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Competitive Bidding Assistance Programs Do Not Violate Robinson-Patman Act

By Suzanne E. Wachsstock
February 06, 2006

On Jan. 10, 2006, the U.S. Supreme Court announced its first decision in over a decade interpreting the federal price discrimination statute, known as the Robinson-Patman Act (the “RPA”). In a 7-2 decision, the Court in Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc. (04-905), held that a heavy-duty truck manufacturer's unequal price concessions to its dealers bidding for special order jobs do not violate the RPA unless they discriminate between dealers competing for the same retail customer.

Background

Section 2(a) of the RPA prohibits sellers from discriminating in price between “different purchasers of commodities of like grade and quality,” when such discrimination may “substantially … lessen competition or … injure, destroy or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination.” 15 U.S.C. '13(a). Reeder, a franchised dealer of Volvo heavy-duty trucks, claimed that Volvo violated the Act by giving other dealers more advantageous wholesale discounts for their bids on retail truck contracts. Customers in the heavy-duty truck industry typically invite select dealers to bid on orders for particular trucks, built to order to unique specifications. Each selected dealer, before bidding, requests from its manufacturer a job-specific price concession (or discount) that it uses to prepare its bid. In most cases, the customer selects only a single dealer representing each manufacturer to provide a bid. In the rare cases where more than one Volvo dealer was selected to bid, Volvo's written policy is to offer each the same price concession.

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