Wednesday, July 6, 2005

Mending Robinson-Patman

A recently released report from the American Antitrust Institute recommends reforms to the Robinson-Patman Act to strengthen enforcement against secondary line price discrimination cases, or cases involving price discrimination among buyers.  The report concludes that after the Brooke Group decision, which applied the legal standard of predatory pricing to primary line cases (involving differential pricing intended to limit competition among sellers), primary line price discrimination cases are on the right course.  The one caveat  that the report provides is the current criminalization of primary line price discrimination, which the report recommends abolishing.   As for secondary line cases, the report recommends a stronger market power requirement and a stronger defense of cost justification.  Since the Supreme Court will be reviewing an important Robinson Patman case next term, a case involving alleged price discrimination by Volvo in the distribution of its trucks,  it will be interesting to see whether the rules for secondary line cases will be reformed in the way that the rules for primary line cases were reformed over 10 years ago in Brooke Group.

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