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Claim For Inducing Price Discrimination Dismissed Because Complaint Failed to Allege Sufficient Knowledge of Price Difference
Posted in Antitrust

A federal court in New Jersey recently dismissed a claim for inducing price discrimination between competing distributors, but granted the plaintiff leave to file an amended complaint with additional factual allegations. Marjam Supply Co. v. Firestone Bldg. Prods. Co., 2014 U.S. Dist. LEXIS 158217 (D.N.J. Nov. 7, 2014). Marjam, a distributor of Firestone products, filed suit against the manufacturer of roofing systems and products, as well as against various competing Firestone distributors, for price discrimination violations under the Robinson-Patman Act. Firestone terminated Marjam's distribution agreement after a precipitous fall in sales in 2010 and 2011. Marjam alleged that its sales fell because it was unable to compete with the unlawfully low prices Firestone offered to co-defendants ABC Supply Co. and New Castle Building Products. ABC and New Castle moved to dismiss Marjam's claim that they induced price discrimination from Firestone by knowingly accepting lower prices than Firestone charged Marjam.

The court concluded that Marjam had established antitrust standing because it alleged that ABC and New Castle violated antitrust law, that the violation resulted in Marjam's loss of its Firestone distributorship, and that the loss of that distributorship thereby reduced competition among Firestone distributors. But the court ruled that Marjam had not established a plausible claim for inducing price discrimination, which requires that the defendants knew they were receiving a lower price than a competitor, and the seller would have little likelihood of justifying that lower price. The court concluded that the complaint did not meet the first requirement. Nowhere in the complaint did Marjam allege that either ABC or New Castle was aware of the prices Marjam paid to Firestone. Because the Robinson-Patman Act does not forbid a buyer from bargaining for the best price it can get from a manufacturer, the court dismissed the claim against ABC and New Castle. Based on the plaintiff's claim to have learned subsequently of correspondence between New Castle and Firestone that might support its inducement allegation, the court ruled that Marjam could file an amended complaint.

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