Question

what are the ethical considerations of Robinson patman act with references

Answer 1

The Robinson Patman Act of 1936 was enacted as part of the US Federal Law to outlaw producers of products from indulging in UNFAIR PRICE DISCRIMINATION. Large Chains used to adopt unfair competition methods against small retailers.

If a large Business sells 1,000 units of a product @ $ 220 per unit to a Large Outlet Chain ( e.g. Walmart), then the same product can be sold by this business to a small shop at $220 per unit even if that outlet buys only 10 units. If it were to sell the same outlet at a higher price, then that would amount to a violation of this Act.

Section 2 of the Act list s the following subsections :-

a) Prohibits price discrimination to avoid causing injury to competition on the market

b)Provides Sellers a defense to the discrimination if they offer products at a lower price to meet an equally low price offered by another seller

c)Limits or prohibits certain brokerage fees

d)Prohibits sellers from offering different prices to competing customers

e)Prohibits sellers from promoting the resale based on discriminatory prices

f)Prohibits sellers from encouraging buyers to violate the Act

THere are number of cases which underline the objective of the act .

FTC versus MORTON SALT: The US Supreme Court in 1948 upheld the decision of the Federal Trade Commission to hold as violation of this ACT wherein certain large chains could get preferential lower prices by buying large quantities and gain advantage over small outlets that could not buy such huge volumes.

Lewis Vs Texaco: In 1990 US Supreme court upheld the FTC's decision which decided in favour of TEXCO retailers who filed proceedings against TEXACO for adopting discriminatory pricing against retailers by giving preferential pricing to Wholesalers of gasoline.Texaco was fined $ 450,000.