The Franchise Memorandum

The United States District Court for the Western District of Wisconsin denied a motion to dismiss a lawsuit alleging violations of the Robinson-Patman Act based on the discriminatory offering of different product sizes to sellers for resale. Woodman's Food Mkt., Inc. v. Clorox Sales Co., 2015 U.S Dist. LEXIS 11656 (W.D. Wis. Feb. 2, 2015). After Clorox informed Woodman's that it would no longer offer Woodman's the large pack products that it offered to bulk retailers like Sam's Club and Costco, Woodman's brought suit against Clorox under the Robinson-Patman Act's price discrimination provisions. The provisions upon which Woodman's relied prohibit product sellers from providing promotional services to aid some buyers but not others in the resale of the products. Woodman's argued that the offering of larger packages to only some retailers constituted a discriminatory provision of promotional service, because the larger package sizes aided the bulk retailers in their resale of the products.

Clorox moved to dismiss Woodman's claims, arguing that the offering of different package sizes to resellers does not constitute a promotional service but rather the offering of different products, and that the Robinson-Patman Act does not prohibit a seller from selling different products to retailers at its choosing. Relying on dated administrative decisions and more recent FTC guidelines, the court denied Clorox's motion to dismiss, holding that the discriminatory use of "special packaging" and "package sizes" may amount to an unlawful provision of promotional services, in violation of the Robinson-Patman Act.