VOLVO TRUCKS NORTH AMERICA v. REEDER-SIMCO GMC, INC.
Reeder, a Volvo truck dealership, sued Volvo for violating the Robinson-Patman Act (RPA), which prohibits forms of discriminatory pricing that reduce competition. When retail customers take bids from dealers such as Reeder, the dealers ask manufacturers for price concessions, which dealers factor into their bids. Reeder accused Volvo of offering better price concessions to other Volvo dealers bidding for different customers. Reeder cited four instances in which it had received a comparatively low concession from Volvo, but it claimed that its losses due to discriminatory pricing went beyond those four instances. District Court allowed the case to go to a jury, and the jury awarded damages to Reeder. On appeal, Volvo argued that no competition was present, as would be required by the RPA, because Reeder was not actually bidding against the other Volvo dealers that allegedly got favorable concessions. The Eighth Circuit disagreed, ruling that the Volvo dealers - though they did not bid against each other - "competed at the same functional level." Volvo's price discrimination would therefore fall under the RPA.
Can a seller be held liable for discriminatory pricing under the Robinson- Patman Act if the purchaser loses profits to competitors that do not purchase from the seller, but does not lose profits to any competitor that "receives the benefit of" the price discrimination?
Legal provision: Robinson-Patman
No. In a 7-2 decision, the Court ruled that for a manufacturer to be liable under the RPA, dealers must be in actual competition with each other. The opinion by Justice Ruth Bader Ginsburg held that Volvo's pricing decisions did not fall under the Act, because "in none of the discrete instances on which Reeder relied did Reeder compete with beneficiaries of the alleged discrimination for the same customer." In declining to interpret the RPA more expansively, the Court hoped to maintain the "broader policies of the antitrust laws," which are designed to protect competition itself rather than individual competitors. Justice Stevens wrote a dissent, which Justice Thomas joined.
Argument of Roy T. Englert
Chief Justice Roberts: We'll hear argument first today in Volvo Trucks North America versus Reeder Simco GMC.
Mr. Englert, Jr.: Thank you, Mr. Chief Justice, and may it please the Court--
Sixty six years elapsed between the passage of the Robinson Patman Act and the judgment of the District Court in this case.
In that time, there is no reported instance of a finding of a violation by a seller operating in an industry like this one in which a sale is made to the plaintiff distributor if, and only if, it has already secured a contract for resale to a particular end user.
Courts have long understood that mere offers at different prices cannot violate the Act, because it requires two purchases, and that successful purchases in winner take all bidding cannot have the requisite effect on competition.
To affirm the judgment below would open up new vistas for application of the Robinson Patman Act where it has never been applied before.
Chief Justice Roberts: You concede, though, don't you, Mr. Englert, that the language of the statute covers the conduct here?
Mr. Englert, Jr.: --Very much the opposite, Your Honor.
Chief Justice Roberts: Well, you have a person who's engaged in commerce, who's discriminating in the price that they offer to different purchasers.
Now, I know your argument about the structure, but the actual language does seem to encompass the activity.
Mr. Englert, Jr.: Well, I don't agree, with respect, Your Honor.
With respect to mere offers, offering a price to different purchasers is not covered by the statutory language.
With respect to the sales to sales comparisons, there is not the requisite effect of such discrimination--
Chief Justice Roberts: Well, just to--
Mr. Englert, Jr.: --on competition.
Chief Justice Roberts: --get to your first point, the statute talks about discrimination in price between different purchasers, and not different actual purchases.
Mr. Englert, Jr.: But this--
Chief Justice Roberts: It doesn't seem it's that much of a stretch to cover would be purchasers, potential purchasers.
Mr. Englert, Jr.: --Well, except that, back in 1947, this Court, in the Bruce's Juices case, made clear, in the early days of the Act, that it takes two completed sales to violate the Act.
No one sale can violate the Act.
Even earlier than that, the Third Circuit, in the Shaw's case, in 1939, laid down that rule, and it's been an accepted rule of Robinson Patman Act jurisprudence for that entire time.
And it is a natural reading of the statute, and in accordance with the general principle, that this statute should be construed consistently with the larger body of antitrust law.
Justice Stevens: But may I not ask, Isn't it true that each of the parties here, over a long period of time, was a purchaser?
I mean, the... Reeder was a purchaser, was he not?
They were a dealer.
Mr. Englert, Jr.: Yes.
Justice Stevens: So, they were a purchaser.
And were not the other people who purchased from Volvo also purchasers?
Mr. Englert, Jr.: Yes.
With respect to the sales--
Justice Stevens: So there were--
Mr. Englert, Jr.: --to sales transactions--
Justice Stevens: --two purchasers.
Mr. Englert, Jr.: --Well, with respect to the sales to sales transactions in which there were--
Justice Stevens: Over a--
Mr. Englert, Jr.: --two purchases--
Justice Stevens: --period of time, you had two purchasers.
Mr. Englert, Jr.: --Yes.
But the statutory language is the effect of "such discrimination" must be to harm competition in one of these justified instances.
Justice Stevens: And the discrimination occurred over a period of a couple of years, as I understand it.
Mr. Englert, Jr.: No, Your Honor.
This case was tried on the basis of several discrete transaction comparisons.
It was not tried on the basis of any systematic study of every offer to Reeder and every offer to--
Justice Stevens: Well, if--
Mr. Englert, Jr.: --another--
Justice Stevens: --these are ordinary automobile dealers who sold out of inventory, would you agree that they were... you had two purchasers?
Mr. Englert, Jr.: --Sure.
Justice Stevens: So that the whole point of your case is they're negotiated transactions?
Mr. Englert, Jr.: The whole point of the case is the... is twofold.
Each transaction is one in which there is a purchase if, and only if, there is already a contract for resale, so that when there is an offer compared to a purchase, you don't have two purchases.
And when you've already got the contract for resale--
Justice Kennedy: Well, but... I mean, you say that, but the title goes to the dealer.
The dealer makes the purchase.
Aren't you... as I understand your answer to Justice Stevens, and also your answer to the Chief Justice, if these were automobile dealers that sold some inventory, there would be a cause of action if you extrapolate this... these kind of facts.
One dealer being discriminated against, vis a vis another dealer.
Mr. Englert, Jr.: --If the requisite effect on competition is shown, yes.
Justice Scalia: Well, and if there was a sale to the other dealer.
You would say that there had to be a sale to the other dealer.
Mr. Englert, Jr.: There have to be two sales.
Justice Scalia: Not just an--
Mr. Englert, Jr.: But there would--
Justice Scalia: --not just an offer to the other dealer--
Mr. Englert, Jr.: --Correct.
Justice Scalia: --of higher prices.
Justice Souter: Yes, but there would be sales if they were selling from inventory.
I mean, there would have been a preceding sale, and the sale would have been at differential prices, as between two dealers.
Mr. Englert, Jr.: And that's the typical--
Justice Souter: Yes.
Mr. Englert, Jr.: --Robinson Patman case.
That's the case in which there is a potential violation.
The case in which there is a sale by the purchaser if, but only if... I'm sorry, the case in which there is a purchase by the purchaser if, but only if, it already has the sale is the case in which it can't have lost that sale in competition with a favored dealer because of price discrimination, which is what the statutory language requires, which is--
Justice Ginsburg: Mr. Englert--
Mr. Englert, Jr.: --why the Robinson Patman Act--
Justice Ginsburg: --suppose you had a case of two Volvo dealers, and the scheme is, as this one, specially ordered goods with competitive bidding, but, over a substantial period of time, one dealer... we'll call that dealer the "favored dealer"... consistently gets higher concessions, and the other dealer, who ends up being the plaintiff in the case, consistently, in that same period, gets lower concessions.
