The Robinson-Patman Act: Price Discrimination, Promotional Allowances, and a Statute That Came Back

Document type: Article Practice area: Commercial — Antitrust Jurisdiction: United States (federal) Last reviewed: 5 September 2026

A statute that was declared dead and was not

For roughly three decades, antitrust practitioners advised clients that the Robinson-Patman Act was a dead letter. The federal agencies had essentially stopped bringing cases; the economics profession regarded it as protecting competitors rather than competition; the Supreme Court had narrowed it in a series of decisions; and private plaintiffs found the elements and the damages proof forbidding.

That advice is no longer safe. Enforcement interest has returned, private litigation continues in industries with concentrated buyers and observable pricing, and the statute has never been repealed. A pricing program built on the assumption that nobody enforces the Act is a program with unpriced risk.

What the Act does. Enacted in 1936 as an amendment to the Clayton Act, and codified principally at 15 U.S.C. § 13, it prohibits a seller from discriminating in price between different purchasers of commodities of like grade and quality where the effect may be substantially to lessen competition or tend to create a monopoly, or to injure, destroy, or prevent competition with any person who grants or knowingly receives the benefit of such discrimination, or with customers of either of them.

Its purpose, and why economists dislike it. It was enacted to protect small retailers and wholesalers from the buying power of emerging chain stores. It therefore protects competitors, not merely competition — an aim that modern antitrust doctrine has largely abandoned elsewhere. That tension explains both the judicial narrowing and the statute's persistence: it says what it says, and courts must apply it.

Companion provisions. 15 U.S.C. § 13a makes certain discriminatory pricing a criminal offense, including selling at unreasonably low prices for the purpose of destroying competition — a provision essentially never charged. And the Federal Trade Commission enforces the Act under 15 U.S.C. § 45.

The elements of a price discrimination claim

To establish a violation, a plaintiff must show:

1. Two or more completed sales

Not offers. A discriminatory quotation that is never accepted is not a violation. The Act reaches actual sales, which means a seller that offers different prices but sells to only one buyer has not discriminated within the statute.

Reasonably contemporaneous. The sales must be close enough in time that the price difference is a discrimination rather than a change in price over time. A seller is free to raise or lower its prices; what it may not do is charge two competing buyers different prices at the same time.

2. In interstate commerce

At least one of the sales must be in interstate commerce, and the jurisdictional test is stricter than under the Sherman Act — the Act requires that the sales themselves be in commerce, not merely that they affect it.

3. Commodities of like grade and quality

"Commodities" means tangible goods. Services, leases, licenses, and intangibles are outside the Act. This is a substantial limitation: a company that sells software or advertising or consulting cannot violate the Act by charging different prices.

"Like grade and quality" is determined by physical characteristics, not by brand or label. The leading rule is that physically identical products are of like grade and quality even if one bears a premium brand and the other a private label. A manufacturer selling the same product under its national brand and under a retailer's private label at different prices is selling commodities of like grade and quality, and brand-related consumer preference does not change the analysis.

Genuine physical differences do change it, if they are more than trivial and affect marketability.

4. A difference in price

Measured by the net price to the buyer, accounting for discounts, rebates, allowances, freight, and terms. A nominally uniform list price with different discounts is a price difference.

Terms of sale count. Credit terms, delivery arrangements, and payment discounts affect net price.

5. Competitive injury

The Act distinguishes among levels of injury:

Primary line — injury to competition at the seller's level, where a seller uses discriminatory pricing to injure its own rivals. Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) held that a primary line claim requires the same showing as a predatory pricing claim under the Sherman Act: pricing below an appropriate measure of cost, and a dangerous probability of recouping the investment in below-cost prices. That holding effectively merged primary line Robinson-Patman with predatory pricing law and made such claims very difficult.

Secondary line — injury to competition among the seller's customers, where a disfavored buyer competes with a favored one. This is where the real Robinson-Patman risk lives.

Tertiary line — injury to competition among the customers' customers.

