available to a party charged under Section 2(c); only the meeting Sections 2 (d) and (e) permit a seller to grant advertising or promotional allowances only if such benefits are made available to all customers on a proportionally equal basis. FTC and judicial attempts to implement the sections have created a complex scheme of regulation governing the promotional process. The Supreme Court in Fred Meyer, Inc. v. FTC, 61/ held that all retailers in competition with one another, whether they purchase directly from the manufacturer or through an intermediary, must receive the benefit of proportional allowances, if a violation of Section 2(d) or (e) is to be avoided. In response to the Court's suggestion that guidelines would be helpful, the Commission in 1969 promulgated guides for advertising allowances and other merchandising payments and services. 62/ The 60/ FTC v. Henry Broch & Co., 363 U.S. 166 (1960); FTC v. Simplicity Pattern, 360 U.S. 55 (1959). guidelines present a bewildering array of regulations with which the seller must comply. Among these regulations is the requirement that sellers police the conduct of intermediaries to insure that any promotional allowance is, in fact, passed through to the retailer since the definition of "customers," entitled under Sections 2(d) and (e) to receive equal allowances, includes any buyer of the seller's product who purchases "from or through a wholesaler or other intermediate reseller."63 Should the intermediary fail to pass the allowance on, it is the seller who may be held responsible. Furthermore, under the FTC's regulations, a seller wishing to engage in promotion, through promotional allowances covered by Sections 2(d) and (e), must forebear implementation until all promotion can take place in accordance with a "plan." 64/ While the Commission does not require a formal written plan, it warns that a seller "would be well advised to put his plan in writing." 65/ A seller's plan must provide for affirmative action to inform all of his competing customers that such a plan exists, and must call for communication to such customers of the availability of the allowances. 66/ Even if the seller's promotional plan otherwise satisfies the requirements of the FTC's regulations, deficiencies in application of the plan may put the seller in violation of the Act. In House of Lords, Inc. 67/ a manufacturer of women's apparel offered to pay its customers approximately 50 percent of the cost of placing advertisements in newspapers and magazines. The Commission decided that the terms of the program were not available on a proportionally equal basis, and thus were violative of Section 2(d), since some of the customers were too small to afford any advertisement in newspapers or magazines, even if 50 percent of the cost were paid by the seller. 68/ Under Section 2(f) of the Act, a buyer is liable for the knowing inducement or receipt of a price discrimination unlawful under Section 2(a). While scienter is usually a difficult matter to prove, the burden of proof with respect to knowledge was considerably lightened by the Supreme Court's opinion in Automatic Canteen Co. of America v. FTC, 69/ which allowed the Commission to rely on "trade experience" to show that the buyer should have recognized that a particular price received was unlawful. After Automatic Canteen, buyers have been found liable under Section 2(f) where the FTC showed, for example, that the buyer knew or should have known that the seller's discounts were not cost justified, 70/ that the buyer regularly used pressure to extract concessions, 71/ or that the seller protested that the requested discount would be discriminatory. 72/ As with Section 2(a), the plaintiff's burden under Section 2(f) is light. The buyer liability provision completes the Act's control of the distributive process by exposing both parties to a sales transaction to liability. The buyer liability provision, moreover, strikes at a process which is fundamental to a competitive market: the process by which each buyer negotiates for itself the best possible price. It 69/ 346 U.S. 61 (1953). 70/ Kroger Co. v. FTC, 438 F.2d 1372 (6th Cir.), cert. denied, 404 U.S. 871 (1971). 71/ Fred Meyer, Inc. v. FTC, 359 F.2d 351, 363 (9th Cir. 1966), cert. denied, 386 U.S. 908 (1967). 72/ Giant Food v. FTC, 307 F.2d 184, 187 (D.C. Cir. 1962), cert. denied, 372 U.S. 910 (1963). was, of course, the intent of the statute's drafters to discourage the use of coercive buyer pressure. Section 2(f), however, is not limited to such situations and operates without regard to the relative market power of the parties. The Section thus instills extreme caution in buyers negotiating for price breaks which, if obtained, might arguably subject them to liability under Section 2(f). Broad exposure to liability under the Robinson-Patman Act means that sellers and buyers are also exposed to that Act's costly sanctions. Under Robinson-Patman, there are two immediate consequences of violation of the Act: 73/ in an FTC proceeding a firm can be subjected to broad injunctive relief; in a private action a firm can in addition be made to pay treble damages to a complainant. shown, either of these sanctions can impose serious costs on competitors found to violate the Act. As will be A respondent found to have violated the Robinson-Patman Act in an FTC proceeding frequently will be subjected to a cease and desist order much broader than the facts underlying the actual violation. In the most extensive analysis of FTC orders under the Robinson-Patman Act to date, 74/ one commentator found that virtually all cease and 73/ Criminal violations of § 3 are punishable by imprisonment of up to one year and a fine of $5000. 15 U.S.C. § 13a. As previously stated, the Act's criminal provisions have rarely been used. 741 Kauper, Cease and Desist: The History, Effect, and Scope of Clayton Act Orders of The Federal Trade Commission, 66 MICH. L. REV. 1095 (1968). |