So, we don't have a picture of what you call "mix and match", but two dealers, one consistently getting higher concessions, and one consistently getting lower, and, therefore, missing out on sales or making sales at a very low profit.
That, too, would be out of Robinson Patman, if I understand your view of the statute.
Mr. Englert, Jr.: --It... yes, I think that's correct.
That's a closer case to what's the... what the statute was designed to cover than this case, but, yes, that, too, would be out of Robinson Patman.
Justice Breyer: So, you go back to the language... are you finished with that answer?
Go ahead and finish, if you want.
Mr. Englert, Jr.: Enough for now, Justice Breyer--
Justice Breyer: All right.
Mr. Englert, Jr.: --yes.
Justice Breyer: In respect to the language, how do you read it?
I think it's ambiguous.
"To discriminate in price between different purchasers of commodities. "
Do you read it... "different purchaser"...
"to discriminate in price in respect to that commodity that is purchased? "
Do you read it
"to discriminate in price between different purchasers of commodities... i.e., the commodity, the particular item... the commodity there refers to the particular item in respect to which there is the discrimination? "
How do you want to read it, literally?
I just want your--
Mr. Englert, Jr.: Well--
Justice Breyer: --literal reading of the statute to... I agree with you, 60 years, nobody's questioned it.
I agree with you, policy reasons, very strongly on your side.
I agree with you, at least hypothetically, but for the particular language.
So, look at the phrase and read the language as you want me to read it.
Mr. Englert, Jr.: --Well, two different issues, Justice Breyer.
With respect to the two purchase rule, if the statutory language is ambiguous, and if it can be read to say "purchaser status is enough", then I think the principle stated in all of this Court's cases, that the Robinson Patman Act--
Justice Breyer: You're giving--
Mr. Englert, Jr.: --should be construed--
Justice Breyer: --me a policy argument.
I don't want a policy argument, for the moment.
I want to know... what you're saying is that the word "purchaser" means
"purchaser in respect to the particular commodity... this one that is purchased, there has to be a discrimination in price. "
Mr. Englert, Jr.: --And there's a textual--
Justice Breyer: And what you're hearing, I think, is, well, this person, the dealer, bought other items in respect to which there was no discrimination in price.
So, he is a purchaser of that commodity.
You see, "commodity" could refer to the kind of thing... Volvo trucks... or it could refer to the particular thing... this truck.
And I want to know how you read the literal language.
Mr. Englert, Jr.: --The textual answer to your question is--
Justice Breyer: That's all I want--
Mr. Englert, Jr.: --the phrase--
Justice Breyer: --the textual answer.
Mr. Englert, Jr.: --the phrase "the effect of such competition" ties--
Justice Breyer: Oh, no, no.
Mr. Englert, Jr.: --I'm sorry, the effect of such--
Justice Breyer: --sorry.
The effect of such competition--
Mr. Englert, Jr.: --discrimination.
Justice Breyer: --was conceded in this case, that there's the effect on the competition.
There are two separate things.
There is the truck that was purchased by the disfavored dealer.
In respect to that, he wasn't hurt, in the sense of the statute, because, even though he got a lower profit margin, that doesn't count.
I'm not focusing on that.
I am focusing upon the truck that he did not purchase.
The reason that the disfavored dealer did not purchase that truck is that he had a rival... maybe there's only one case of it, but there's at least one... he had a rival, the favored dealer, who got the purchase.
He got the order from the customer, and then ordered the truck.
Now, in that one, I take it, the problem is that there was no purchase by the disfavored dealer.
Mr. Englert, Jr.: Correct.
Justice Breyer: All right.
But what you're hearing is,
"So what? "
"He was a dealer whose line of business was to purchase Volvo trucks, and, therefore, he is a purchaser of a commodity... namely, Volvo trucks. "
Mr. Englert, Jr.: Well--
Justice Breyer: And there was a discrimination... namely, the offer was discriminatory.
And there was a harm to competition, in the... in the Robinson Patman sense... his rival got the sale.
Mr. Englert, Jr.: --Well, I still question whether--
Justice Breyer: So, I want the textual answer.
Mr. Englert, Jr.: --Okay.
I still question whether the... under the text... the effect of such discrimination was the requisite effect on--
Justice Breyer: Yes.
Mr. Englert, Jr.: --competition.
Justice Breyer: The effect of such discrimination is that his next door rival, in effect, "got the sale".
Do you want to say that isn't enough?
Mr. Englert, Jr.: --Yes, I do want to say that isn't enough.
And, Justice Breyer, first of all, I--
Justice Breyer: Let's assume I don't agree with you about that.
Mr. Englert, Jr.: --Well--
Justice Breyer: --what?
Justice Scalia: Mr. Englert, I thought you were relying on the succeeding phrase, where
"either or any of the purchases involved in such discrimination are in commerce. "
which seems to require that...
"to discriminate in price between different purchasers where either or any of the purchases involved in such discrimination. "
--I thought that's what you were hanging your hat on, to say that there has to be a discrimination in particular sales.
Mr. Englert, Jr.: --I think the statute, read as a whole, compels that conclusion.
But if I'm wrong about that, and if there is enough ambiguity to admit of a different conclusion, then the principle comes into play that cases of ambiguity in the Robinson Patman Act are construed to be more consistent with the overall--
Justice Kennedy: Well, of course, if we can go back to the language, it's between different purchases of commodities of "like grade and quality".
And that seems to me to indicate that Volvo trucks, generically, must be looked at... the policy, with reference to Volvo trucks, generically.
Suppose one dealer always got a 10 percent discount, the other dealer always got a 20 percent discount over a period of time.
Mr. Englert, Jr.: --Well, Your Honor, I think everyone, including the lower courts in this case, agrees that you don't look at the goods generically.
You have to look at their characteristics to determine like grade and quality.
And I would actually think that the grade--
Justice Kennedy: It has to be purchase by purchase to determine like grade or quality?
Mr. Englert, Jr.: --Yes.
Every Robinson Patman case there's ever been has been purchase by purchase at the level of--
Justice Breyer: Fine.
Mr. Englert, Jr.: --sale from the manufacturer to the dealer.
Justice Breyer: --You've put your finger right on it.
My question is so obvious that you're not giving me an answer.
Every case for 60 years has been on your side of it.
Those judges, though, were... must have been reading some language.
And how did they interpret that language?
That's all I'm asking you.
A very literal question.
It has nothing to do with policy or anything.
And all I want you to do is take the statute and read the language so that it is possible for you to win this case.
Mr. Englert, Jr.: Okay.
Justice Breyer: Okay.
Mr. Englert, Jr.: I'm a manufacturer.
I'm reading the statute.
I have to give a price on a particular deal.
I realize I can't discriminate in price between different purchasers of like grade and quality, where the effect of such discrimination may be one of the prohibited effects.
"Okay, can I give a different price to one dealer or to another? "
Yes, I can, because it says
"different purchasers of commodities of like grade and quality. "
It is a specific instance of a purchase, a specific instance of discrimination.
The very words in the statute are what judges have read consistently to compel that result.
Justice Stevens: May I ask this question, just to get it in the... Supposing Volvo had a policy of granting everybody a 20 percent concession, and they had... except Reeder... and they always granted Reeder just a 15 percent concession, and the... you had the same sales pattern you have here.
Would there be a violation of the Robinson Patman Act?
Mr. Englert, Jr.: Well, again--
Justice Stevens: Prima facie violation.
Mr. Englert, Jr.: --I think the answer is no, Your Honor, although that... although that would be a closer case--
Justice Stevens: Even if there--
Mr. Englert, Jr.: --than this case.
Justice Stevens: --were dozens and dozens--
Mr. Englert, Jr.: This case was tried on the basis of the same transactions.
Justice Stevens: --of sales to both.
