Distribution, Competition, and Antitrust / IP Law

Drug Makers Win Summary Judgment on De Minimis Price Discrimination Claim

A recent case reminds us that price discrimination under the Robinson-Patman Act may be so de minimis that it is not actionable.

In Drug Mart Pharmacy Corp. v. American Home Products Corp. (No. 1:93-cv-05148-ILG-SMG) (August 16, 2012) (a so-called secondary line discrimination case involving disfavored retailers), retail pharmacies brought a Robinson-Patman Act price discrimination claim against various drug manufacturers, alleging that the manufacturers had effectively given price breaks to hospitals, HMOs, and mail order pharmacies but not to the smaller retailers. Plaintiffs argued that they could identify specific customers lost to competitors as a result of the price discrimination, and selected a test sample of plaintiffs to evaluate.

Upon evaluation, the 28 sample plaintiffs were only able to match 5,147 potential lost customers (about 3% of their customer base) and 15,043 potential lost transactions.

On these facts, the court concluded that the plaintiffs had failed to demonstrate an anti-competitive effect or antitrust injury. Although FTC v. Morton Salt Co., 334 U.S. 37 (1948), allows an inference of anti-competitive effect where there is a significant price difference over a substantial period of time, this presumption is subject to rebuttal, and here the plaintiffs themselves undertook an extensive, costly, and time-consuming effort to trace the customers they claim to have lost to favored purchasers because of price discrimination, but “essentially c[a]me up empty.”

Additionally, plaintiffs could not show antitrust injury, because they could not match up any alleged losses with gains to favored customers — at least not beyond a de minimis amount.

Price discrimination is not per se unlawful, and winning a price discrimination case, while not impossible, is in fact very difficult.

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About Howard Ullman

Antitrust, competition, and IP law enthusiast.

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