The Morton Salt inference and what Volvo did to it

The inference

Federal Trade Commission v. Morton Salt Co., 334 U.S. 37 (1948) established the rule that made secondary line claims viable. Morton Salt offered volume discounts on a schedule that only the largest chains could reach, so that in practice a small grocer paid more per case than a national chain.

The Court held that competitive injury may be inferred from proof of a substantial price discrimination between competing purchasers over time. A plaintiff need not prove actual lost sales or diverted business; the inference arises from the fact of a significant, sustained price difference between competitors.

Why this mattered so much. It relieved plaintiffs of proving injury to competition in the economic sense, and it made the statute enforceable against ordinary volume discounting.

The narrowing

Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164 (2006) substantially confined the inference.

Reeder-Simco was a Volvo dealer that bid for customer business on a project basis. It complained that Volvo gave better concessions to other dealers. But — decisively — Reeder rarely competed head to head with the favored dealers for the same customer. The bidding process assigned dealers to specific customer opportunities, so the comparison sales were not sales to competing purchasers in a real sense.

The Court held that a plaintiff must show it competed with the favored purchaser for the same customers, and that the Morton Salt inference does not arise from price differences between purchasers who do not actually compete. It also emphasized that the Act's purpose is to protect competition, not to enable a disappointed dealer to complain about ordinary competitive bidding.

What survives. The inference remains available where the plaintiff and the favored buyer actually compete for the same customers and the price difference is substantial and sustained. In classic distribution — where two retailers in the same market buy the same product and sell to the same consumers — Morton Salt is intact.

What does not. Bidding markets, project-based sales, and situations where buyers do not compete at the point of resale.

The defenses

Three, and in practice sellers rely almost entirely on one of them.

Cost justification

A price difference is lawful to the extent it makes only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which the commodities are sold or delivered.

In principle this is the answer to volume discounting. In practice, almost nobody wins on it. The reasons:

The defendant bears the burden of proof
It requires a detailed cost accounting study tying specific cost savings to specific customers or customer classes
Courts and the Commission have historically demanded rigor that ordinary business records do not support
The study must be prepared to justify the actual differentials, not merely to show that some savings exist
Customer groupings must be homogeneous, and a grouping that includes dissimilar customers fails

When it can work. Where a company has genuinely different fulfillment models — full truckload direct shipment versus less-than-truckload through a distribution center, or customer-managed inventory versus vendor-managed — and can document the cost difference per unit with contemporaneous accounting.

The practical advice. If you intend to rely on cost justification, build the study before you set the prices, using data your accounting system actually produces. A study reconstructed during litigation rarely persuades.

[United States v. Borden Co. and the line of cases on customer classification] establish that the classification must reflect actual cost differences rather than convenient categories, and Automatic Canteen Co. of America v. FTC, 346 U.S. 61 (1953) addresses the interaction between the seller's cost justification and the buyer's knowledge, holding that a buyer is not liable where it did not know that the price it received was not cost-justified.

Meeting competition

A seller may rebut a prima facie case by showing that its lower price was made in good faith to meet an equally low price of a competitor.

This is the defense sellers actually use, and it is more workable than cost justification.

What it requires:

Good faith. The seller must have had a reasonable belief, based on information a prudent businessperson would rely on, that a competitor was offering the lower price.
Meeting, not beating. The price may match the competitor's, not undercut it.
A specific competitive situation, or — importantly — a systematic response to competitive conditions in an area.

Falls City Industries, Inc. v. Vanco Beverage, Inc., 460 U.S. 428 (1983) is the key modern case, and it liberalized the defense in three respects. It held that the defense is available for a pricing system responding to competition generally, not only for individual defensive responses to specific competitor offers; that the seller need not show it acted to retain an existing customer rather than to obtain a new one; and that the price met need not have been lawful in itself.

Standard Oil Co. v. Federal Trade Commission, 340 U.S. 231 (1951) established that meeting competition is an absolute defense, not merely a factor, where the seller acts in good faith.