Mr. Englert, Jr.: Yes.
That would be a closer case.
But the... it might fit the policy of the Act, but it's a very poor fit with the words of the statute.
Justice Stevens: Well, it depends on how... whether you regard the purchase as on a single... each single transaction as a separate purchase or if you look at a course of dealing and say that, over a period of years, the favored dealer is one purchaser and the disfavored dealer is the other purchaser.
Why can't you look at the pattern of dealing by automobile dealers over a period of time?
Mr. Englert, Jr.: --That would be the argument in favor of an expansive reading of the language in the hypothetical example to cover that case.
But it would not be consistent with the general policies of antitrust law.
Justice Stevens: It would be consistent with the literal language, wouldn't it?
If you treat it, the purchaser, as a... as... look not at just individual transactions, but what they do over a period of years, just like any other... any ordinary automobile dealer.
Two dealers in this market, one in Arlington and one in Bethesda, are both purchasers, even though they may not compete on the same transactions, aren't they?
Mr. Englert, Jr.: No.
The effect of such discrimination has to be to harm competition with the favored purchaser.
And if all transactions are hermetically sealed from one another, yes, the buyer might like a better price, but it's not complaining about the effect of such discrimination on competition with the favored purchaser.
To put this point in perspective, imagine that Volvo raised its price to every so called favored purchaser--
Justice Stevens: But--
Mr. Englert, Jr.: --in this case.
Justice Stevens: --You would agree, in my hypothetical, there's discrimination, but you'd say there's no injury to competition.
Mr. Englert, Jr.: There's no injury to competition that is the effect of such--
Justice Stevens: Even if you--
Mr. Englert, Jr.: --competition with--
Justice Stevens: --got an expert to--
Mr. Englert, Jr.: --a favored purchaser that is the effect of such--
Justice Stevens: --even if you got an expert to come and say,
"Well, these two dealers are in the same relevant market, and there's a likelihood that customers go to the favored dealer. "
that would not be a prima facie--
Mr. Englert, Jr.: --Oh, if you have that evidence?
Justice Stevens: --Yes.
Mr. Englert, Jr.: That there is a likelihood that, in a pattern, customers have gone to the favored dealer?
That's... that begins to come within the statutory language in a way this case does not.
Chief Justice Roberts: I understand--
Mr. Englert, Jr.: There is no customer testimony, no evidence of diversion to any favored dealer in this case, no evidence that Reeder lost profits because of the price given to any favored dealer, only evidence that if Reeder had gotten a price, it would have... better price... it would have made more money.
Well, every dealer--
Chief Justice Roberts: --I understand your argument that there's no injury or impact in competition for resale of the trucks.
What's wrong with looking at the statute as being concerned to protect competition to be the Volvo dealer?
In other words, you know, they're competing... if Volvo's restructuring its approach, they're competing to be the favored dealer, even though they don't compete with other Volvo dealers directly.
Mr. Englert, Jr.: --The main problem with that interpretation of the statute is, it takes the last phrase of the statute and makes it no longer a limiting phrase.
It essentially makes all price discrimination illegal.
And this Court said, in Brooke Group, and has said in many other cases, that it is not... not all price discrimination is made illegal by this statute.
It does require the requisite effect on competition.
I'd like to reserve the balance of my time.
Argument of Thomas G. Hungar
Chief Justice Roberts: Thank you.
Mr. Hungar: Thank you, Mr. Chief Justice, and may it please the Court--
The fundamental question in this case is whether a plaintiff who did not purchase goods for resale in competition with a favored purchaser can, nonetheless, establish all the elements of a Robinson Patman Act claim by picking and choosing from among different aspects of unrelated transactions.
The position of the United States is--
Justice Stevens: But how can you say--
Mr. Hungar: --that the answer is no.
Justice Stevens: --that the dealer didn't purchase goods for resale in competition with other Volvo dealers?
That's exactly what they do every day, isn't it?
Mr. Hungar: No, Your Honor.
When they purchase the goods, they are not in competition with any other Volvo dealer.
By definition, they have the sale.
And so, if--
Justice Stevens: Can't they be--
Mr. Hungar: --That's the point that I'm making.
Justice Stevens: --in competition just from... on a day to day basis over the years, over a period of time, trying to get business?
Mr. Hungar: In a different sense, they may be in competition--
Justice Stevens: Assuming--
Mr. Hungar: --with other--
Justice Stevens: --they're in the same relevant market, of course.
Mr. Hungar: --In a different sense, yes.
But the point is, the price discrimination does not occur when there is any competition.
And, therefore, the requirements of the Act are not satisfied.
Justice Stevens: You're assuming they're not in competition on a continuing basis, they're only in competition for one isolated transaction after another.
Mr. Hungar: No, Your Honor.
The... they may be, in other senses, and in... and in seeking other customers, in a... in some sense, in competition with other Volvo dealers.
But, at the point that the price discrimination occurs, they are not.
And, therefore, even in the... in the... in the... well, in any of the examples offered by the Respondents in this case, they don't show price discrimination between competing purchasers, which is what this Court, in the Morton Salt case and in other cases, have indicated the Act was aimed at.
And as Mr. Englert indicated, that is why, in the 70 years since the Robinson Patman Act was enacted, we haven't seen cases like this, because it is understood that the Act has no application in these circumstances, and--
Justice Kennedy: Two--
Mr. Hungar: --I would--
Justice Kennedy: --two dealers within 10 miles of each other, customers frequently go to both dealers to check out... to get the lowest price.
Dealer A gets 10 percent discount routinely; Dealer B, 20 percent discount routinely.
Over a period of time, would there be a violation of the Robinson Patman Act?
Mr. Hungar: --And all the same structure as this--
Justice Kennedy: Yes.
Mr. Hungar: --hypothetical?
Well, the answer is no, but only for, I think, one of the several reasons why in this case the answer is no.
That is, in your hypothetical they are, in a sense... and I'm assuming that there might be direct head to head competition, but the offers are different... or affected by the differing differentials.
So, there is... there is competition between the purchasers, and there is discrimination in offers, although not in purchases.
So, there is still the two purchaser requirement which is not satisfied in that circumstance.
There is the... Reeder is not purchasing in... assuming it loses the sale to the other customer, it's not purchasing in competition with a favored customer, a favored dealer, because it's not purchasing at all.
Chief Justice Roberts: Just so--
Mr. Hungar: But I would point out that even if the Court is unwilling to go that far in this case, that you don't need to go that far to resolve this case and to reverse the judgment below for the other... because of the other failings in the plaintiff's case here.
Chief Justice Roberts: --And the... and the main failing there is that Volvo Trucks and Reeder Simco do not compete in the same market for sales of Volvo trucks.
Is that a correct statement of the record?
Mr. Hungar: Well, I don't think I would put it that way.
I think, again, they don't compete at the point at which the price--
Chief Justice Roberts: For any--
Mr. Hungar: --discrimination occurs.
Chief Justice Roberts: --particular sales.
Mr. Hungar: Right.
Chief Justice Roberts: I see.
Mr. Hungar: And that's--
Chief Justice Roberts: Okay.
Mr. Hungar: --right.
Other than... there are the... the two examples of what have been called head to head competition, in one of which there was clearly no price discrimination, in the other of which our reading of the record is that a reasonable jury could not have found that there was price discrimination.
And even if there were price discrimination, that one instance, standing alone, could not support a finding of a Robinson Patman Act--
Justice Breyer: Why not?
Mr. Hungar: --violation.
Justice Breyer: Why not?
The... Hiland... is that the one?
Mr. Hungar: Because there--
Justice Breyer: Hiland Dairy?
Mr. Hungar: --because there's no substantial injury to competition.
Justice Breyer: In other words, a... I mean, you could go in... I see that.
