The United States Supreme Court has granted certiorari in a Robinson-Patman Act (“RPA”) case. In Reeder-Simco GMC, Inc. v. Volvo GM Heavy Truck Corp., 374 F.3d 701 (8th Cir. 2004), cert. granted, 73 U.S.LW. 3402, 3524 (2005), a divided panel of the Eighth Circuit had affirmed a jury verdict for the plaintiff on an RPA claim. Plaintiff truck dealer, a reseller of Volvo trucks, asserted that it had lost bids to non-Volvo competitors for the sale of trucks because Volvo had refused to provide plaintiff with price concessions that would have enabled plaintiff to bid successfully.

Trucks are frequently not manufactured until after a retail customer has solicited bids from several dealers. Dealers, such as plaintiff, seek concessions from manufacturers below the initial wholesale price which then enables the dealer to offer lower prices to its retail customers when bidding. Plaintiff only purchased trucks in the event that its bid was successful. Plaintiff’s claim was that Volvo gave other dealers more favorable concessions for bids than Volvo granted plaintiff.

Plaintiff claimed damages from unsuccessful bids against non-Volvo competitors; damages from successful bids against non-Volvo competitors because plaintiff would have made more money if it had received the same price concessions that “favored” Volvo dealers received for bids to different customers; damages for a bid in which neither plaintiff nor the “favored” Volvo dealer received the sale, and so neither made a related purchase from Volvo; and one case in which plaintiff and another Volvo dealer received identical price concessions from Volvo and the retail customer chose the other dealer. The retail customer then extracted another price reduction from the other dealer for which Volvo provided a further price concession. Plaintiff also produced evidence that Volvo considered plaintiff to be an underperforming dealer that Volvo intended to terminate.

The Eighth Circuit majority held that plaintiff stated an RPA claim despite the usual rule that an unsuccessful bidder is not a “purchaser” within the meaning of the RPA. Where plaintiff’s bids were unsuccessful, it purchased no trucks. The RPA concerns price differentials “between different purchasers.” 15 U.S.C. § 13(a). The majority also held that the RPA applied even though plaintiff as an allegedly “disfavored purchaser” did not lose sales, except in one instance, to any allegedly “favored purchaser” of Volvo trucks. Instead, plaintiff lost sales to dealers of non-Volvo trucks.

In its petition for certiorari, Volvo argued that a discriminatory offer to sell does not violate the RPA, and that the Eighth Circuit’s decision conflicted with the “two-purchase rule” of a number of Circuits requiring that there be two consummated purchases, one by the favored and one by the disfavored buyer. Volvo also argued that the court’s decision conflicted with those of other Circuits requiring that an RPA plaintiff in a secondary live case show that the price differential was likely to harm intrabrand competition by diverting sales or profits from the disfavored purchasers to the favored purchasers. In addition, Volvo asserted that an expansive interpretation of the RPA should be avoided in order to prevent the RPA from conflicting with the overall purposes of the antitrust laws.

Authored by:
Thomas D. Nevins
415-774-3284
tnevins@sheppardmullin.com