What Is the Robinson-Patman Act?
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Talk to our experts- Robinson-Patman Act
- The Robinson-Patman Act is a 1936 federal law, found mainly in 15 U.S.C. 13, that in certain cases makes it unlawful for a seller to charge competing buyers different prices for commodities of like grade and quality, or to grant them promotional allowances and services on unequal terms. It applies to commodities, not services.
Also called: Robinson-Patman Antidiscrimination Act, Robinson-Patman Price Discrimination Act
How it works
The core text, in 15 U.S.C. 13(a), makes it unlawful for any person engaged in commerce "to discriminate in price between different purchasers of commodities of like grade and quality" where "the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce", or to injure competition. These are excerpts; the full subsection sets further conditions and provisos.
According to the Federal Trade Commission (FTC), a claim must in practice meet several specific legal tests:
- The Act applies to commodities, but not to services, and to purchases, but not to leases.
- The goods must be of "like grade and quality."
- There must be sales to at least two different purchasers within approximately the same time period.
- There must be the reasonable possibility of injury to competition.
- Normally, at least one of the relevant sales must be across a state line.
Defenses and exceptions
The FTC names two of the most important defenses: the price difference is justified by different costs in manufacture, sale or delivery (volume discounts, for example), or the lower price was given in good faith to meet a competitor's price. The statute also leaves sellers free to select their own customers in bona fide transactions, and to change prices in response to changing market conditions, such as perishable goods deteriorating.
Allowances and services
The Act also forbids certain discriminatory allowances or services. In general, the FTC says, the Act requires that a seller treat all competing customers in a proportionately equal manner, covering items such as advertising allowances, display cabinets and special packaging. The cost justification defense does not apply here. The seller must let all types of competing customers take part, or provide another reasonable means of participation for those who cannot use the basic plan.
Under 15 U.S.C. 13(f), it is also unlawful for a buyer to knowingly induce or receive a prohibited discrimination in price. This page summarizes the statute and the FTC's guidance; it is not legal advice.
Example
Illustrative figures only, to show the arithmetic the FTC's cost justification defense turns on. A distributor sells the same product to two competing hardware stores: Store A buys 500 cases at $40, and Store B buys 20 cases at $44, a gap of $4 a case.
Delivering 500 cases on one truck costs $1,000, or $2 a case; delivering 20 cases costs $120, or $6 a case. The delivery cost difference is $6 minus $2 = $4 a case. The FTC's guidance says a manufacturer may have a cost justification defense if the price differential does not exceed its actual cost savings by more than a de minimis amount. The arithmetic does not settle whether a price gap is lawful: in its own canned food example, the FTC starts by saying more information is required to determine whether there is a law violation.
If the distributor also offered an advertising allowance, the FTC's guidance says the seller must inform all of its competing customers, Store B included, if any services or allowances are available. This page does not reach a conclusion about any pricing decision; it is not legal advice.
On Shopify
Shopify B2B lets you set different prices for different business buyers in a few places:
- Catalogs. Catalogs set the products and prices B2B customers can access. On the Basic, Grow and Advanced plans, you can assign up to 3 active catalogs across your B2B markets. Shopify Plus offers unlimited catalogs and direct assignment to companies and locations.
- Draft orders. A custom line item price lets you quote a negotiated price that differs from a company's catalog pricing.
How Uncap helps
Uncap's Shopify B2B pricing guide is plain that catalog assignment is not a casual configuration. It calls for clear governance over which company accounts are assigned to which catalogs, and for auditing assignments before promotional or event-based catalogs go live.
Sources
Frequently asked questions
What is the Robinson-Patman Act in simple terms?
In certain cases, it makes it unlawful for a seller to charge competing buyers different prices for the same goods, or to offer them promotional allowances and services on unequal terms.
What does the Robinson-Patman Act forbid?
The statute covers price discrimination between purchasers of commodities of like grade and quality, certain brokerage payments, allowances and services not available on proportionally equal terms, and knowingly inducing or receiving a prohibited price, each with conditions.
Is it legal to sell the same product at different prices?
It can be. The FTC says price discriminations are generally lawful, particularly if they reflect the different costs of dealing with different buyers or result from meeting a competitor's offering. It also lists practices that may be illegal, such as price differences in the sale of identical goods that cannot be justified on the basis of cost savings or meeting a competitor's prices. This is general guidance, not legal advice.
