13 cases, court decisions held that the disfavored purchaser failed to pay its monetary debt

to the supplier. In another case, the court ruled that the purchaser violated the intellectual property

rights of the supplier. In an additional 14 cases, the supplier claimed for additional illegal conducts

by the purchaser. Those cases, divided by the nature of the allegations, are presented in Table 8.

Table 8. Supplier claims of illegal conduct by the disfavored purchaser.

Of Those, Final Ruling by the

Court In Favor of the Supplier

Number of Cases with Information Nature of Illegal Claim

1 3 Breach of Intellectual Property Rights

0 2 Breach of Contract

13 21 Unpaid Debt

0 2 Other Allegations

14 28 Total

Note: The data in the table do not include separate complaints filed by the supplier against plaintiff purchaser.

2. The findings indicate competitive failure

The fact that the great majority of complaints were initiated by the discriminated purchaser

matches the results showing that those complaints included additional contractual allegations (73

percent of the cases) and that the great majority of contractual relationships ended before the

complaint was filed. In those cases, the disfavored purchaser had contractual disagreements with

the supplier, which led the purchaser to file the complaint, asking for compensation and recovery.

Termination of the agreement by the supplier is a way to signal to the disfavored purchaser

that it can negotiate with other competing suppliers for a new distribution contract. In such a case,

the supplier is willing to lose the purchaser in the intra-brand competition, and to enable its

competitors to contact an experienced, well trained purchaser, which knows the secrets of the former supplier, its weaknesses, the most efficient way to sell the products to the consumers, and

has a well trained working staff and equipment.

14

Therefore, the complaint filed in court claiming damages might indicate that the purchaser

was unable to use its distribution skills to gain a competitive advantage over its rivals, or any other

skills that might have encouraged the supplier to keep on doing business with the purchaser. By

contrast, the law encourages those purchasers to free-ride over the skills and investments of other

favored purchasers, and to claim in court that there cannot be a price difference between them,

even if such discrimination does not cause any harm to consumers.24 In light of those results, one must therefore ask why the law should encourage a purchaser that has not gained any advantages

worth paying for or keeping.

If the contract termination clause allows the supplier to terminate the purchaser's contract in

some cases, and it chooses to do so legally, but the purchaser wishes to prevent it, the purchaser

has the ability to threaten the supplier with an expensive lawsuit of price discrimination that has

nothing to do with the contract's terms. Since all antitrust litigations are very expensive, and

complaints of a breach of the Robinson-Patman Act must be filed in federal court, this can be a

credible threat and the supplier may prefer to settle with the plaintiff purchaser, even if it makes no

economic sense. The costs of the settlement or alternatively the costs of defending itself in court

will cause an increase in the price of the product, and consumers may have to pay more for the

same products because an unsuccessful purchaser used its legal right to sue the supplier for

secondary line discrimination. Since the research shows that there are many cases in which the supplier sought to terminate

the purchaser's contractual relationship, this may indicate that the supplier did not gain enough

from the discrimination between its purchasers, even if it did have market power.

Moreover, by deciding to terminate the purchaser's contract, the supplier was in effect

declaring that the outcomes of the termination are more efficient and profitable than the

discrimination, even if it exposes itself to a complaint. If the supplier had gained significant profit

from the discrimination between its purchasers, it could have easily continued to sell its products

to both purchasers in a discriminatory manner, gaining more profits as it used to do.

The treble damages award for successful plaintiffs in antitrust litigation increases the

purchaser's motivation to file a complaint for illegal secondary line price discrimination, in

addition to allegations of non-antitrust violations for which no such increased remedy is awarded, and in cases in which the purchaser doesn't have any other allegations.25 Once the parties terminate

their contractual relationship, the purchaser has more to gain by alleging price discrimination and

using the threat of treble damage in order to increase its probabilities of success or settlement.

Since the supplier knows that termination can dramatically increase the potential to be sued for

discriminatory practices, the fact that it chose to do so proves that it didn't gain from any

discriminatory behavior.

By contrast, assuming that the purchaser and supplier had a substantial, long-term contractual

relationship (as will be shown later on), and since the supplier wishes to maintain high-quality,

efficient purchasers selling its products to consumers and third parties, it is not surprising that

there are only few cases in which the lawsuit was filed for illegal price discrimination only, with

no other allegation. Any litigation between a purchaser and a supplier significantly damages the

fragile relationship between the parties, as the complaint may (directly or indirectly) cause the parties to end the contract.

24

The problem is known in vertical relationships as the "downstream moral hazard and the free ride" problem. It occurs

when a purchaser cannot fully enjoy its selling efforts and investment in promoting the suppliers' products, while other

purchasers rely on those investments. The use of price discrimination by supplier can increase competition among

suppliers, since competitive distribution system, and reduce of free ride in such a system, can help the manufacturer to

compete more effectively against other manufacturers. See also Herbert Hovenkamp, The Robinson-Patman Act and

Competition: Unfinished Business, 68 ANTITRUST L.J. 125, 126 (2000); and AMC – FINAL REPORT, supra note 5, at 319.

For the use of vertical restraints to decrease the free ride effect see SULLIVAN E. THOMAS, HARRISON JEFFREY L.,

UNDERSTANDING ANTITRUST AND ITS ECONOMIC IMPLICATIONS, 219 (3ed, 2000); Howard P. Marvel & Stephen

McCafferty, Resale Price Maintenance and Quality Certification, 15 RAND J. ECON 346 (1984); Preston McAfee & Marius

Schwartz, Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity, and Uniformity, 84 AM.