But what... is there any authority for that, that just one... a head to head competition, he bought the truck.
Let's... keep that out of it, so imagine they bought the truck, they resold it, and the market structure is such there probably is quite a lot of competition, in fact, with other dealers, and they lost at least one sale.
That's not enough to prove an injury to competition?
Mr. Hungar: I don't think so, Your Honor.
I mean, clearly--
Justice Breyer: What's the authority for that?
Mr. Hungar: --Well, certainly the Morton Salt inference wouldn't apply, because there's no distinction--
Justice Breyer: That's a different matter.
That's a... what... I'm saying, What authority is there... have there been cases in which that was not viewed?
After all, let's suppose the dealers are located geographically in about the same place, and it's logical to think they'd go for the same customers.
Their territories are close.
Logical to think people shop around for trucks.
And we have in the record one item where they... one instance in which they found the customer, and he said,
"Yeah, I did... I did go and shop in both. "
"I lost. "
--the disfavored dealer lost the sale.
Mr. Hungar: --Well, I don't--
Justice Breyer: Any authority?
Mr. Hungar: --Well, this Court's cases, and the lower courts', have understood the Act to require a likelihood of a substantial injury to competition--
Justice Breyer: Well, they say,
"This is our evidence that it is likely. "
Just what I said.
Mr. Hungar: --But one sale is not substantial, Your Honor, I would submit.
And, moreover, in this case, of course, they don't have that evidence of the close dealer with whom they are in repeated competition for the same customers that... and so, I don't think we have that case.
We don't have a substantial injury, even if you assume... even if you read the evidence the way they do with respect to the one head to head competition.
And it's important to understand that this... the two purchaser rule is not the only flaw in the judgment below.
The Act requires causation.
That is, the price differential must cause the injury to competition.
Here, it's not the price differential that causes the injury, in the sense that the Robinson Patman Act addresses.
The Act is addressed to the situation where they're competing head to head, the favored purchaser has a competitive... a relative competitive advantage which allows them to offer a lower price and, thereby, either get the sale or reduce the profits of the competing purchaser.
But that's simply not the case here in these sales to sales or offers to sales competitions.
The fact that some other dealer in some other transaction with some other customer got a better price has absolutely no relevance, no significance, and no effect on Reeder's ability to get a sale or make a profit in its transactions with an unrelated customer.
So, there... the causation element that's so crucial under the Act is absolutely missing here.
And, in fact, Reeder's interpretation would simply read the injury requirement out of the statute.
They would say,
"Whenever there is a price differential, we've been injured, because if we had gotten the lower price instead of the higher price, we would have made more money. "
So, there's per se injury.
The Morton Salt inference is converted into an irrebuttable presumption--
Justice Ginsburg: Mr.--
Mr. Hungar: --contrary--
Justice Ginsburg: --Mr. Hungar, do you agree with Mr. Englert that even if you had... you could... you had a case based on two dealers, one consistently gets higher concessions, one consistently gets lower concessions, and they're in roughly the same market... that even that would not be covered by Robinson Patman?
Mr. Hungar: --And they're in repeated head to head competition for the same customers... one gets... they're getting--
Justice Ginsburg: But I--
Mr. Hungar: --differential offers?
Justice Ginsburg: --I'm not putting the head to head in.
Just, one of his sales gets lower concessions; one, higher.
Mr. Hungar: --I agree that that would not be actionable under the Robinson Patman Act.
The reasons why... the reason, or reasons, why depend on whether they are in head to head competition or not.
If they're never in head to head competition, then they're never in competition--
Justice Stevens: Let me just--
Mr. Hungar: --and they would fail to have--
Justice Stevens: --modify Justice Ginsburg's question a little bit.
Supposing, over a period of years, one dealer always got 15 percent off, and the other one always got 20 percent, and there's testimony they're in the same relevant market, so presumably customers can go to either one.
What more do they have to prove to establish a prima facie case?
Mr. Hungar: --They have to prove at least what Morton Salt said, which is price differentials between competing purchasers.
And the way the purchasers were competing in Morton Salt was that--
Justice Stevens: Well, I understand--
Mr. Hungar: --they were both competing--
Justice Stevens: --I understand the Morton Salt case, but do the... I'm assuming they're in the same relevant market in which customers patronize both of them from time to time, but they can't identify that Mr. Smith was here on this day, and the other dealer on the same day, but just an overlapping in the... in the same competitive market.
Would that not create a prima facie case?
And if not, how much more would they have to prove?
Mr. Hungar: --Well, in this market, they'd have to show that they were purchasers--
Justice Stevens: Well--
Mr. Hungar: --at--
Justice Stevens: --they're both purchasers.
They're dealers, in my hypothesis.
Each of them buys a hundred cars a year, and one of them pays a higher price than the other, and they're in the same relevant market--
Mr. Hungar: --Yes, Your Honor, but they haven't purchased--
Justice Stevens: --What?
Mr. Hungar: --They haven't purchased in connection with the--
Justice Stevens: They all purchased--
Mr. Hungar: --a price discrimination--
Justice Stevens: --for the purpose of reselling, if they can find customers.
Mr. Hungar: --Well, right.
But, as Justice Scalia pointed out, the Act clearly does not apply to offers.
It requires purchases--
Justice Stevens: Well, I understand.
Mr. Hungar: --and it requires--
Justice Stevens: In my case--
Mr. Hungar: --sales.
Justice Stevens: --there are a hundred purchases by each of them at different prices.
What more do they have to prove, other than that they were in the same relevant market?
Mr. Hungar: They have to prove that they were in competition with each other and that competition was--
Justice Stevens: Now, isn't the fact they're--
Mr. Hungar: --injured by--
Justice Stevens: --in the same--
Mr. Hungar: --the differential.
Justice Stevens: --relevant market enough to prove they're in competition with each other?
Mr. Hungar: No, Your Honor, because... it's not enough to prove they're in competition with each other.
They have to prove that they are in... that the price differential injured, or was likely to injure, substantially, that competition.
And that is not true if they aren't competing in connection with the transactions--
Justice Souter: No, but if you're looking at--
Mr. Hungar: --in which the price discrimination occurs.
Justice Souter: --if you're looking at broad market competition, you don't normally require them to identify competition on a customer... on a per customer basis.
The only reason we get into the per customer basis is that we have this odd... not an odd situation, but the situation with Volvo trucks that no dealer ever buys unless he's already got a... got a sale waiting.
But in Justice Stevens' hypothetical, we... as long as the market was identified, and as long as they were buying, we wouldn't require anything more to show competition, would we?
Mr. Hungar: May I answer?
Chief Justice Roberts: Sure.
Mr. Hungar: Your Honor, if... I understood Justice Stevens' hypothetical to address the situation where, as in this circumstance, they are not competing at the point at which they actually purchase--
Justice Stevens: No.
Mr. Hungar: --the product.
If it were the traditional Robinson Patman Act case, where they purchase for inventory and are both trying to sell the same goods to the same customers, then yes, the problems that we've identified here would not exist.
Chief Justice Roberts: Thank you, Mr. Hungar.
Mr. Hungar: Thank you.
Argument of Carter G. Phillips
Chief Justice Roberts: Mr. Phillips.
Mr. Phillips: Thank you, Mr. Chief Justice, and may it please the Court--
It seems to me there are three issues that have been posed by the way both this case has been argued by the parties on the other side and as the questions have arisen.
And the first one is whether or not there is competition in this particular case.
And Justice Stevens' question, it seems to me, posed the issue about as starkly as it can be, is it not the case that under traditional standards of Tampa Electric, this Court's decision there, and a host of other cases, that we define "competition" by reference to whether or not entities compete for the same... with respect to the same product in the same market, same region, and if they're... if that's what you have by way of competition, then you look to the next level, which is to see, is there price discrimination, and is there injury to that competition?
