The Supreme Court held 1/10/06 that a manufacturer that offers its dealers different wholesale prices may not be held liable for price discrimination under the Robinson-Patman Act, absent any evidence that the manufacturer offered differing prices to dealers that were competing to resell to the same retail customer at the same time. In this case, manufacturer Volvo Trucks North America gave Reeder-Simco GMC and other Volvo dealerships “concessions” that the dealers used in bidding for sales to retail customers. Reeder presented evidence that the concessions from Volvo that other dealers used in successful bids for certain sales were more favorable than (1) the concessions that Volvo gave Reeder for use in successful bids for other sales (“purchase-to-purchase comparisons”), and (2) the concessions that Volvo offered Reeder for use in several unsuccessful bids for other sales (“offer-to-purchase comparisons”). Reversing the Eighth Circuit, the Supreme Court held that the purchase-to-purchase and offer-to-purchase comparisons could not form the basis for liability under the Robinson-Patman Act because in none of these instances did Reeder compete with other Volvo dealers for a sale to the same customer. In the rare instances that Reeder did compete head-to-head with other Volvo dealerships for the same sale, the Court held that if any price discrimination existed between the concessions offered the dealerships, it was not of sufficient magnitude so as to substantially affect competition between them. The Court emphasized that its interpretation of the statute was more consistent with the broader policies of the antitrust laws, which are geared more to the stimulation of interbrand competition than to the protection of existing competitors. The disposition of this case is relevant to businesses whose decisions are affected by the Robinson-Patman Act.
NAM comment: The NAM 2/2/05 joined with the Truck Manufacturers Association, the Farm Equipment Manufacturers Association, the Association of Equipment Manufacturers and the Business and Institutional Furniture Manufacturer’s Association in an amicus brief urging the Supreme Court to review this decision. On May 20, we filed a second brief, this time on the merits of the issue on appeal.
The Supreme Court’s ruling recognizes the need for flexibility of manufacturers’ pricing decisions when offering quotes on custom purchases like large trucks and farm equipment. Our brief argued that, in the context where dealers are responding to request for bids from potential purchasers, manufacturers may offer their products at prices that vary depending on a variety of competitive factors, all of which can be taken into account to promote interbrand competition. It is normal for manufacturers to choose a price level for made-to-order products on a case-by-case basis that depends on many factors, including the volume the customer is buying or has bought, whether the customer has historically purchased another brand, how busy the assembly plant is, and how high current demand is.