ECON. REV. 210, 212 (1994). Yossi Spigel & Yaron Yehezkel, Price and Non-Price Restraints When Retailers are

Vertically Differentiated, INT. J. INDUS. ORG. 21 (2003). 25

Section 4 of the Clayton Act states that "any person who shall be injured in his business or property by reason of

anything forbidden in the antitrust laws may sue therefore in any district court of the United States . . . [and] shall recover

threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee," 15 U.S.C. § 15; for

treble damages in price discrimination cases, see Truett, 541 U.S. at 559.

15

Therefore, as long as the parties have a good contractual relationship they will hesitate to lose

their initial investment: that of the supplier in teaching and training a purchaser to successfully

distribute the products and provide the other services required, and that of the purchaser in

adapting its business to the needs of the supplier. Suppliers will therefore settle with purchasers

out of court, since they have the motivation to keep good contractual relationships with efficient

and experienced purchasers. Therefore, the research outcomes regarding the contractual relationships and the termination

of the agreement by the supplier in most cases may indicate a lack of any discrimination which

harms consumers or competition, or alternatively may indicate that the purchaser wasn't efficient

enough to be worth keeping.

A supplier's ability to discriminate between purchasers and to terminate the distribution

contract with an opportunistic purchaser can increase competition in the distribution system and

help solve the moral hazard and free ride problem that exist in intra-brand competition. The ability

of a free-rider and failing purchaser to file a claim for illegal price discrimination and ask for

beneficial conditions, causing the supplier and the favored purchaser to fear of such a lawsuit,

cannot be justified by law and has nothing to do with consumers' welfare or even with competition

between purchasers.

C. Complaint against favored purchaser

Thirty-three cases included secondary line complaints against the favored purchaser under section

2(f) of the Robinson-Patman Act. Those data are shown in Table 9.26

Table 9. Secondary line complaints against the favored purchaser under section 2(f) of the Robinson-Patman

Act

Number of Cases Including Favored Purchaser Year

5 1991

1 1991

0 1992

8 1993

8 1994

1 + additional separate suit 1995

1 + additional separate suit 1996

0 1997

3 1998

5 1999

8 2111

33 + 2 additional separate suits Total

Disfavored purchasers may be expected to file a complaint against the favored purchaser in

many more cases than shown in the research. According to section 2(f) of the Robinson-Patman

Act and section 4 of the Clayton Act, for any illegal discrimination which was harmful to the

disfavored purchaser, it can receive a treble damages award from the favored purchasers, unless

the latter did not know they were getting favorable prices. If the disfavored purchaser ended its contractual relationship with the supplier, it should not hesitate to claim for damages from its

rivals as well as the supplier, especially if it has already decided to file the complaint against the

supplier and pay for legal counsel and the costs of filing the claim. If the purchaser cannot file a

complaint because the favored purchaser knew nothing about the favorable treatment it received, it

26

Section 2(f) provides "that 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." 15 U.S.C. § 13(f). It was

therefore difficult, in some cases, to trace the identity of the favored purchaser and collect information as to its business

relationship with the supplier, its advantages over the disfavored purchaser, and its size. However, since the allegation of

secondary line discrimination requires a comparison between the disfavored and favored purchasers, there was more

information in the files than in other contract, damage and antitrust cases in which the dispute had nothing to do with

competing third parties, which are not the end consumers

16

can be said that the advantage the favored purchaser gained was not significant in such a way as to

decrease the competition between the purchasers or the competition over the consumers.

Furthermore, a disfavored purchaser knows that if it files a complaint against the favored

purchaser, the complaint and evidence supporting it will have to include the sales efforts made by

both parties. Citing only the supplier in the complaint will enable the plaintiff purchaser to avoid

exposing its sales efforts and having them compared to those of other purchasers. Since the favored purchaser wasn't cited in most of the cases, although there is considerable logic in doing

so, it may be assumed that the disfavored purchaser has more to lose by filing such a complaint

and exposing competitive evidence as to the sales efforts of the purchasers, perhaps revealing an

opportunistic behavior which led to the preferential treatment the favored purchaser received.

D. Size and seniority of the purchasers – how they affect price discrimination

1. Results

Fifty-three cases included information regarding the size of the favored purchaser compared to the

size of the plaintiff purchaser. In 43 (81 percent of these cases), the favored purchaser was significantly larger than the purchaser complaining of discrimination. In six cases (11 percent) the

discriminated purchaser was larger. In four additional cases the purchasers were of relatively the

same size. The results are presented in Table 10.

Table 10. Size of the favored purchaser compared to the size of the plaintiff purchaser

No Information Favored

Purchaser

Larger

Favored

Purchaser

Smaller

Similar Size Year

6 2 1 1 1990

2 5 0 0 1991

3 4 0 1 1992

2 4 3 0 1993

4 7 0 1 1994

5 6 0 0 1995

2 2 1 0 1996

5 4 0 1 1997

7 2 0 0 1998

6 2 1 0 1999

5 5 0 0 2000

47 43 (81.1%) 6 (11.3%) 4 (7.5%) Total

The research found 52 cases with information as to the seniority of the plaintiff purchaser as a

purchaser of the supplier's products compared to that of the favored purchaser. In 34 (65 percent of

these cases), the plaintiff purchaser had seniority over the favored purchaser. In seven cases the

favored purchaser had seniority over the plaintiff seller. In 11 cases they had distributed the

supplier's products for relatively the same period of time. In 72 cases there was information as to the year the plaintiff purchaser started distributing the

supplier's products. In 29 cases (40 percent of these cases) the purchaser's experience in

distributing the supplier's products exceeded 10 years. In 18 cases (25 percent) it ranged from five

to ten years, in ten cases (14 percent) from three to five years, and in eight cases (11 percent) from

one to three years. The average distribution time accedes 6.73 years. In seven cases the distribution

experience was less than one year. Tables 11-12 show the finding divided by years.