Justice Scalia: What evidence was there of competition here?
How... did you bring forward instances where they both bid for sale of special trucks to a single repurchaser?
Mr. Phillips: Well, we clearly did that with the... with the Hiland case.
That was... that was clear.
But the testimony was uncontested on both sides.
Both Reeder's... Reeder testified,
"We compete against other dealers every day. "
And Volvo's witness testified--
Chief Justice Roberts: Not other Volvo dealers.
Mr. Phillips: --Yes, other Volvo dealers.
Chief Justice Roberts: I thought the Volvo policy was, if you had two dealers competing for the same sale, they gave the same discount to each dealer.
Mr. Phillips: Well, that's not the competition.
That's the question as whether there is discrimination.
The question is, Do Volvo dealers compete against other Volvo dealers, in the first instance?
And with respect to that, the testimony was absolutely clear, it's in the... witnesses for Volvo... are quoted in our brief at page 8... explicitly say,
"We compete, on a daily basis, in the region and the district, Volvo dealer to Volvo dealer. "
Now, there's a separate issue--
Chief Justice Roberts: But there's never... but, in those situations, there's never two purchases, there's always one... there's only one completed purchase.
Mr. Phillips: --Well, the... again, there are lots of situations where there are two purchasers.
Again, you go back to the... to the four specific transactions that were identified.
For the 102 sales, 55 percent of the sales between 1996 and 2000 involve... I mean, 1998... involved direct comparison sales, where we purchased from Volvo, and one of our competitors 200 miles down the road... and on interstate highways, 200 miles down the road's the same as next door... and we... we purchased exactly the same product, and we got a significantly lower concession--
Justice Stevens: Well, but--
Mr. Phillips: --under the circumstances.
Chief Justice Roberts: But that was for a resale to... that was for resale to different purchasers.
Mr. Phillips: To be sure, it was--
Chief Justice Roberts: Nobody's buying two--
Mr. Phillips: --for resale.
Chief Justice Roberts: --nobody's buying two trucks from two different purchasers.
Mr. Phillips: Right.
Anymore than anybody's buying two cars from two different purchasers in the... in the classic inventory situation.
Justice Scalia: Yes, but it's very hard to compare those two sales, because they all depend upon the special features on the trucks that are ordered by the particular individual, and also how... you know, how much of a hard bargain that individual is driving.
I don't know how you can compare a sale to one... one person with XYZ features on the truck with a sale to a totally different person with ABC features on the truck.
Mr. Phillips: Justice Scalia, that was precisely the defense that Volvo made at trial.
They put it to the jury,
"Remember, it has to be like kind and quality. "
"We are required to demonstrate that the truck that we are getting a 10 percent discount on and the truck that they're getting a 20 percent discount on is exactly the same like kind and quality of truck. "
And that was their defense.
And our witness meticulously... I'd commend the record to you if you want to read it... but he meticulously examined each of those trucks and showed that, systematically, for 102 sales, they sold the exact same truck to a dealer down the road, with a significantly better price than the truck they sold to us, in order to implement the "Volvo Vision" and drive my client--
Justice Scalia: For resale--
Mr. Phillips: --out of the dealership business.
Justice Scalia: --to a different purchaser, who may have been in a better position with regard to the negotiation than any of your customers were.
Mr. Phillips: Well, he... but whatever that person's position was, vis a vis its customer, doesn't affect the relationship between Reeder Simco and Volvo, and that individual and Volvo.
Justice Scalia: Why is it--
Mr. Phillips: There, it has to be a level playing field.
Justice Scalia: --why is it--
Mr. Phillips: That is precisely what Robinson Patman is about.
Justice Scalia: --why is it unreasonable... why does it violate the principle of Robinson Patman, and why does it destroy competition, for Volvo to say,
"We'll make whatever discount it takes to get the sale, and if this dealer needs a 20 percent discount for this sale, but this other fellow over here only needs a 10 percent discount to make that sale, we're going to have a differential discount? "
Why... I don't see why that harms competition.
Mr. Phillips: Because the... it wouldn't necessarily, on an episodic basis.
But what you have in this case is substantial price discrimination across time, which this Court held, under Morton Salt, triggers an inference of competitive injury.
Justice Ginsburg: Mr. Phillips, the problem that I have with even accepting your theory is what the other side calls the "mix and match" quality of your evidence.
That is, you say here's Reeder, disfavored, and here's someone else, favored.
But it's not consistently the same someone else.
And, for all we know, someone else could make a case saying,
"We compare ourselves with Reeder, and we say, oh, there was that sale 7 months ago, where they got a whopping discount and we got a much smaller one. "
You're not... you don't have the same favored customer.
You're picking from a series of sales, and we don't know how manipulative this proof is.
And we I mean... and we don't--
Mr. Phillips: Well, I mean, putting aside the fact, Your Honor, that I think that that's essentially a jury question... I mean, I do think both sides get to put on the evidence that shows that there's been discrimination and that there... and then we know what the market consequences will be.
But if you look at plaintiff's exhibit 104, which is in the appendix to the Court of Appeals at 577, and you look down that list, you will see that they are... where they're specifically talking about Reeder Simco, and it has... and it satisfies its 28 percent of its overall objective in 1999; and then you go through the testimony of Reeder Simco's coowner, and he's... identifies each of the four or five competing entities that were the beneficiaries of those... of the price discrimination of those sales in the 102 sales that were the basis for liability; and their percentages for their objectives during the next... during 1999 are 71 percent, 81 percent, 97 percent, 107 percent, 92 percent... those are... those are huge differentials.
Chief Justice Roberts: Mr. Phillips, when you lose--
Mr. Phillips: And--
Chief Justice Roberts: --If I may.
When you lose a sale, it's because Volvo didn't give you a big enough discount.
It's not because they gave another Volvo dealer a bigger discount.
Mr. Phillips: --That's today, Mr. Chief Justice, to be sure.
But tomorrow, when I go to the next dealer to... go to the next purchaser, the reason I didn't get that sale was because I didn't have enough capital to have the same quality of salesperson in place to make that sale.
Chief Justice Roberts: Well, sure, but, I mean, that's... I mean, long term... of course, Volvo can terminate you, as a dealer, tomorrow.
Mr. Phillips: Well, it can't.
Under the contract--
Chief Justice Roberts: --Well--
Mr. Phillips: --and under State... Arkansas State law, it can't.
Chief Justice Roberts: --well, what... but it... under the Robinson Patman Act, it can.
Mr. Phillips: As long as it doesn't discriminate on the basis of price--
Chief Justice Roberts: The classic--
Mr. Phillips: --you're right.
Chief Justice Roberts: --case that the Robinson Patman Act is directed to is when you lose sales because they're giving bigger discounts to other sellers.
And that's just not the case here.
Mr. Phillips: But it... it's not just sales.
It's always been lost profits, as well.
And if we are paying more, we're losing money, vis a vis our competitors.
And then every day after that, we're competing with our... one arm tied behind our back because we have less money.
And is there any reason to doubt that--
Chief Justice Roberts: But Volvo's interest may be in as... making as much money off of sales this year, and they may not be terribly concerned about whether you, as a reseller, are making enough profit to last 3 years or 5 years.
Mr. Phillips: --That's true.
But we know from the record that Volvo's purpose in this enterprise was to eliminate 50 percent of its dealers--
Justice Scalia: That... that's a--
Mr. Phillips: --and to do so by using price discrimination.
Justice Scalia: --that's a... that's a broad Robinson Patman principle you're arguing for, that a... that a seller such as Volvo has to make sure that each of its distributors makes the same profit?
Mr. Phillips: Oh, no.
