FALL CITY INDUSTRIES v. VANCO BEVERAGE

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Case Basics
Docket No. 
81-1271
Petitioner 
Fall City Industries
Respondent 
Vanco Beverage
Advocates
(Argued the cause for the respondent)
(Argued the cause for the United States as amicus curiae urging reversal)
(Argued the cause for the petitioner)
Tags
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Facts of the Case 

From 1972 through 1978, Falls City Industries, Inc. sold beer to Vanco Beverage, Inc., the sole wholesale distributor for Falls City in Indiana at a higher price than Falls City charged its only wholesale distributor in Kentucky. Under Indiana law, brewers were required to sell to all Indiana wholesalers at a single price, Indiana wholesalers were prohibited from selling to out-of-state retailers, and Indiana retailers were not permitted to purchase beer from out-of-state wholesalers. Vanco filed suit, alleging that Falls City's price discrimination violated section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act. The Federal Court found that Vanco had established a prima facie case of price discrimination. The court rejected Falls City's "meeting-competition" defense under section 2(b) of the Clayton Act, which provides that a defendant may rebut a prima facie showing of illegal price discrimination by establishing that its lower price to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor. The Court of Appeals affirmed.

Question 

Is the meeting-competition defense of section 2(b) of the Clayton Act available only if the defendant sets its lower price on customer-by-customer basis and creates the price discrimination by lowering rather than by raising prices?

Conclusion 
Decision: 9 votes for Fall City Industries, 0 vote(s) against
Legal provision: Robinson-Patman

No. In a unanimous opinion delivered by Justice Harry A. Blackmun, the Court held that section 2(b) is not so inflexible. The Court held that the meeting- competition defense required a seller at least to show the existence of facts that would lead a reasonable and prudent person to believe that the seller's lower price would meet the equally low price of a competitor and required the seller to demonstrate that its lower price was a good faith response to a competitor's low price. "Falls City contends that it has established its meeting-competition defense as a matter of law. In the absence of further findings, we do not agree," wrote Justice Blackmun.

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FALL CITY INDUSTRIES v. VANCO BEVERAGE. The Oyez Project at IIT Chicago-Kent College of Law. 14 December 2014. <http://www.oyez.org/cases/1980-1989/1982/1982_81_1271>.
FALL CITY INDUSTRIES v. VANCO BEVERAGE, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1980-1989/1982/1982_81_1271 (last visited December 14, 2014).
"FALL CITY INDUSTRIES v. VANCO BEVERAGE," The Oyez Project at IIT Chicago-Kent College of Law, accessed December 14, 2014, http://www.oyez.org/cases/1980-1989/1982/1982_81_1271.