Table 11. Seniority of the favored purchaser compared to the plaintiff purchaser

No Information Favored

Purchaser has

Seniority

Disfavored

Purchaser has

Seniority

Similar Seniority

6 0 3 1 1990

5 0 2 0 1991

4 0 2 2 1992

17

3 2 4 0 1993

6 0 4 2 1994

7 1 3 0 1995

3 0 2 0 1996

4 0 5 2 1997

3 0 2 3 1998

4 2 3 0 1999

3 2 4 1 2000

48 7 (13.4%) 34 (65.3%) 11 (21.1%) Total

Table 12. Number of years the disfavored purchaser sold the supplier's products

No

Information

More than

10 years

5-10 years 3-5 years 1-3 years Up to 1

Year

Year

5 5 0 0 0 0 1990

3 1 1 2 0 0 1991

3 0 0 3 1 1 1992

2 2 3 0 2 0 1993

4 6 1 0 1 0 1994

4 3 2 0 1 1 1995

1 1 3 0 0 0 1996

0 2 5 2 1 1 1997

1 3 0 3 0 1 1998

3 2 1 0 2 1 1999

2 4 2 0 0 2 2000

28 29 (40.2%) 18 (25%) 10 (13.8%) 8 (11.1%) 7 (9.7%) Total

As shown in Table 13, in the great majority of 89 cases, the discrimination allegedly extended

beyond a short, one time interaction, and only eight cases claimed for a one-time infraction or a short period of time in which the discrimination took place. In another three cases no such

information was available.

Table 13. Character of the discrimination

No Information Long Lasting

Discrimination

One Time or Short

Period of Time

Year

1 8 2 1991

0 7 1 1991

0 5 2 1992

0 9 1 1993

0 11 1 1994

0 10 1 1995

0 5 1 1996

0 9 1 1997

1 6 2 1998

0 9 1 1999

0 10 1 2111

3 89 (91.8%) 8 (8.2%) Total

2. How the results affect competition

The results match the economic thinking that suppliers tend to prefer large purchasers. It can also

be extrapolated that those purchasers use their size and the negotiating power they have over

suppliers to obtain better prices for the products they buy. Small purchasers do not have enough

negotiating power over suppliers, and consequently are unable to extract better terms from them.

18

These were the main concerns of the legislators of the Robinson-Patman Act. However, it

need be kept in mind that a purchaser's ability to obtain better prices from a supplier, especially

from a monopoly supplier, can be helpful to consumers: an oligopoly supplier or member suppliers

in a cartel agreement tend to use secret rebates and discounts in order to covertly breach the

coordinated behavior. A supplier will prefer to use one or a few large purchasers rather than many

small ones, since keeping the lower prices secret and hiding the discount from other members of the cartel is easier with a few big purchasers than with many small ones.

As the research shows, the great majority of plaintiffs had distributed the supplier's products

for many years. It may therefore be assumed that the supplier and purchaser knew each other well

enough to estimate each other's efficiency and advantages and the purchaser's ability to sell the

product to end consumers. The research indicates that although the plaintiffs had a substantial

amount of time to establish advantages in promoting and selling the supplier's products to

consumers, and knew the supplier's preferences, they were nevertheless discriminated against by

the supplier, or at least believed they were. 27

The empirical results, besides the nature of the lawsuits in general and the fact that most of the

complaints were initiated by the purchaser, indicate that purchasers complained about

discriminatory prices in most cases after the long-term relationships ended or were about to end

due to other circumstances, mostly disagreements over contracts or damages. The discrimination claim arose from other disputes, or at least was alleged in court after many years of contractual

relationship during which no such claim was made.

Section 4B of the Clayton Act28 provides a four-year statute of limitations for private antitrust

actions, including a Robinson-Patman action. The limitation period begins when the cause of

action occurs – ordinarily, when the plaintiff suffers injury resulting from an antitrust violation.29

Since there is a four year limitation to filing secondary line discrimination complaint, the long-

term relationships of over five years (in about 65 percent of the cases with relevant information)

may be an indication, first, that the purchasers may have preferred not to sue even though they

suffered from discrimination over the years, and filed their complaints only after the relationships

ended, leading to other contractual and damages claims. That may be the explanation, especially if

the plaintiff invested at the beginning of the contractual relationship in promoting the product, and in facilities and training to adjust to the special needs of the product and supplier.

A purchaser would naturally wish to keep the contract with the supplier and not start a new

contract with a competing supplier that would demand investment in training, special equipment

and other adjustments to the special needs of the competing product. In that case, the problem of

discrimination is actually a contractual problem, and purchasers should better protect themselves

by means of termination clauses and fine clauses.

If purchasers cannot protect themselves by means of contractual clauses, the problem of

discrimination is a signal of market power and should be dealt with using the prohibition of abuse

of dominant position under the Sherman Act30 and section 102(a) of the TFEU (unfair conditions)

and not by preventing discrimination, since the problem begins with the uneven positions of

contractual parties rather than discrimination. As such, the problem of uneven parties and

dominant supplier has nothing to do with secondary line price discrimination. Second, old purchasers may have been willing to compromise when a supplier favored new

purchasers that needed to invest in new equipment, training and facilities, for which reason the

supplier wished to help them financially and reduce the risks and costs (lower the entry barriers) of

the new purchasers.