To be sure, no--
Justice Scalia: And if--
Mr. Phillips: --of course not.
Justice Scalia: --if it works its system in such a way that one of them is making less profit than another, it's liable?
Mr. Phillips: No, there are... there are two elements to this, Justice Scalia.
You first have to demonstrate that there's discrimination.
And the way you demonstrate anticompetitive discrimination is to show that there is a consistent pattern.
It has to be substantial discrimination over a substantial period of time.
If we're trying to cut deals on a daily basis, presumably today you got a deal with a customer, and I'll give you a 10 percent, and then the Chief Justice got a deal tomorrow, and I may give him 12 percent, but, 2 weeks down the line, the situations will likely be flipped out.
You're not going to find, where you have 55 percent of your sales, 102 sales involving $250,000-plus of sales differentials to be the basis for the claim that there is price discrimination in the first instance, Justice Scalia.
Justice Scalia: Do you have any instance where you made an offer to a buyer assuming that you'd get the kind of a break that Volvo gives to other dealers... all right +/?
you made that offer, and the buyer says,
"Yes, I'll take it at that price. "
--and then you go to Volvo, and they won't give you that advantage?
Mr. Phillips: Oh, sure.
We had thousands of those examples.
Justice Scalia: Where you made the offer to the buyer--
Mr. Phillips: Yes.
Justice Scalia: --and the buyer had agreed to buy it--
Mr. Phillips: Sure.
Justice Scalia: --and you--
Mr. Phillips: Where we... well, I... had agreed to buy it.
We had a... clearly, there was an understanding.
Our sales person thought that,
"If I can get this discount at this rate, I can cut this deal. "
went to... went to Volvo, asked for that rate, Volvo said no.
Didn't get the deal.
Justice Breyer: This is the Robinson--
Mr. Phillips: That happened literally more than a thousand times.
The testimony on that is rampant.
And the reason we don't make more of that, Justice Scalia, in this particular case, is because the jury verdict is based on actual sales.
There is as very clear fidelity to the two purchaser rule in the way the jury verdict was rendered and the way the Court of Appeals affirmed it.
That said, I... a lot of this discussion about, you know, is that two purchaser rule, in its most strict version, the right way to interpret the Robinson Patman Act?
Our view is, it's not.
But we don't have to get there--
Justice Breyer: --If it's not, the... the reason... I thought, for about 60 years, the words "different purchasers of commodities", it forbids any person to discriminate in price between different purchasers of commodities.
Now, you have to refer... as soon as I ask the question, or start getting into the language, I forget the statute, and it's so complicated that I'm giving you time to think about it--
--and to think of those words in your mind.
Mr. Phillips: --All right.
Justice Breyer: It's a... it's forbidden to discriminate in price between different purchasers of commodities.
Mr. Phillips: Right.
Justice Breyer: Now, I had always thought... and I think the courts' decisions bear that out, or the absence of decisions... that the words
"discriminate in price between different purchasers of commodities. "
meant you can't discriminate in price between different purchasers of the item, or items, in respect to which the discrimination of price exists.
That's what I thought it meant.
And it seems to me that was the general understanding in the antitrust bar, that was the general understanding of the courts.
And either it's not permissible to give such an interpretation... I don't know why it wouldn't be; it's literal... or there's a good policy reason for not doing it in respect to the policy.
And in respect to the policy, what worries me about the broader interpretation is suddenly doing what Volvo... forbidding Volvo from doing what it probably wants to do here.
If it wants to get rid of its dealers, it's because it wants to compete better with other brands.
And that means lower prices for consumers, though individual dealers might be hurt.
So, if I'm trying to read that law consistent with 60 years of history, and the basic purposes of the antitrust law, I guess I would... might favor your opponents in this.
I'm exposing my entire line of thought.
I'm trying to protect interbrand competition, why... while, at the same time, not being... not being unfair to the purposes of Robinson Patman; and, therefore, I'm reading this fairly literally, as it's been read.
So, what's your response?
Mr. Phillips: Well, I guess the difficulty I have, Justice Breyer, is understanding why you don't think we are... what we have here is precisely different purchasers of commodities.
Justice Breyer: No, I said... I said they... in... the problem for you is that, in respect to discrimination between the item, or items, the... in respect to... the purchase of the item, or items, in respect to which the discrimination existed.
Insofar as there were items, or items, purchased, there is no discrimination.
At least there is no discrimination that... in terms of the injury of the statute, creates that kind of injury.
In respect to instances where you have a strong case of the right kind of injury, there was no purchase, defined as I just defined it.
Mr. Phillips: I apologize for being--
Justice Breyer: No, let me deal--
Mr. Phillips: --dense, Justice Breyer.
Justice Breyer: --with the latter.
I will say--
Mr. Phillips: Let--
Justice Breyer: --there are some items where your client bought the truck.
Mr. Phillips: --Absolutely.
Justice Breyer: When he bought the truck, he got the sale, although he earned less profit.
Put those to the side.
Mr. Phillips: It's difficult--
Justice Breyer: Let's focus--
Mr. Phillips: --for me to do that, Justice Breyer--
Justice Breyer: --But you are.
Mr. Phillips: --but I understand.
Justice Breyer: Let's focus--
--on the items... let's focus on the items where he didn't get the sale.
Mr. Phillips: Right.
Justice Breyer: When he didn't get the sale, there was no purchase of the item, or items, from the manufacturer in respect to which the discrimination existed.
Mr. Phillips: Right.
Justice Breyer: Okay?
Now, it's that second class--
Mr. Phillips: That's what you want me to focus on.
Justice Breyer: --Yes.
Mr. Phillips: That's fine.
As long as you accept that the first class is a distinct one, and, as far as I'm concerned--
Justice Breyer: Of course it's distinct.
Mr. Phillips: --but... and it totally makes my case, as far as I'm concerned.
Justice Breyer: --Oh, well, you have a--
Mr. Phillips: I realize you may disagree with me on that, but--
--we'll start there.
But I just want to be clear that that's a completely separate analysis.
Then, it seems to me, what you... what you have to go back to is the kind of analysis that Justice Stevens was saying, which is that when you're talking about different purchasers of commodities, there is no reason to be so focused on the... on the identical transaction, rather than recognizing, particularly in the context of a dealership arrangement where you're... have continuous relationships between the... between the seller... the manufacturer and the dealer, where you have this enormous disadvantage to the dealer, who has already sunk, you know, huge amounts of money into this and is in... essentially at the whim of what is now a monopoly seller... a monopsony... a monopoly seller.
And, under those circumstances, it makes perfect sense to say,
"Look, if I'm going to systematically keep getting 20... 10 percent discounts, where my competitor, a hundred miles away, is always getting 20 percent discounts. "
that's a situation that this statute seems clearly aimed at dealing with.
Chief Justice Roberts: You're not at the whim of a monopoly seller.
You mentioned to me just a little while ago, you've got a contract with them.
You can put in that contract whatever you want about pricing.
Mr. Phillips: I have a 5-year contract that's already in place, so, at least for the 5 years, I'm pretty much at the whim of my... unless I want to breach the contract, which--
Justice Scalia: --You should have written a better contract.
Mr. Phillips: --Well, unfortunately--
--I didn't write that contract, Justice Scalia.
Justice Scalia: But on a misinterpretation of Robinson Patman.
Chief Justice Roberts: What do you do with the policy argument... at, sort of, the level of the forest, rather than the trees... that the antitrust laws are designed to prefer competition in interbrand... in the interbrand market, rather than intrabrand, and that, therefore, to the extent there's ambiguity, that supports an interpretation that allows the manufacturer to strengthen his interbrand position, as opposed to protect the intrabrand position?
