The NAM joined with 5 other organizations in an amicus letter to the California Supreme Court asking it to hear an appeal of a ruling that effectively eliminated summary judgment on four important defenses to price discrimination claims under the Unfair Practices Act (“UPA”), Cal. Bus. & Prof. Code § 17045. This lower court ruling could have serious negative effects on all suppliers in California, as it greatly broadens the conduct that can subject suppliers to liability for “price discrimination” under the UPA, including conduct that is indisputably pro-competitive, innovative and business-justified. The Court declined to hear the appeal.Our amicus letter argued that companies must have pricing flexibility, and the California statute would outlaw all strongly competitive discounting practices pricing without the four primary defenses that are the subject of this litigation. We support recognition of (1) the meeting competition defense, (2) a functional classification defense, (3) the defense that a discount is not secret if it is generally known and available to competitors, and (4) that the complaining party was buying on like terms and conditions. We were concerned that the lower court’s decision eviscerated these safe harbor defenses.
Joining in the amicus letter were the California Retailers Association, Estee Lauder Companies, Inc., ExxonMobil Corporation, Pfizer, Inc. and Shell Oil Company.
The case arose when video distributors and retailers brought an antitrust conspiracy case against Blockbuster and the major Hollywood movie studios based on innovative revenue-sharing deals that Blockbuster negotiated with each of the studios. Plaintiffs are smaller, independent distributors and retailers, and they were unable to obtain the same discounts as Blockbuster because they were either unwilling or unable to agree to the same terms.