In that case, the law should encourage discrimination, since special prices to new purchasers

can increase competition in intra-brand markets between purchasers. If antitrust laws are intended

to increase downstream competition and consumers' welfare, they should be designed to promote

27

See Inderst & Shaffer, supra note 21, at 659. In the article the authors explain how the secondary line prohibition can

cause the increase in prices for consumers. The profits will shift from the efficient reseller to the inefficient reseller. 28

CLAYTON ACT, U.S.C. § 15b (1914). 29

ABA SECTION OF ANTITRUST LAW, ANTITRUST LAW DEVELOPMENT, 858 (6th ed. 2007). 30

SHERMAN ACT, 15 U.S.C. §§ 1-7 (1890). The Sherman Act already provides a remedy against the existence of monopoly

power. Section 1 of the Sherman Act protects against unlawful agreements (including price discrimination) based on

monopoly power. Section 2 outlaws the unlawful acquisition or maintenance of monopoly power. See AMC, FINAL

REPORT, supra note 5, at 323-324

19

new players entering the market and willing to invest in the promotion and distribution of

products, and encourage special action taken by suppliers that can increase competition and reduce

entry barriers.

To the contrary, the price discrimination prohibition bans the granting of favorable terms to

new purchasers and therefore discourages firms from entering the intra-brand market. As the

research indicates, banning discriminatory pricing for newer purchaser decreases intra-brand competition, protects old purchasers that are afraid of competition, and encourages inefficient

purchasers that are unable to meet the needs of consumers.

One of the main concerns regarding the abuse of monopoly power is that a monopoly supplier

will try to raise the entry barriers of its rivals and potential rivals by using its market power, and

therefore antitrust laws restrict the ability of a monopoly supplier to abuse its power by using

exclusive contracts. Exclusive agreements between a monopoly and its purchasers would prevent

trained and experienced purchasers from contacting the supplier's rivals and block distribution

channels. The results of the research indicate that the secondary line prohibition discourages

monopoly suppliers from allowing experienced purchasers to contract with other suppliers. If a

supplier ends its contractual relationship with a well trained purchaser and discriminates in such a

way that the purchaser chooses to sue the supplier, the plaintiff purchaser is also likely to seek an

alternative by distributing competing products. That purchaser will have gained advantages and knowledge of the market, the consumers' preferences, and the weaknesses of the monopoly

product, and will easily be able to sell the competing product.

Also, since the purchaser knows the market well, it can easily become a rival to the supplier.

For example, a disfavored wholesaler can promote a private label which competes with the

products of the supplier-manufacturer, since it knows the market, the special needs of the

consumers, and how to distribute the competing product.31 Discrimination encourages it to become

competitor, or alternatively to contact competing suppliers and promote their products.

The prohibition of price discrimination discourages monopoly suppliers from discriminating

among their purchasers, discourages experienced purchasers from contacting new suppliers, and

helps to protect monopoly suppliers.

However, in almost 20 percent of the cases the favored purchaser was not bigger than the plaintiff, and in 11 percent of them the purchaser claiming discrimination was larger than the

favored purchaser, which shows that small retailers and purchasers may well gain an advantage

giving them enough power to negotiate their prices and contractual conditions with suppliers. The

fact of the matter is, suppliers were willing to jeopardize relationships with large purchasers and

give smaller ones better prices. Furthermore, the fact that a supplier did not settle with a large

purchaser before the complaint was filed shows that the smaller purchaser had such an advantage

over the larger one that the supplier was willing to come to trial and present their respective

advantages and disadvantages.32

E. Products in secondary line cases Table 14 shows the variety of products sold to the plaintiffs at allegedly discriminatory prices.

Most of the products can be broken down into a few primary markets: communication – nine

cases; gasoline stations and fuel – 11 cases; vehicles, spare parts, and other modes of

transportation – eight cases; and photocopying machines and printers – eight cases.

According to the list in the table, in more than 75 percent of the cases, the products were not

of a kind commonly sold in large department stores or chain operations. The complaints, then,

31

In Stelwagon Mfg. Co. v. Tarmac Roofing Sys., 63 F.3d 1267 (3d Cir. 1995) the supplier sold its' products to the favored

purchaser as a private label product, in a price which decreases in 10-25 present of the price old to the disfavored purchaser. 32

"The Robinson-Patman Act signals no large departure from that main concern. Even if the Act's text could be construed

in the manner urged by Reeder and embraced by the Court of Appeals, we would resist interpretation geared more to the

protection of existing competitors than to the stimulation of competition. In the case before us, there is no evidence that any

favored purchaser possesses market power, the allegedly favored purchasers are dealers with little resemblance to large

independent department stores or chain operations, and the supplier's selective price discounting fosters competition among

suppliers of different brands." Volvo, 546 U.S. at 878-880 (2006)

21

were made against larger purchasers that bore little resemblance to those "bad" chain-stores the

legislator wished to restrict so it could protect "mom and pop" stores.33

In light of the nature of the products and the qualities of the purchaser and seller, it could be

said that in 60 cases the purchasers had the ability to significantly influence consumer satisfaction

and consumer preferences. The supplier would have wanted to encourage efficient purchasers and

prevent free-riding by other purchasers. By using price discrimination, a supplier could easily help those purchasers that tend to invest time and money in marketing and services for the product,

when those efforts are directed towards selling the supplier's products. By contrast, a supplier

could discriminate against those purchasers that tend to free-ride on the efforts of others,

especially as to products that require special service. 34

The research shows that the price discrimination prohibition makes it difficult for a supplier to

promote such efficiency, especially as to products that require special investments in marketing

and services, and therefore it must apply other vertical restraints upon the purchasers' trading

practices. The price discrimination prohibition and the treble damages remedy thereby decrease a

supplier's ability to prevent free-riding.

