Robinson-Patman Act: Powerful Buyers To Obtain Price Discrimination

- In Butler v Acme Markets, Inc 89 N.J. 270, 445 A.2d. 1141 (1982), the Supreme Court of New Jersey held that:

The Complaint fails to state a claim upon which relief can be granted because Georgia Shopkeeper’s Defense statute guarantees immunity to R-Mart because it had a reasonable suspicion and investigated in a reasonable time and manner.

As shown in Document A, reformers sought to break up large companies that controlled their area of competition, such as the Standard Oil monopoly on oil fields. However, the way at which they were picked was to organize them into good or bad trusts. The way this was done was at the control of the government, thus creating no set standards as to what company trusts to break up to create competition and which ones to keep. Despite the indecision, this was somewhat successful. As the Clayton Antitrust Act states (Document E), “... 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 which commodities are sold for use, consumption, or resale in the United States…”, meaning that women, and other minorities could buy the same items for the same price of others at any store in

There are different types of businesses, for example, some use monopolies, trust and pools, while other eliminate competition for higher prices. As stated in “Progressive reformers regarded regulation as a cure for all sorts of socioeconomic and political problems” , “The Sherman Act of 1890 attempted to outlaw the restriction of competition by large companies that co-operated with rivals to fix outputs, prices, and market shares, initially through pools and later through trusts” , meaning, competition is the

In paragraph 4, Edelman uses a valid appeal; “Section 1 of the Sherman Antitrust Act, in pertinent part, states that ‘every contract, combination…or conspiracy, in restraint of trade or commerce…is declared to be illegal,’.” Edelman appeals to credibility, making this an example of ethos; because he gives credit to the dependable

Some of the dishonorable measures taken by the interstate trusts and monopolies were product quality reduction, employee exploitation, and even putting ultimatums on necessary products (“Domination” 1). Such abuse of business combinations consisted of secrecy or misinterpretation in corporate organization, overcapitalisation, and of course, price manipulation (Johnson 572).

Furthermore, in Standard Oil Co., the Supreme Court stated that “The term "monopoly,"… as used in the Sherman Act was intended to cover such monopolies or attempts to monopolize as were known to exist in this country; those which were defined as illegal at common law by the States, when applied to intrastate commerce.” The Supreme Court went on to further state that “the principles of the common law applied to interstate as well as to intrastate commerce.”

In modern society it is a fundamental right not to be discriminated against based on race, ethnicity and gender. This situation deprived the storeowner of his personal liberty subjecting him to social injustice. The storeowner has not forfeited his legal rights by giving them up freely; he has been unjustly deprived of them.

When a group of retailers and wholesalers of a particular product decided to all raise prices together and they are accused of overpricing customers. Which federal law allowed the United States to investigate this anti- competitive method ?

The similarity between the conditions of both acts are that the acts apply to consumers who purchase goods or services worth less than $40000 and when the price is more than $40000, then the goods or services consumed should be used for personal, domestic or household purposes. Goods which are purchased for resale or goods used as inputs in the commercial production are not applicable under both acts.[7]

For price discrimination to exist we need to sell the same products or services to different consumers which would not be possible without fulfilling specific conditions. This is mainly due to the fact that individuals are ration and therefore won’t be willing to spend more on a product than another consumer. For price discrimination to take place three important conditions need to be considered these include; incomplete competition, price flexibility, and arbitrage (simultaneous purchase and sale of an asset to profit from a difference in the price). For a company to operate within a market and be successful with price discrimination, the company must do this through a certain degree of market power. Therefore, the market demand curve should be at a negative slope this therefore creates market power to create price discrimination. Market power is a necessary

According to Brue, Mcconnell, and Flynn, (2014, p. 424-438), in the price discrimination category a first-degree price discrimination occurs when charging each consumer the maximum price that customer is willing to pay for each unit. Business extracts surplus from the consumers and earns the highest possible profits, but it is somewhat difficult to know the maximum price the consumer is willing to pay. In the case of Second-degree price discrimination, it is a practice of posting a discrete schedule of declining prices for different ranges of quantities in advance which is a common in the electricity market. Business can extract some consumer surplus without customer needing to know beforehand, the firm charges different prices to different consumers. The final type of price discrimination is called Third-Degree Price Discrimination that allows maximize profits

Further, there are three different types of price discrimination. First-degree price discrimination, otherwise known as perfect price discrimination, is when a firm charges every customer exactly how much they are willing to pay for that good and charges a different price for every unity consumed. Some examples include car sales and roadside sellers of fruit and produce. Furthermore, second-degree price discrimination is when firms discriminate though volume discounts. This is when a firm charges a different price for different qualities and allows buyers to purchase a higher inventory at a reduced price. An example of this would be quantity discounts for bulk purchases. While benefiting the high-inventory buyers, it can hurt the low-inventory buyer who is forced to pay a higher

That is not to say that firms will not sell their output at different prices in order to increase market share. In the aforementioned oligopolistic market of tour operators, 3rd degree price discrimination can be practised by charging two sets of consumers with differing price elasticities of demand for the same product (price elasticity of demand for the time duration of a holiday becoming more inelastic at around 7 days) contrasting prices, and thus firms can extract consumer surplus from buyers and convert this into supernormal profit. This in turn can be used to defend market position through the cross subsidisation of other markets in which it operates, thereby artificially altering price and driving competitors out of the market. It must ensure however, that the cost of separating the two markets is not greater than the profit made, through the regulation of the resale of flight tickets, for example.

| | | |- According to the case, in order to encourage competitive price setting, there are