The practical requirements:

Contemporaneous documentation. A record, made at the time, of what the seller learned, from whom, and what it did in response. A file note is the whole defense.
Verification where possible, though the seller need not verify to a certainty and may rely on a customer's report if reliance is reasonable.
A matching price, not a lower one.
Discipline about scope. A defense established for one customer does not justify the same price to a different customer facing no competitive offer.

Changing conditions

The Act permits price changes in response to changing conditions affecting the market for or the marketability of the goods — deterioration, obsolescence, seasonal goods, distress sales, and going-out-of-business sales. Narrow, but real.

Functional discounts

A seller frequently sells to buyers at different levels of distribution — a wholesaler that performs warehousing and redistribution, and a retailer that does not.

Texaco Inc. v. Hasbrouck, 496 U.S. 543 (1990) addressed whether a discount to a distributor is lawful where the distributor competes with the disfavored retailers at the retail level.

The Court's framework: a legitimate functional discount — one that constitutes a reasonable reimbursement for the purchaser's actual marketing functions — does not violate the Act. But where the discount exceeds the value of the functions performed, or where the distributor passes the discount through to compete at the retail level without performing distribution functions, the discount may cause secondary line injury.

In Hasbrouck, the "distributors" performed few distribution functions and sold at retail in competition with the plaintiffs, and the discounts substantially exceeded any value of the functions performed. The discounts were not protected.

Practical application. A functional discount program is defensible if:

The classification reflects actual functions performed — warehousing, delivery, credit, inventory, promotion, technical support;
The discount is calibrated to the value or cost of those functions, documented at the time;
Customers in each class actually perform the functions, and the seller verifies periodically;
Where a customer operates at two levels — buying at wholesale and also selling at retail — the discount applies only to the volume actually resold through the wholesale function.

The last point is where programs fail. A "distributor" that buys at the distributor price and sells half its volume directly to end users is receiving a discount on that half for which it performs no function.

Promotional allowances and services

Sections 2(d) and 2(e) of the Act address payments and services provided in connection with resale, and they operate differently from the price provisions in ways that make them the most commonly violated part of the statute.

The requirement. A seller that provides to any customer any payment for services or facilities furnished in connection with the resale of its products — advertising allowances, display allowances, cooperative advertising, slotting-type payments, demonstrator services — must make such payments available on proportionally equal terms to all competing customers. The same applies to services or facilities the seller furnishes.

Three features make this stricter than the price provisions:

No competitive injury requirement. Sections 2(d) and 2(e) are violated by the disproportionality itself. The plaintiff need not show injury to competition.
No cost justification defense. It is unavailable.
The meeting competition defense is available, but is the only one.

"Proportionally equal terms" generally means proportional to the customer's purchases of the seller's products — dollar volume or unit volume — during a defined period.

"Competing customers" are those in actual competition for resale. A customer in a different geographic market is not competing.

The affirmative duty of notification

Federal Trade Commission v. Fred Meyer, Inc., 390 U.S. 341 (1968) established a point sellers routinely miss: the seller must take reasonable steps to notify competing customers of the availability of a promotional program, including indirect purchasers who buy through wholesalers where the seller's program is aimed at the retail level.

It is not enough to make a program available to those who ask, or to those the seller happens to deal with directly. A seller running a co-op advertising program with national chains must tell the independent retailers who buy through distributors that the program exists and how to participate.

Designing a compliant program

A written plan, describing the program, the terms, and the basis of proportionality
Availability to all competing customers, on terms proportional to purchases
Alternatives suitable to different customer types. A program requiring a full-page newspaper advertisement is not functionally available to a single-store retailer. Provide alternatives — a smaller-format option, in-store display, a website listing — of comparable value.
Affirmative notification, including to indirect purchasers, by a method that can be evidenced
Documentation of performance, with proof from the customer that the service was rendered
Payment only against proof, since payments for services not performed are simply discounts and are analyzed as price
Periodic audit of participation and payments

Buyer liability

Section 2(f) makes it unlawful for a buyer knowingly to induce or receive a discrimination in price prohibited by the Act.

