Perform brief research on the Robinson-Patman Act of 1936 (USA law) and become a

Question

Perform brief research on the Robinson-Patman Act of 1936 (USA law) and become acquainted with the basics of the law. Apply this law to a situation where your firm has discovered some essential cost information from a competitor in a specific geographic market. From this valuable commercial intelligence, you believe you can accurately estimate the break-even, pricing point of your competitor. Management of your firm also believes it can temporarily lower its prices (in just that specific geographic area) to a point just below your competitor’s break-even price point and effectively eliminate it as a meaningful competitor.

Explanation / Answer

Robinson-Pitman Act of 1936 (USA law) prohibits a seller charging competing buyers different prices for the same "commodity" or discriminating in the provision of "allowances" compensation for advertising and other service. This 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 likely injury to competition that is, a private plaintiff must also show actual harm to his or her business. The sales must be "in" interstate commerce.

When one manufacturer reduces its prices in a specific geographic market and causes injury to its competitors in the same market it leads to competitive injury. It may be illegal for a manufacturer to sell below cost in a local market over a sustained period. A below-cost sale by a firm that charges higher prices in different localities, and that has a plan of recoupment is illegal under the act.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.