Moreover, a supplier's ability to discriminate among its purchasers solves the free-ride

problem by means of a competitive method, without using anticompetitive agreements and

restraints such as exclusivity and resale price maintenance (RPM).35 If discrimination could be practiced, suppliers would reduce the use of other methods that interfere with purchasers' business

decisions, since it would allow purchasers to choose whether to invest in marketing the product

and receive the discount, or not to invest money and time and therefore not get the same discount.

By contrast, exclusive agreements and RPM clauses do not enable the purchaser to make such a

choice.

The communication, gasoline, photocopying and transportation vehicle markets all have dual

distribution systems, meaning the supplier maintains a distribution system of its own as well as a

distribution system consisting of many purchasers. Purchasers therefore compete sometimes with

the supplier.

Communication (especially hardware such as cellular phones), photocopying and vehicle

products all carry an after-sale warranty. Additional products with after-market warranty are electronic devices and tools. Table 14 shows that many of these products tend to be the subject of

price discrimination cases.

Table 14. Products

Number of Cases The Products

3 Electronic Tools + Repairs

3 Cigarette

9 Communication

1 Car Repair

9 Photocopy, Computers, Scanners

0 Safety Belts

1 Pipes

8 Books

0 Lawn Mower

0 Garage Doors

5 Pet Food

00 Petroleum Stations

0 Beer

33

Volvo, 546 U.S. at 870: "Augmenting that provision in 1936 with the Robinson-Patman Act, Congress sought to target the

perceived harm to competition occasioned by powerful buyers, rather than sellers; specifically, Congress responded to the

advent of large chain stores, enterprises with the clout to obtain lower prices for goods than smaller buyers could demand.." 34

The ability to discriminate among purchasers in intermediate markets can increase competition even when the supplier

possesses market power. See Daniel P. O'Brien & Greg Shaffer, Vertical Control with Bilateral Contracts, 23 RAND J.

ECON. 299 (1992); Patrick Rey & Thibaud Verge, Bilateral Control with Vertical Contracts, 35 RAND J. ECON. 728 (2004);

Preston McAfee & Marius Schwartz, Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity,

and Uniformity: Reply, 94 AM. ECON. REV. 796, 802–803 (2004). 35

Robert H. Bork, Resale Price Maintenance and Consumer Welfare, 77 YALE L.J. 950 (1968).

21

0 Explosives

1 Electronic Databases

0 Software

8 Building Materials

0 Chemical Fabric

8 Vehicles, Motors and Spare Parts

0 Paper

0 Milk Products

0 Ice Cream

0 Pigments

0 Gift Cards

3 Electricity, Batteries

1 Medical Device

3 Cosmetic Products

1 Tires

0 Windows

0 Video Cassette

0 Shows

0 Restaurant

0 Dog Collar

0 Soft Drinks

0 Army Electronic Devices

0 Games

0 Steel

0 Motor Boats

0 Drugs

1 Food

0 Sun-Heater

1 No Information

When a customer receives a warranty over a product, she expects to receive the services she

paid for when she bought it. In such cases, if a supplier does not have the ability to encourage

purchasers to grant the best services to her, by using awards for success and penalties for failed

services, and instead is forced to grant the same price to all purchasers, regardless of the services

they provide or the quality of those services, it can only encourage failing purchasers and reduce

consumer satisfaction with the supplier's products.

Conclusion In this article I have shown that the empirical results lend support to discriminatory behavior on

the part of suppliers and their ability to discriminate among purchasers in a secondary line manner.

As the article shows, the concerns over the secondary line prohibition are well justified. The

empirical data indicate that taking such a complaint to court helps to maintain coordinated

competition between suppliers, increases the free-ride problem, keeps monopoly prices high, and

harms horizontal as well as vertical competition. Courts' decisions in the preliminary procedures

do not help to reduce the harm of the prohibition, even though the success rate of secondary line complaints is extremely low.

Therefore, managers have good reason to take many precautionary measures to avoid lawsuits,

even at the expense of raising prices, maintaining a coordinated cartel price, and reducing

competition between downstream firms.

The results indicate that the prohibition is incompatible with antitrust goals, namely to protect

consumer welfare and increase competition, and in fact it also has little to do with the goals of the

Congress in protecting "mom and pop" stores.36 Since 55 percent of the cases involving complaints

36

The Act's goal is to abolish unwarranted favoritism among all functional competitors, big or small. Its objective is to

ensure "that businessmen at the same functional level . . . start on equal competitive footing so far as price is concerned";

22

of secondary line violation also allege other antitrust violations, there must be a coherent line

between the goals of the two categories. However, the research shows that antitrust and secondary

line allegations contradict one another.37

In light of the results, one must ask whether the cost of maintaining similar prices among

retailers, wholesalers and resellers is worth the price of harming the consumer. Unfortunately, the

empirical results reveal that we pay a high price for maintaining the secondary line prohibition, and we protect free-riders and failing purchasers. We have much more to lose than to gain by

keeping the prohibition.

FTC v. Sun Oil Co., 371 U.S. 505, 520 (1963); Though the birth of the RPA was motivated by a desire to place "big"

purchasers on par with "small" ones, the Act's applicability is not limited to big buyer/small buyer cases. Boise Cascade

Corp. v. FTC, 267 U.S. App. D.C. 124 (D.C.Cir. 1988). "It 'is of general applicability and prohibits discriminations

generally.'" Falls City Indus., Inc. v. Vanco Everage, Inc., 460 U.S. 428, 436 (1983) (quoting FTC v. Sun Oil Co., 371 U.S.