The knowledge requirement is a real limit. Automatic Canteen Co. of America v. FTC, 346 U.S. 61 (1953) held that a buyer is not liable merely because it received a lower price; the plaintiff must show the buyer knew, or should have known, that the price was not justified by a defense available to the seller. A buyer that negotiates hard is not thereby liable.

Great Atlantic & Pacific Tea Co. v. Federal Trade Commission, 440 U.S. 69 (1979) went further. A buyer solicited bids, received one, and told the seller its bid was not low enough — without disclosing the competing bid's terms. The seller then offered a lower price, which the Court held was protected by the seller's meeting competition defense. Because the seller had a defense, the buyer could not be liable under 2(f), which reaches only discriminations "prohibited by this section."

The practical rules for buyers:

Do not tell a seller what a competitor bid in terms that misrepresent it. Lying about a competing bid to induce a lower price is the conduct 2(f) reaches.
A buyer may say a bid is not low enough without disclosing the competing price.
Do not demand a price the buyer knows exceeds any available defense, or demand allowances disproportionate to purchases.
Train procurement teams, because 2(f) exposure is created in conversations, not in contracts.

Damages and remedies

Private damages are treble, plus attorneys' fees and costs, under the Clayton Act's remedial provisions.

But proving damages is hard. J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557 (1981) held that automatic damages are not available — a plaintiff who establishes a violation is not entitled to damages equal to the price differential. It must prove actual injury attributable to the discrimination, though once injury is established the amount may be estimated with less precision.

The consequence. A plaintiff may win liability and recover nothing. This asymmetry explains a good deal of the private bar's historical disinterest in the statute.

Injunctive relief is available and is frequently the practical objective, particularly for a disfavored distributor seeking access to the same terms as its competitor.

Agency enforcement carries cease and desist orders and, for violations of outstanding orders, civil penalties.

Brokerage payments

Section 2(c) prohibits paying or receiving anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase, and then only to the other party's agent or intermediary acting for someone other than the payer.

In plain terms: a seller may not pay a brokerage fee to the buyer's agent, and a buyer may not receive a brokerage payment or a discount in lieu of one.

Why the provision exists. In the 1930s, large buyers set up nominal brokerage subsidiaries that received "commissions" from sellers on the buyers' own purchases — a rebate dressed as brokerage.

What makes it dangerous:

No competitive injury requirement. Like sections 2(d) and 2(e), it is violated by the payment itself.
No cost justification and no meeting competition defense. The only question is whether services were actually rendered to the payer.
It reaches "any allowance or discount in lieu thereof," so restructuring a brokerage payment as a discount does not help.

Where it arises in modern practice:

Buying groups and cooperatives that receive payments from suppliers on their members' purchases. The analysis turns on whether the group performs genuine services for the seller — consolidating orders, providing market information, handling logistics — or is simply a vehicle for its members to receive a rebate.
Group purchasing organizations, particularly in healthcare and food service, whose administrative fee arrangements have received specific attention and where practice has developed around disclosure and demonstrable services.
Sales agents who represent both sides, which is a straightforward violation.
Freight and logistics arrangements where a buyer's affiliate receives payments from the seller.

The compliance approach. Where a payment flows to an intermediary connected to the buyer, document: what services the intermediary performs, for whom, why the fee is commensurate with them, and that the arrangement is disclosed to the buyer's principals. An arrangement that cannot be described in those terms is a rebate to the buyer, and section 2(c) reaches it without any injury showing.

Availability, indirect purchasers, and the practical scope of "customer"

The Act's operative comparisons are between competing purchasers, and identifying who counts is more subtle than it appears.

Direct purchasers are obvious. Indirect purchasers — retailers buying through a distributor — are not the seller's customers for price discrimination purposes, because there is no sale between them. But three doctrines pull them in:

The indirect purchaser doctrine. Where the seller controls the terms of the sale to the indirect purchaser — setting the price at which the distributor resells to it, or dealing directly with it and using the distributor only to invoice — the indirect purchaser may be treated as a customer. The test is control, and a seller that negotiates directly with a retailer and passes the order through a distributor has created that exposure.

