Jones Day Antitrust Alert

Antitrust Alert: Third Circuit Affirms Directed Verdict Following Rare Price Discrimination Trial

Failure to show antitrust injury proved fatal to price discrimination claims as the Third Circuit affirmed a directed verdict in favor of cement company, Argos USVI, in a case brought by its customer, ready-mix concrete company Spartan Concrete Products ("Spartan").  This decision highlights courts’ reluctance to permit recovery for price discrimination without specific proof linking lost sales or profits to the price differential.

The Robinson-Patman Act ("RPA") prohibits sellers from charging competing buyers different prices for the same product if it results in harm to competition. To recover damages for an RPA violation, a plaintiff also must show that the discrimination caused harm to its business (an "antitrust injury"), based on a reasonable estimate of losses tied to the price differential.          

From 2010 to 2013, Spartan and Heavy Materials were the only companies supplying ready-mix concrete in St. Thomas, U.S. Virgin Islands. Argos sold cement, an input to ready-mix concrete, to both Spartan and Heavy Materials, but only Heavy Materials received a 10 percent volume discount. Following a price war between Spartan and Heavy Materials, Spartan stopped selling ready-mix concrete in St. Thomas, and subsequently sued Argos for RPA violations.  

At the conclusion of Spartan's evidence at a bench trial, the court granted Argos' motion for a directed verdict, concluding that Spartan failed to link harm to its business to the discount, and the Third Circuit affirmed. Spartan failed to show an "actual injury attributable to the alleged price difference" and to proffer competent evidence of its damages because it merely assumed that the discrimination caused 90 percent of lost sales, presenting no evidence of lost customers, and failing to consider other reasons for lost sales and profits.

Key Lessons

  1. Although successful RPA cases are rare, private RPA litigation persists, and it can be both time consuming and expensive to defend. The Third Circuit’s decision comes four years after Spartan's complaint.
  2. Courts are reluctant to find RPA liability without exacting proof of harm attributable to discriminatory prices. Assumptions, speculation, or guesswork will not suffice.This often requires evidence of lost customers or profits that are a direct result of paying a higher price than a competitor for the same product.
  3. Damage claims must account for lost sales or profits attributable to reasons other than the price differential. Those that fail to do so will be found insufficient as a matter of law.

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