505, 522 (1963)). Compare - FTC v. Morton Salt, 334 U.S. 37, 43-44 (1948): “The legislative history of the Robinson-

Patman Act makes it abundantly clear that Congress considered it to be an evil that a large buyer could secure a competitive

advantage over a small buyer solely because of the larger buyer’s quantity purchasing ability”. For the goals of the antitrust

laws, see Herbert Hovenkamp, Antitrust Policy After Chicago, 84 MICH. L. REV. 213 (1985).

37 The Chairman of the Federal Trade Commission, Deborah Platt Majoras, filed her statement before the Antitrust

Modernization Commission (21 March, 2006), concluding that "The Commission should seriously consider recommending

the repeal of the Robinson-Patman Act, the overall purpose of which stands in contrast to the recognized goals of modern

antitrust law – the protection and enhancement of consumer welfare." Available at

www.ftc.gov/speeches/majoras/060321antitrustmodernization.pdf.

23

Appendix A: List of cases, and reference to the lexis.com serial number

1990

Auto Parks, Inc. v. Stanley Works, 1990 U.S. Dist. LEXIS 9938 (E.D. Pa. July 26, 1990)

Capital Ford Truck Sales, Inc. v. Ford Motor Co., 779 F. Supp. 1345 (N.D. Ga. 1990)

Eagle Windows of Northern Illinois, Inc. v. Eagle Window & Door, Inc., 1990 U.S. Dist. LEXIS 12933

(N.D. Ill. Sept. 27, 1990)

Lubonski v. UIC, Inc., 1990 U.S. Dist. LEXIS 15221 (E.D. Pa. Nov. 8, 1990)

Mays v. Massey-Ferguson, Inc., 1990 U.S. Dist. LEXIS 10245 (S.D. Ga. Apr. 26, 1990)

Metro Video Dist. v. Vestron Video, Inc., 1990 U.S. Dist. LEXIS 18739 (D.P.R. Feb. 8, 1990)

Musick v. Burke, 913 F.2d 1390 (9th Cir. Cal. 1990)

National Music Centers, Inc. v. Kimball Int'l, Inc., 1990 U.S. Dist. LEXIS 17910 (M.D. Pa. Aug. 28,

1990)

Tolokan v. Mobil Oil Corp., 1990 U.S. Dist. LEXIS 19933 (D. Conn. June 20, 1990)

TV Communications Network, Inc. v. ESPN, Inc., 1990 U.S. Dist. LEXIS 18433 (D. Colo. Dec. 21, 1990)

1991

Adcom, Inc. v. Nokia Corp., 1991 U.S. Dist. LEXIS 8097 (E.D. La. June 7, 1991)

Hoosier Penn Oil Co. v. Ashland Oil Co., 934 F.2d 882 (7th Cir. Ind. 1991)

National Info. Servs. v. TRW Inc., 1991 U.S. Dist. LEXIS 21608 (D. Or. Dec. 17, 1991)

Oreman Sales, Inc. v. Matsushita Electric Corp., 768 F. Supp. 1174 (E.D. La. 1991)

Perkasie Indus. Corp. v. Advance Transformer, 1991 U.S. Dist. LEXIS 18709 (E.D. Pa. Dec. 23, 1991)

Retail Service Assoc. v. ConAgra Pet Products Co., 759 F. Supp. 976 (D. Conn. 1991)

Robertson's Battery Terminal, Inc. v. Pacific Cloride, Inc., 1991 U.S. Dist. LEXIS 20458 (W.D. Ky.

June 27, 1991)

1992

Ben Sheftall Distributing Co. v. Mirta de Perales, Inc., 791 F. Supp. 1575 (S.D. Ga. 1992)

Lightning luba v. Witco Corp., 802 F. Supp. 1180 (D.N.J. 1992)

Metro Communications Co. v. Ameritech Mobile Communications, Inc., 788 F. Supp. 1424 ( E.D.

Mich. 1992)

S & W Constr. & Materials Co. v. Dravo Basic Materials Co., 813 F. Supp. 1214 (S.D. Miss. 1992)

Southern Business Communications, Inc. v. Matsushita Electronic Corp., 806 F. Supp. 950 (N.D. Ga.

1992)

Tel-Phonic Services, Inc. v. TBS Int'l, Inc., 975 F.2d 1134 (5th Cir. Tex. 1992)

Videocipher v. Satellite Earth Stations SESE, Inc., 1992 U.S. Dist. LEXIS 14162 (W.D. La. July 30,

1992)

Florida v. Knapp King-Size Corp., 1992 U.S. Dist. LEXIS 21544 (W.D. Mich. Oct. 19, 1992)

1993

Al Copeland Enters., Inc. v. C.T.V. Sys., Inc., 1993 U.S. Dist. LEXIS 7373 (E.D. La. May 21, 1993)

Acquaire v. Canada Dry Bottling Co., 24 F.3d 401 (2d Cir. N.Y. 1994)

Caribe BMW v. Bayerische Motoren Werke Aktiengesellschaft, 821 F. Supp. 802 (D.P.R. 1993)

Coastal Fuels Inc. v. Caribbean Petroleum Corp., 990 F.2d 25 (1st Cir. P.R. 1993)

24

Gabriel & Assocs. v. Invisible Fence Co., 1993 U.S. Dist. LEXIS 19907 (D. Md. Nov. 9, 1993)

Khoury v. Getty Petroleum Corp., 1993 U.S. Dist. LEXIS 19641 (D.R.I. Dec. 3, 1993)

Nichols Motorcycle Supply v. Dunlop Tire Corp., 1993 U.S. Dist. LEXIS 17241 (N.D. Ill. Dec. 3, 1993)

RSI Wholesale of Grand Rapids v. Rollex Corp., 1993 U.S. Dist. LEXIS 15839 (W.D. Mich. Oct. 14,

1993)

Shaheen Hyundai Motors, Inc. v. Hyundai Motor Am., 1993 U.S. Dist. LEXIS 13909 (W.D. Mich. Sept.