The Fred Meyer notification duty for promotional programs, which applies expressly to indirect purchasers competing with direct ones.

Tertiary line injury, where the discrimination between two direct purchasers injures competition among their respective customers.

"Availability" as a defense. Sellers frequently argue that a discount was functionally available to the complaining customer, which failed to take it. The argument works where the discount genuinely was available on the same terms — a volume tier the plaintiff could have reached, a program it could have joined. It fails where the terms are practically unattainable for the plaintiff's size or type of business, which is the same analysis that governs promotional program design.

The practical drafting response for a seller. Set customer classifications and discount thresholds that are genuinely attainable by customers in each class, and be able to point to customers of each type who have reached each tier. A tier that only one customer has ever qualified for is not an available discount; it is a customer-specific price.

A worked example: the Nordhagen pricing program

The company. Nordhagen Tools sells hand tools to hardware retailers through two channels: directly to large chains, and through three regional distributors who serve independent hardware stores.

The program:

Customer type	Net price per unit	Basis
National chains (4 accounts)	$18.40	Volume tier: over 500,000 units
Regional chains (11 accounts)	$19.75	Volume tier: 100,000–500,000 units
Distributors (3 accounts)	$17.90	Functional discount
Independents buying direct (about 40)	$22.10	Volume tier: under 100,000 units

Plus a co-op advertising program: Nordhagen reimburses 50% of advertising cost, up to 4% of purchases, for customers running a quarter-page or larger newspaper advertisement featuring Nordhagen products.

The problems, in order of seriousness.

Problem 1 — the promotional program. The co-op program requires a quarter-page newspaper advertisement. A single-store independent hardware retailer cannot practically place one, and the program is therefore not functionally available to it. Under section 2(d), this is a violation without any showing of competitive injury, and cost justification is not a defense.

Worse, Nordhagen has never notified the independents who buy through its distributors that the program exists. Under Fred Meyer, it has an affirmative duty to take reasonable steps to notify indirect purchasers who compete with those it deals with directly.

The fix: add alternatives of comparable value — an in-store display allowance, a website and social media option, a shared-cost circular through the distributor — and notify every competing customer, directly and through the distributors, with a record of the notification.

Problem 2 — the distributor discount. The distributor price is the lowest in the program. Nordhagen's distributors warehouse, break bulk, extend credit, and deliver to independents — genuine distribution functions. That supports a functional discount under Hasbrouck.

But two of the three distributors also operate their own retail stores, buying at $17.90 and selling at retail in competition with independents who pay $22.10 through those same distributors.

Under Hasbrouck, the discount is not protected as to the volume the distributor sells at retail, because no distribution function is performed on it. The independents competing with those retail stores have a secondary line claim, and the price differential — $4.20 on a $22.10 product — is substantial and sustained, supporting the Morton Salt inference. And unlike Volvo, these buyers plainly compete for the same customers.

The fix: either require the distributors to purchase at the retail-appropriate price for volume they sell at retail, with reporting and audit; or restructure so that the distributor discount applies only to volume resold to third parties.

Problem 3 — the volume tiers. The tiers themselves are the classic Morton Salt fact pattern: a schedule only large buyers can reach, producing a sustained differential between competing retailers.

Is there a defense?

Cost justification would require a study showing that serving a 500,000-unit chain costs $3.70 per unit less than serving a 90,000-unit independent. Nordhagen has no such study, and building one now, to justify prices already set, is the weakest posture.
Meeting competition may be available for specific accounts where Nordhagen responded to a documented competitive offer. But Nordhagen has no contemporaneous records of what it learned and when.

The fix, going forward: build the cost study before the next pricing cycle, using the accounting system's actual data on order size, delivery mode, and service intensity; and institute a contemporaneous documentation practice for every deviation from list, recording the competitive information relied on.

Problem 4 — what the sales team says. Nordhagen's regional managers routinely tell independents that "the chains just buy more." That is not a defense and it is an admission that the differential is volume-based without a cost study.

