Any sales which exhibit discrimination in prices for the same products to different distributors are prohibited. Such sales practices shall reduce the competition in the markets. A particular set of consumers are benefited greatly irrespective of the efficiency of the product, which is in sales. The price of the products refers to the net price at which the products are sold. For effective sales of any product, promotional activities and advertising is required. The cost incurred for such activities, including other services, is included in the product’s price. The end consumer buys the product at a price, including compensation, advertisement, etc. The seller of the product does not allow more goods and services into the marketplace to reduce the price. Competition for the product increases, and prices keep increasing. The products available for public consumption are less, corresponding prices for the existing products are high. The individuals affected due to this context, along with the U.S government, aim to implement the clauses as per the Robinson-Patman Act to minimize the differences and inequality of prices. Existing sales patterns are required to have a chance for a better environment. Sales must be transacted outside state borders. The standards and quality of the product sold for public consumption and personal use must be simultaneously available in the marketplace.
Robinson-Patman Act: Criticisms
Economists and legal researchers have deeply evaluated the Robinson-Patman Act and criticized the drawbacks. The following criticisms were put forward.
The Robinson-Patman Act was considered to be anti-competitive.
The Robinson-Patman Act aimed to accommodate the interests of some business dealings over the interests of their end consumers.
The Robinson-Patman Act is tentatively liable to face potential abuse.
Price competition is punishable under the Robinson-Patman Act.
The Robinson-Patman Act levies charges on individuals for charging a lower price of the products.
High-cost distributors are benefitted highly under the Robinson-Patman Act.
High-cost distributors charge high prices to the products.
Consumers who lower retail prices shall benefit are being affected under the Robinson-Patman Act.
The Robinson-Patman Act is in favor of high-cost distributors when compared to corresponding end consumers.
Different prices are charged for the same product by different distributors in the marketplace. Under this act, the sellers should not provide payments to their favorable resellers. This is not available to other retailers on the same terms. For the services rendered, few individuals have paid false brokerage fees; however not paid in the actual context. The main intention of the Robinson-Patman Act is to stop large distributors from charging different prices to different retailers, thereby causing harm to the firm producing the products. Any deviations from these clauses are mapped as criticisms.
Price Discrimination
When a seller charges different prices to the same product to the competing end consumers, it is termed as the seller discriminating the prices. The seller is said to violate the Robinson-Patman Act. Price discriminations are considered lawful in the context when a seller sells a product in the completive marketplace. As per the Robinson-Patman Act, the claim must adhere to the following specifications.
Robinson-Patman Act applies to commodities and not to services.
Robinson-Patman act is applicable for purchases and not to leases.
Goods sold must be of standard quality and grade.
There should be an injury caused in the process of competition.
Actual harm suffered should be listed out.
Sales transactions across state borders should be put to practice.
There are two types of competitive injury. The primary line of competitive injury is experienced when a seller reduces the product’s prices in a particular location and causes changes in competition in the marketplace. A secondary line of competitive injury is experienced when the seller has a particular set of consumers as their favorites and enjoys a price advantage compared with the other end consumers in the marketplace.
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