17, 1993)

1994

Acadia Motors v. Ford Motor Co., 844 F. Supp. 819, 1994 U.S. Dist. LEXIS 2118 (D. Me. 1994)

Anaren Microwave v. Loral Corp., 855 F. Supp. 634, 1994 U.S. Dist. LEXIS 8018 (S.D.N.Y. 1994)

Anti-Monopoly v. Hasbro, Inc., 1994 U.S. Dist. LEXIS 6769 (S.D.N.Y. May 23, 1994)

Bob Nicholson Appliance v. Maytag Co., 883 F. Supp. 321, 1994 U.S. Dist. LEXIS 20208 (S.D. Ind.

1994)

Bristol Steel & Iron Works v. Bethlehem Steel Corp., 41 F.3d 182 (4th Cir. Va. 1994)

Bryant Corp. v. Outboard Marine Corp., 1994 U.S. Dist. LEXIS 18371 (W.D. Wash. Sept. 29, 1994)

High Tech Communications v. Panasonic Co., 1994 U.S. Dist. LEXIS 12687 (E.D. La. Sept. 2, 1994)

In re Brand Name Prescription Drugs Antitrust Litig., 1994 U.S. Dist. LEXIS 7146 (N.D. Ill. May 26,

1994)

Lago & Sons Dairy v. H.P. Hood, Inc., 1994 U.S. Dist. LEXIS 12909 (D.N.H. Sept. 6, 1994)

Luzerne & Lackawanna Supply Co. v. Peerless Indus., 855 F. Supp. 81, 1994 U.S. Dist. LEXIS 8012

(M.D. Pa. 1994)

Oki Distrib. v. Amana Refrigeration, Inc., 850 F. Supp. 637, 1994 U.S. Dist. LEXIS 5399 (S.D. Ohio

1994)

Stelwagon Mfg. Co. v. Tarmac Roofing Sys., 862 F. Supp. 1361, 1994 U.S. Dist. LEXIS 12812 (E.D. Pa.

1994)

1995

American Booksellers Ass'n v. Houghton Mifflin Co., 1995 U.S. Dist. LEXIS 2044 (S.D.N.Y. Feb. 21,

1995)

Big Rivers Elec. Corp. v. Thorpe, 1995 U.S. Dist. LEXIS 21970 (W.D. Ky. May 30, 1995)

D.S. Am. (E.) v. Chromagrafx Imaging Sys., 873 F. Supp. 786, 1995 U.S. Dist. LEXIS 859 (E.D.N.Y.

1995)

Thompson v. Nashua Corp., 907 F. Supp. 247, 1995 U.S. Dist. LEXIS 18618 (W.D. Tex. 1995)

Hewlett-Packard Co. v. Arch Assocs. Corp., 908 F. Supp. 265, 1995 U.S. Dist. LEXIS 18260 (E.D. Pa.

1995)

Kotam Elecs. v. JBL Consumer Prods., 59 F.3d 1155 (11th Cir. Fla. 1995)

Labrador, Inc. v. Iams Co., 1995 U.S. Dist. LEXIS 21149 (C.D. Cal. Sept. 18, 1995)

Liebers v. Moore Pretzel Co., 1995 U.S. Dist. LEXIS 5137 (E.D.N.Y. Mar. 10, 1995)

M/A-Com, Inc. v. C.W. Swift & Assocs., 1995 U.S. Dist. LEXIS 22321 (C.D. Cal. Sept. 27, 1995)

Sea-Roy Corp. v. Parts R Parts, 1997 U.S. Dist. LEXIS 21809 (M.D.N.C. Dec. 2, 1997)

Sousa v. BP Oil, 1995 U.S. Dist. LEXIS 20961 (D. Mass. Sept. 12, 1995)

1996

25

American Booksellers Ass'n v. Random House, 1996 U.S. Dist. LEXIS 12775 (S.D.N.Y. Aug. 12, 1996)

Cosmetech Int'l v. Der Kwei Enter. & Co., 943 F. Supp. 311, 1996 U.S. Dist. LEXIS 14998 (S.D.N.Y.

1996)

Hansel v. Shell Oil Corp., 169 F.R.D. 303, 1996 U.S. Dist. LEXIS 16983 (E.D. Pa. 1996)

Kendall Co. v. Southern Medical Supplies, 913 F. Supp. 483, 1996 U.S. Dist. LEXIS 1142 (E.D. La.

1996)

Ralph Kearney & Sons v. Emerson Elec. Co., 1996 U.S. Dist. LEXIS 12600 (E.D. Pa. Aug. 29, 1996)

1997

DYNO Nobel, Inc. v. Amotech Corp., 959 F. Supp. 109, 1997 U.S. Dist. LEXIS 4093 (D.P.R. 1997)

George Haug Co. v. Rolls Royce Motorcars, 1997 U.S. Dist. LEXIS 13650 (S.D.N.Y. Sept. 5, 1997)

Hoover Color Corp. v. Bayer Corp., 1997 U.S. Dist. LEXIS 12676 (W.D. Va. July 24, 1997)

Iams Co. v. Falduti, 974 F. Supp. 1263, 1997 U.S. Dist. LEXIS 10049 (E.D. Mo. 1997)

Juliano v. Sun Ref. & Mktg. Co., 1997 U.S. Dist. LEXIS 24140 (E.D. Pa. Feb. 28, 1997)

Metro Ford Truck Sales, Inc. v. Ford Motor Co., 1997 U.S. Dist. LEXIS 24041 (N.D. Tex. July 29,

1997)

National Ass'n of College Bookstores v. Cambridge Univ. Press, 990 F. Supp. 245, 1997 U.S. Dist.