The overall assessment. Nordhagen has a promotional program violation that is close to strict liability, a functional discount problem that is squarely within Hasbrouck, and a volume tier structure with no documented defense. None of this requires a novel legal theory to attack, and a disfavored independent with a competent lawyer has a real case.

The cost of fixing it is a cost study, a redesigned promotional program with alternatives and notification, and a distributor reporting requirement. The cost of not fixing it is treble damages exposure across roughly forty independents, plus the injunction.

Building a compliance program

1. Map the pricing. Every customer, every net price, every allowance, every service — reduced to a single schedule showing net price per unit by customer. Most companies have never done this, and the exercise itself finds the problems.

2. Identify competing customers. Which customers actually compete with which, for the same end customers, in the same geography. This is the Volvo question, and it determines where exposure exists.

3. Justify every differential. For each price difference between competing customers, identify the basis: cost justification with a study; meeting competition with contemporaneous documentation; a functional discount calibrated to functions actually performed; or changing conditions. A differential with no identified basis is exposure.

4. Build the cost study before setting prices, not after. Use data the accounting system produces. Group customers homogeneously.

5. Institute contemporaneous documentation for meeting competition. A short form, completed at the time, recording: the customer, the competitor, the competing price, the source of the information, why reliance was reasonable, and the price offered in response. This form is the entire defense.

6. Audit functional discounts. Confirm that customers in each class perform the functions, and that customers operating at two levels receive the discount only on the appropriate volume.

7. Redesign promotional programs for functional availability across customer types, with alternatives of comparable value, affirmative notification including to indirect purchasers, proof of performance, and payment only against proof.

8. Train the sales force. Most of the damaging evidence in these cases is in emails from sales representatives explaining why a customer gets a better price. Train them on what to say, what to document, and what not to write.

9. Train procurement, on the buyer side. Section 2(f) exposure is created in negotiations, and the line between hard bargaining and misrepresenting a competing bid is one a procurement team must understand.

10. Review annually, and after any change in the customer base, the channel structure, or the promotional program.

Where the risk actually concentrates

Not every business faces meaningful Robinson-Patman exposure. The risk concentrates where several conditions coincide, and identifying whether they do is the first question in any assessment.

The conditions:

The company sells tangible goods. Services, software licences, advertising, and intangibles are outside the Act entirely. This alone eliminates a large part of the economy.
It sells the same product to multiple buyers who resell it. A manufacturer selling to end users has no secondary line exposure, because its customers do not compete in reselling.
Those buyers compete with each other for the same end customers, in the same geography. This is the Volvo question.
Prices differ substantially and persistently between those competing buyers.
The customer base includes both large and small buyers of differing bargaining power.

Industries where all five commonly coincide: grocery and consumer packaged goods; hardware, building products, and industrial distribution; pharmaceuticals and medical supplies; automotive parts; food service; agricultural inputs; and office and janitorial supplies. These are the industries where the Act was enacted to operate and where private cases continue to be brought.

Industries with limited exposure: professional and financial services; software and digital products; media and advertising; construction services; and any business selling primarily to end users.

Two situations that create exposure people do not anticipate:

The manufacturer that begins selling direct. A company that has always sold through distributors and starts selling directly to large end customers, or through an e-commerce channel, is now selling the same goods at different prices to buyers who may compete with its distributors' customers. Channel conflict is a commercial problem and, in this configuration, a legal one.

The private label arrangement. A manufacturer producing physically identical goods under its own brand and under a retailer's private label, at different prices, is selling commodities of like grade and quality. Brand value does not change the analysis, and the differential must be justified on cost, competition, or function like any other.

The assessment question to ask first. Take the company's five largest customers and its five smallest, identify the net price each pays for the same product, and ask whether any of them compete with each other. If the answer is yes and the differentials are large, the analysis is worth doing properly. If the answer is no, most of this article is background rather than advice.

