facilities furnished by a competitor.

(c) It shall be unlawful for any person engaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept, 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 of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensation is so granted or paid.

(d) It shall be unlawful for any person engaged in commerce to pay or contract for the payment of anything of value to or for the benefit of a customer of such person in the course of such commerce as compensation or in consideration for any services or facilities furnished by or through such customer in connection with the processing, handling, sale, or offering for sale of any products or commodities manufactured, sold, or offered for sale by such person, unless such payment or consideration is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.

(e) It shall be unlawful for any person to discriminate

in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without processing, by

contracting to furnish or furnishing, or by contributing to the

furnishing of, any services or facilities connected with the

processing, handling, sale, or offering for sale of such commodity

so purchased upon terms not accorded to all purchasers on. proportionally

equal terms.

(f) It shall be unlawful for any person engaged in commerce,

in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.

Section 2a

It shall be unlawful for any person engaged in commerce, in the course of such commerce, to be a party to, or assist in, any transaction of sale, or contract to sell, which discriminates to his knowledge against competitors of the purchaser, in that, any discount, rebate, allowance, or advertising service charge is granted to the purchaser over and above any discount, rebate, allowance, or advertising service charge available at the time of such transaction to said competitors in respect of a sale of goods of like grade, quality, and quantity; to sell, or contract to sell, goods in any part of the

United States at prices lower than those exacted by said person elsewhere in the United States for the purpose of destroying competition, or eliminating a competitor in such part of the United States; or, to sell, or contract to sell, goods at unreasonably low prices for the purpose of destroying competition or eliminating a competitor.

Any person violating any of the provisions of this section shall, upon conviction thereof, be fined not more than $5,000 or imprisoned not more than one year, or both.

Appendix C: THE 1975 DEPARTMENT OF JUSTICE DRAFT REFORM PROPOSALS

The proposed modifications of the Robinson-Patman Act took the form of two alternative statutes. The first, "The Predatory Practices Act of 1975," outlaws sustained selling at a price below the seller's average current direct operating expense, an accounting approximation of short run marginal cost, unless the seller has a small market share or is meeting competition. The proposed statute also outlaws overt threats to coerce businessmen to charge noncompetitive prices or refrain from or cease serving specific customers or geographic areas. These provisions are relatively objective standards designed to prevent actions that would not normally be undertaken without an anticompetitive purpose while permitting low prices which may often be part of procompetitive promotional or entry efforts. In so doing, the legislation applies

to situations of primary line predation not involving price discrimina

tion.

The alternative statute, "The Price Discrimination Act of 1975," incorporates the provisions of the Predatory Practices Act and additionally makes unlawful certain types of secondary line price discrimination which are not cost-justified. The prohibited discriminations are

those which are a part of a pattern which systematically favors large firms over their smaller competitors and those which clearly threaten to eliminate a competitor who, under a Clayton Act test, is significant with respect to the maintenance of competition in the particular market. Additionally, the statute makes more flexible the cost and meeting competition defenses currently in the Robinson-Patman Act, and extends the

coverage of that Act to include attempted discriminations.

The proposed secondary line sections are thus designed to limit coverage of the Act to discriminations which serve no real competitive need, but which potentially are harmful to small business (systematic favoritism to large buyers), and those which actually threaten to eliminate a competitively necessary rival.

PREDATORY PRACTICES ACT

Be it enacted, etc., that this Act shall be known as "The

Predatory Practices Act of 1975."

Sec. 2. It shall be unlawful for the seller of a commodity engaged in commerce overtly to threaten a competing or potential competing seller of the commodity with economic or physical harm, so as to cause or induce the competing seller (a) to conform to pricing policies favored by the seller; or (b) to cease or refrain from selling any commodity to any particular customer; regardless or whether any overt action is taken to fulfill such threat.

Sec. 3. It shall be unlawful for a seller of a commodity, engaged in commerce, knowingly to sell on a sustained basis such commodity at a price below the reasonably anticipated average direct operating expense incurred in supplying the commodity, where such commodity is sold for use, consumption, or resale within the United States, the District of Columbia, or any other territory under the jurisdiction of the United

States.

Sec. 4. It shall be a defense to a violation of Section 3 that an

otherwise unlawful price:

(a) was charged by a person in order to meet in good faith an equally low price of a competitor;

(b) was charged by a new entrant, a person having at the time of

sale a less than 10 percent share of the sales of the commodity in

the section of the country in which the commodity was sold at such price being deemed a new entrant;

(c) was charged in response to changing conditions affecting the market for or the marketability of the commodities involved, such as but not limited to actual or imminent deterioration of perishable commodities, obsolescence of seasonal commodities, distress sales under court process, or sales in good faith in discontinuance of business in the commodities concerned; or

(d) did not clearly threaten the elimination from a line of commerce of a competitor of the person charging the otherwise unlawful price.

Sec. 5. As used herein:

(a) "Commerce" shall have the same meaning as in Section 1 of the Act of October 15, 1914 (38 Stat. 730) commonly known as the Clayton

Act;

(b) "Price" shall mean the exaction of all consideration diminished by the granting of any brokerage, advertising, promotional, or other allowance, or the furnishing of services or facilities;

(c) "Economic harm" shall include a reduction of revenues by sales at a price below the direct operational expense incurred in supplying the commodity, destruction of goodwill, and the withdrawal of credit without cause from a person;

(d) "Physical harm" shall include (i) physical damage to or destruction of real property, plants, buildings, equipment or other physical