LEXIS 18298 (S.D.N.Y. 1997)

Parker Ice Cream Co. v. Conopco, Inc., 1997 U.S. Dist. LEXIS 8570 (E.D.N.C. May 22, 1997)

Sawhney v. Mobil Oil Corp., 970 F. Supp. 366, 1997 U.S. Dist. LEXIS 9972 (D.N.J. 1997)

Walker v. Hallmark Cards, 992 F. Supp. 1335, 1997 U.S. Dist. LEXIS 21868 (M.D. Fla. 1997)

World Wide Communs. v. Rozar, 1997 U.S. Dist. LEXIS 20596 (S.D.N.Y. Dec. 29, 1997)

1998

ABC Rail Prods. Corp. v. Progress Rail Servs. Corp., 1998 U.S. Dist. LEXIS 14510 (N.D. Ill. Sept. 10,

1998)

Allcar Motor Parts Corp. v. Federal-Mogul Corp., 1998 U.S. Dist. LEXIS 15164 (S.D.N.Y. Sept. 28,

1998)

Bell v. Fur Breeders Argic. Coop., 3 F. Supp. 2d 1241, 1998 U.S. Dist. LEXIS 5507 (D. Utah 1998)

Cool Insulation, Inc. v. Owens-Corning Fiberglass Corp., 68 F. Supp. 2d 763 (W.D. Tex. 1998)

DJ Mfg. Corp. v. Tex-Shield, Inc., 998 F. Supp. 140, 1998 U.S. Dist. LEXIS 4390 (D.P.R. 1998)

Frank Sexton Enters. v. Societe De Diffusion Internationale Agro-Alimentaire, 1998 U.S. Dist. LEXIS

13594 (E.D. Pa. Aug. 28, 1998)

Hugh Chalmers Motors, Inc. v. Toyota Motor Sales U.S.A., Inc., 1998 U.S. Dist. LEXIS 22538 (E.D.

Ark. Jan. 21, 1998)

Precision Printing Co. v. Unisource Worldwide, Inc., 993 F. Supp. 338, 1998 U.S. Dist. LEXIS 1571

(W.D. Pa. 1998)

1999

Anheuser-Busch, Inc. v. G.T. Britts Distrib., Inc., 44 F. Supp. 2d 172, 1999 U.S. Dist. LEXIS 4856

(N.D.N.Y 1999)

Ansel Communs., Inc. v. Novell, Inc., 1999 U.S. Dist. LEXIS 22738 (N.D. Cal. Mar. 23, 1999)

Chawla v. Shell Oil Co., 75 F. Supp. 2d 626, 1999 U.S. Dist. LEXIS 20352 (S.D. Tex. 1999)

Credit Chequers Info. Servs. v. CBA, Inc., 1999 U.S. Dist. LEXIS 6084 (S.D.N.Y. Apr. 28, 1999)

26

KMG Kanal-Muller-Gruppe Int'l v. Inliner U.S.A., Inc., 1999 U.S. Dist. LEXIS 13895 (S.D. Tex. May

13, 1999)

Republic Tobacco, L.P. v. North Atl. Trading Co., 1999 U.S. Dist. LEXIS 6098, (N.D. Ill. Apr. 8, 1999)

R. J. Reynolds Tobacco Co. v. Premium Tobacco Stores, Inc., 1999 U.S. Dist. LEXIS 19641 (N.D. Ill.

Dec. 16, 1999)

Schwartz v. Sun Oil Co., 1999 U.S. Dist. LEXIS 22257 ( E.D. Mich. Dec. 9, 1999)

Watkins & Son Pet Supplies v. Iams Co., 107 F. Supp. 2d 883, 1999 U.S. Dist. LEXIS 21706 (S.D. Ohio

1999)

2000

Allied Sales & Serv. Co. v. Global Indus. Techs., Inc., 2000 U.S. Dist. LEXIS 7774 (S.D. Ala. May 1,

2000)

Amsterdam Tobacco Inc. v. Philip Morris Inc., 107 F. Supp. 2d 210, 2000 U.S. Dist. LEXIS 11025

(S.D.N.Y. 2000)

Cancall PCS, LLC v. Omnipoint Corp., 2000 U.S. Dist. LEXIS 2830 (S.D.N.Y. Mar. 6, 2000)

Intimate Bookshop, Inc. v. Barnes & Noble, Inc., 88 F. Supp. 2d 133, 2000 U.S. Dist. LEXIS 1429

(S.D.N.Y. 2000)

LCA, Inc. v. Sharp Elecs. Corp. , 2000 U.S. Dist. LEXIS 12470 (N.D. Ill. Aug. 16, 2000

Moecker v. Honeywell Int'l, Inc., 2000 U.S. Dist. LEXIS 21192 (M.D. Fla. Sept. 19, 2000)

O'Dell v. GMC, 122 F. Supp. 2d 721, 2000 U.S. Dist. LEXIS 19640 (E.D. Tex. 2000)

Sheet Metal Duct, Inc. v. Lindab, Inc., 2000 U.S. Dist. LEXIS 9928 (E.D. Pa. July 18, 2000)

Town & Country Equip., Inc. v. Deere & Co., 133 F. Supp. 2d 665, 2000 U.S. Dist. LEXIS 20224 (W.D.

Tenn. 2000)

Via Fone, Inc. v. W. Wireless Corp., 106 F. Supp. 2d 1147, 2000 U.S. Dist. LEXIS 10895 (D. Kan. 2000)