The relationship to other antitrust law

Robinson-Patman sits awkwardly alongside the rest of antitrust, and understanding the interaction prevents both over- and under-advising.

Sherman Act Section 1. Agreements in restraint of trade. A unilateral pricing decision — charging different customers different prices — is not an agreement and is not reached by Section 1. This is why Robinson-Patman exists: it reaches unilateral conduct that Section 1 does not.

Resale price maintenance and the Colgate doctrine. A seller may unilaterally announce prices at which it will resell and refuse to deal with those who do not comply, without agreement. That analysis is separate from Robinson-Patman, but the two interact in distribution programs: a company designing a pricing and distribution policy must satisfy both.

Sherman Act Section 2. Monopolization. Primary line Robinson-Patman claims have effectively merged with predatory pricing analysis after Brooke Group, which requires below-cost pricing and a dangerous probability of recoupment.

FTC Act Section 5. Unfair methods of competition, enforceable by the Commission and reaching conduct the other statutes may not.

State law. Several states have their own price discrimination statutes, some broader than the federal Act — reaching services, applying different injury standards, or omitting defenses. A national pricing program compliant with the federal Act may not be compliant everywhere, and multi-state sellers should check the states where they have concentrated exposure.

The practical synthesis for a distribution program. A company designing how it sells through channels must simultaneously satisfy: Robinson-Patman on price differentials, promotional allowances, and functional discounts; Section 1 on any agreements with distributors about resale prices, territories, or customers; the Colgate doctrine's requirements if it wants to influence resale prices unilaterally; state price discrimination statutes; and, where relevant, franchise and dealer protection statutes that limit termination and impose good faith obligations.

These bodies of law were built at different times for different purposes and they do not fit together neatly. The practical answer is to design the program once, against all of them, rather than to fix each problem as it surfaces — because a change made to solve a Robinson-Patman issue frequently creates a Section 1 issue, and vice versa.

Quick reference

The prohibition. A seller may not discriminate in price between different purchasers of commodities of like grade and quality where the effect may be to injure competition.

The elements. Two or more completed, reasonably contemporaneous sales; in interstate commerce; of commodities — tangible goods only — of like grade and quality determined by physical characteristics, not brand; a difference in net price; and competitive injury.

Where the risk is. Secondary line — injury among the seller's competing customers. Primary line claims now require Brooke Group predatory pricing proof and are very difficult.

The inference. Morton Salt permits inferring injury from a substantial, sustained differential between competing purchasers. Volvo requires that they actually compete for the same customers, which eliminates bidding markets and project-based sales.

The defenses. Cost justification — theoretically the answer to volume discounting, practically almost never won, and it must be built before prices are set. Meeting competition — the defense sellers actually use, absolute where in good faith, available for a pricing system as well as an individual response after Falls City, and won or lost on contemporaneous documentation. Changing conditions — narrow but real.

Functional discounts. Lawful as reasonable reimbursement for functions actually performed, per Hasbrouck. They fail where the discount exceeds the value of the functions, or where the recipient sells at retail on volume for which it performs no distribution function.

Promotional allowances and services. Strict liability territory. Proportionally equal terms required; no competitive injury element; no cost justification defense; and an affirmative duty under Fred Meyer to notify competing customers, including indirect purchasers. Programs must be functionally available to small customers, which means offering alternatives of comparable value.

Brokerage. Section 2(c) prohibits payments to the buyer's agent or discounts in lieu, with no injury element and no defenses beyond actual services rendered to the payer.

Buyer liability. Section 2(f) requires knowledge that no defense was available. Hard bargaining is lawful; misrepresenting a competing bid is not.

Damages. Treble, but J. Truett Payne requires proof of actual injury — the differential is not automatic damages. Injunctive relief is often the real objective.

The compliance core. Map every net price by customer; identify who competes with whom; justify every differential between competitors on a stated basis; build cost studies before pricing; document meeting competition contemporaneously on a standard form; audit functional discounts against functions actually performed; redesign promotional programs for availability and notification; and train the sales force, because the damaging evidence is almost always in their emails.