Mr. Phillips: I think to make that argument you essentially have to make mush out of the last half of the Robinson Patman Act, because it's not injury in any line of commerce, which is where I think you would be talking about interbrand problems.
It's problems with respect to customers of either of them.
And it's quite clear, and it's been clear since 1948 in Justice Black's opinion for the Court in Morton Salt, that this is designed to recognize that when you harm an intrabrand competitor, that that's the kind of injury to competition that this statute was aimed at.
And this Court reaffirmed that both in the 1980s, reaffirmed it again in 1990, in Texaco.
And it's... and notwithstanding some effort to ask the Court to revisit Morton Salt at this point, it seems to me that that principle ought to be completely settled at this stage.
If there's to be any fix there, it ought to be a fix that's offered up by Congress.
To go back to, then, your point, Justice Scalia, I told you, first, you have this discrimination in price, you have to show that it's substantial, lasts for a substantial period of time, you get the Morton Salt inference.
You... then we still have to show, under section 4 of the Clayton Act, that we have actual injury to our business and property.
And in this context, it seems to me, the evidence is absolutely overwhelming, because you have a situation where, in 1995, we are next to none dealer for Volvo.
In 1995, we're selling 66 cars, we're making $165,000.
Volvo implements its "Volvo Vision", the purpose of which is to drive my client out of this dealership.
It engages in systematic discrimination, both with respect to unquestionable purchases on both sides and, candidly, more broadly than that.
And the effect of that, at the end of the day, is that our sales go from 65 to 34 to 18 to 8.
Our gross profits dropped to $26,327.
You compare that to the kind of evidence this Court looked at in the... in the J. Truett Payne case, where it wasn't clear that there was really any discrimination involved there, there was no drop in the market, there was no evidence of any diversion of any sales.
And, even in that context, this Court was unwilling to say that the Fifth Circuit's decision holding that the evidence was flat out inconsistent... or inadequate to sustain the verdict, was overturned, had to be sent back.
I submit to you, the evidence in this case is vastly stronger.
The jury reached the result that it did.
That result was approved in the face of a JMOL--
Justice Stevens: --Well, let me ask you--
Mr. Phillips: --and affirmed--
Justice Stevens: --this question.
Mr. Phillips: --on appeal.
Justice Stevens: Supposing you did have a contract, such as Justice Scalia suggests, in which the manufacturer agreed that, at any given point of time, you will get just as favorable a concession as any other Volvo dealer could get at the same time.
If there were such a contract in place, would the evidence show that it was breached?
Mr. Phillips: In this case, yes, it would have been.
We have evidence that they clearly didn't.
Because they have a policy of trying to accomplish the same thing, and didn't achieve that in this particular case, in at least two instances.
Justice Ginsburg: --But you did... you did get a judgment on the... whatever it was... the State Franchises Act, and that is not being contested--
Mr. Phillips: That's correct--
Justice Ginsburg: --on appeal.
Mr. Phillips: --Justice Ginsburg.
Justice Ginsburg: So that if... the question is whether fair franchising practices... were there unfair practices?
You won a verdict that there was a violation of the Fairness in Franchising Act.
Mr. Phillips: Right.
We clearly aren't raising the State law issue here.
Our argument here is that the Robinson Patman--
Justice Ginsburg: Well, you won on it.
Mr. Phillips: --violation--
Justice Ginsburg: You won on it.
But the difference is that that doesn't give you treble damages.
Mr. Phillips: --Well, it also has a different statute of limitations, Justice Ginsburg.
There are a lot of differences between the State law and the Federal claim that we're--
Justice Ginsburg: On--
Mr. Phillips: --that we're pursuing here.
Justice Ginsburg: --limitations, one of the aspects of this matches... that in one case you went back as much as... there was a 7-month differential.
Is there a timeframe, if we adopt your theory, about... in which you can engage in this comparison?
Mr. Phillips: Oh, of course.
You require the jury to make a determination that it's within a reasonable period of time and that it's in a reasonable adjustment.
There is no challenge to the jury instruction on whether or not the comparisons that were made were legitimate in any way.
So, that's... you know, there's no question that this Court can certainly establish a rule that says certain timeframes are either, per se, good or bad, but that issue is clearly not raised by the way the jury... this jury was instructed, because there was no challenge to the instruction, in this case.
Justice Stevens: And it's also not disputed now that these were goods of like grade and quality.
Mr. Phillips: Not disputed that these are goods of like grade and quality, Your Honor.
Justice Scalia: Mr. Phillips, how many States have these fair franchising laws?
Are there any States that don't?
Mr. Phillips: Oh, I'm sure there are some States that don't.
I think there are about 30-some States that do, as I recall.
Chief Justice Roberts: Your argument that focuses on the dealer's profits, I guess, doesn't depend upon you losing those sales at all.
I mean, if you... you had made all the sales, but you still thought you should have gotten a bigger discount that would have allowed you to make more money, you'd have the same argument, right?
Mr. Phillips: Well, I think if we had gotten all of those sales the first time around, we would have ended up with the profits that would have allowed us to make the sales--
Chief Justice Roberts: Oh, no, you just go back and look again, 7 months or a year down the road, and if somebody else was getting a bigger discount... if you had gotten the bigger discount, you would have made more money on those sales, and then you would have had more capital, and you'd be able to be a dealer for a longer time.
Mr. Phillips: --Well, I think, at the end of the day, what we're talking about is essentially a jury question, were we entitled to say these were lost profits, the margins were reduced, we didn't have as much money?
That interfered with our ability to make sales in the future period, because you have the complete before and after documented history in this particular case.
Justice Souter: So--
Mr. Phillips: It seems to me that's a jury question.
And the jury found in our favor.
Justice Souter: --Wouldn't--
Justice Breyer: --You suggest something very... to me, quite interesting, but it would be quite a departure, I think, from prior law that--
Mr. Phillips: I hope not.
Justice Breyer: --If you want to go look at this, you know, you say, all right, here's... we should be realistic about it.
We're going to be realistic.
Realistic, they... we're only now looking at the cases where they undoubtedly bought the item, but the profit was lower.
There's no purchaser problem.
Mr. Phillips: Right.
Justice Breyer: But they got a lower profit.
And I think, there, the mine run of cases is against you that that counts as an injury.
Mr. Phillips: That, by itself, wouldn't count as an injury.
Justice Breyer: Yes.
Yes, but it's... you know, it shows that they're going to be hurt, that they may be driven out of business.
Mr. Phillips: Right.
Justice Breyer: Indeed, the market in... the dealership market, whatever... if that's a separate market, which it might be... becomes more concentrated, and the result of... you know, I could make a... tell a little story there that would be quite consistent with the purposes of the antitrust law.
So we follow that approach in this case and say goodbye to Morton Salt, because Morton Salt, after all, was a case that was quite formalistic.
It didn't really look to the injury to competition in a market.
It had a formalistic slogan that would, in fact, be a proxy for that.
Mr. Phillips: Right.
Justice Breyer: So, what do you think of that?
We follow your... we follow your advice, we say,
"Okay, we're going to be very realistic in the future. "
"Forget the presumptions. "
"And, Court, look to see whether competition, in the sense of increased concentration through people going out of business, will lead to higher prices with the ordinary antitrust proxies there. "
What about that?
I mean, I don't know if you... you know, I--
Mr. Phillips: Well, I'm not here to--
Justice Breyer: --I'm being a little--
Mr. Phillips: --I'm not here, necessarily, as an advocate for overturning Morton Salt, for obvious reasons.
I think the answer to your question is, under Morton Salt we clearly win, because we... we probably didn't need to show as much as we did, in terms of the impact of this particular discrimination on our ability to compete in the future.
I think we were entitled to a straight inference of that, in terms of the substantial... or reasonable possibility of injury in the first instance.
But, beyond that, I... you know, you could certainly hold, in this case, that Reeder Simco has made more than enough of a case in order to recover under the Robinson Patman Act.
Justice Kennedy: Well, in fact--
Mr. Phillips: --we, neverthe... I'm sorry, Justice--
Justice Kennedy: --you almost have to show that.
But the evidence of the head to head competition, it seems to me, too insubstantial to support liability here.
Would you agree?
I... and I--
Mr. Phillips: --One--
Justice Kennedy: --I... your opposing counsel says you almost concede that, right?
Mr. Phillips: --Well, we... I mean, we don't rely on it.
And part of this... part of the problem is that it's not... that head to head item wasn't part of the jury instruction.
So, that... we... I can't rely on it, in terms of supporting it.
If you ask me, outside of the context of this case, would I defend that argument?
I probably would try to defend the argument.
But it's obviously much tougher when you only have one head to head.
It's completely different when you're talking about 102 sales to sales comparisons over years, with significant differentials, that clearly caused the kind of injury we have here.
If there are no further questions, Your Honors, I'd give you back the rest of my time.
Rebuttal of Roy T. Englert
Chief Justice Roberts: Thank you, Mr. Phillips.
Mr. Englert, you have four minutes remaining.
Mr. Englert, Jr.: Thank you, Mr. Chief Justice.
The heart of the theory of this case came up in colloquy between the Chief Justice and Mr. Phillips.
The Chief Justice pointed out that Reeder doesn't lose a sale because of the concession that Volvo gives to the other dealer, which makes this quite different from every other Robinson Patman case.
Mr. Phillips' response was,
"That's today, Your Honor. "
"But our future ability to compete is impaired. "
Well, that's very similar to the evidence this Court referred to as J. Truett Payne.
The Court didn't go all the way and say that that wasn't enough to give rise to damages under section 4 of the Clayton Act, but the... but all nine Justices agreed that such evidence was very weak.
The Fifth Circuit, on remand, threw out the jury verdict, a case that arose in the same posture as this case.
And there is not... as we said in the reply brief, Reeder is complaining about price, not price discrimination.
Now, let me say a word or two about the record.
Mr. Phillips says the "Volvo Vision" was to get rid of dealers, and to do so through price discrimination.
That is a leap of faith that Reeder asked the jury to make at trial, but there is not an iota of evidence connecting Volvo's interest in making its dealer network smaller and more efficient to price discrimination.
That's entirely a leap of faith.
Mr. Phillips says an inference should be made.
That's not the kind of inference we usually allow juries to draw in antitrust cases without some evidence.
The evidence was actually that Reeder's biggest customer, New Hi Way, which was 82 percent of its business, was bought by a Memphis company.
So, just to point to Reeder's before and after sales is really terribly misleading, in terms of causation here between so called discrimination and the decline in Reeder's business.
The so called 102 sales are four transactions.
There's one 77-truck transaction to New Hi Way before it was bought by the Memphis company, and 25 other trucks in the other three transactions.
They are all cases in which all Reeder did was take its own completed sales and compare them to sales by some other dealer in some other State.
Reeder wasn't competing for the sale to that dealer's customer.
That customer wasn't competing for the sale to Reeder's customer.
So it is, as Justice Ginsburg's questions pointed out, completely a mix and match approach.
And Bill Heck conceded that there were times when Reeder got better concessions than other dealers.
If you have a company that doesn't engage in uniform pricing, as Volvo does not, it's not going to be hard for any plaintiff, whether it's Reeder or Reeder's competitor, to come up with instances in which it was the so called disfavored dealer if it is admissible to compare transactions to completely unrelated transactions, which is what the proof at trial in this case was.
Chief Justice Roberts: Thank you--
Justice Stevens: Let me ask you, if you have a minute left, is your central point that there was no proof of damages or no proof of injury to competition?
Mr. Englert, Jr.: Both, Your Honor.
They need both.
Justice Stevens: I know they--
Mr. Englert, Jr.: --In 2(a)--
Justice Stevens: --need both, but which is your principal argument?
Mr. Englert, Jr.: --My principal argument is under 2(a), but if I fail on that, I think they fail under Clayton Act, section 4, as well.
Justice Stevens: Your principal argument, that there was no injury to competition.
Mr. Englert, Jr.: --That was the effect of such discrimination, yes.
Justice Stevens: Okay.
Chief Justice Roberts: --Thank you, Counsel.
The case is submitted.
Argument of Speaker
Mr. Phillips: Justice Ginsburg has the opinion in No. 04-905, Volvo Trucks North America versus Reeder-Simco GMC.
Argument of Justice Ginsburg
Mr. Ginsburg: This case, calling for interpretation of a federal law, the Robinson-Patman Price Discrimination Act, involves specially ordered products, heavy-duty Volvo trucks, sold by franchised dealers through a competitive bidding process.
In this process, the retail customer states its specifications and invites bids, generally from dealers franchised by different manufacturers.
Only when a Volvo dealer’s bid proves successful does the dealer arrange to purchase the trucks, which Volvo then builds to meet the customers’ specifications.
Reeder-Simco, an Arkansas Volvo dealer, sued Volvo, alleging that Reeder’s sales and profits declined, because Volvo offered other dealers price concessions more favorable than the discounts Volvo offered to Reeder.
Seeking travel damages under the Robinson-Patman Act and compensatory damages under the Arkansas Franchise Practices Act, Reeder prevailed on both federal and state claims at trial and on appeal to the 8th Circuit.
We granted review on the federal claim to resolve this question: may a manufacturer offering different wholesale prices to different dealers be held liable under the Robinson-Patman Act absent the showing that the manufacturer discriminated between dealers contemporaneously competing to resell to the same retail customer?
State law protecting franchisees may provide, and in this case has provided, a remedy for the dealer exposed to conduct of the kind Reeder alleged; but the federal Robinson-Patman Act, we hold, does not cover Reeder’s complaint.
The Act centrally addresses price discrimination between purchases of products of light grade and quality who compete to resell those products.
Competition of that character ordinarily is not involved when a product subject to special order is sold to a customer-specific competitive bidding process.
Congress passed the Robinson-Patman Act in 1936 to combat perceived harm to competition occasioned by powerful buyers, rather than sellers; specifically, Congress responded to the advent of large chain stores, enterprises with the clout to obtain lower prices for goods than smaller buyers could demand.
Reeder presented three principle categories of proof at trial: first, Reeder compared concessions it received on four occasions when it bid successfully against non-Volvo dealers and thus purchased Volvo trucks with more favorable concessions other successful Volvo dealers received were bidding process in which Reeder did not participate; second, Reeder compared concessions Volvo offered on several occasions when Reeder bid unsuccessfully, again, against non-Volvo dealers with more favorable concessions received by other Volvo dealers who gained contracts, again, on which Reeder did not bid; finally, Reeder brought up two instances in which Reeder did bid against other Volvo dealers for a particular sale.
In one, Volvo initially offered Reeder and the other dealer the same concession; Volvo ultimately granted a larger concession to the other dealer, but only after that dealer had won the bid.
In the second instance of head-to-head competition that Reeder identified, Volvo increased Reeder’s initial discount to match the discount offered to the other competing Volvo dealer; neither dealer won the bid.
Mixed and matched selective comparisons of the manipulable kind Reeder presented, we hold, do not show the injury to competition targeted by the Robinson-Patman Act.
Reeder did not establish that it was disfavored vis-à-vis the other Volvo dealers in the uncommon instances in which they competed for the same sale, let alone that the alleged discrimination was substantial.
For the reasons just sketched and more fully drawn out in the Court’s opinion, the judgment of the Court of Appeals is reversed.
Justice Stevens has filed a dissenting opinion, in which Justice Thomas joins.