Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc.

PETITIONER: Volvo Trucks North America, Inc.
RESPONDENT: Reeder-Simco GMC, Inc.
LOCATION: Board of Immigration Appeals

DOCKET NO.: 04-905
DECIDED BY: Roberts Court (2005-2006)
LOWER COURT: United States Court of Appeals for the Eighth Circuit

CITATION: 546 US 164 (2006)
GRANTED: Mar 07, 2005
ARGUED: Oct 31, 2005
DECIDED: Jan 10, 2006

ADVOCATES:
Carter G. Phillips - argued the cause for Respondent
Roy T. Englert, Jr. - argued the cause for Petitioner
Thomas G. Hungar - argued the cause for Petitioner

Facts of the case

Reeder, a Volvo truck dealership, sued Volvo for violating the Robinson-Patman Act (RPA), which prohibits forms of discriminatory pricing that reduce competition. When retail customers take bids from dealers such as Reeder, the dealers ask manufacturers for price concessions, which dealers factor into their bids. Reeder accused Volvo of offering better price concessions to other Volvo dealers bidding for different customers. Reeder cited four instances in which it had received a comparatively low concession from Volvo, but it claimed that its losses due to discriminatory pricing went beyond those four instances. District Court allowed the case to go to a jury, and the jury awarded damages to Reeder. On appeal, Volvo argued that no competition was present, as would be required by the RPA, because Reeder was not actually bidding against the other Volvo dealers that allegedly got favorable concessions. The Eighth Circuit disagreed, ruling that the Volvo dealers - though they did not bid against each other - "competed at the same functional level." Volvo's price discrimination would therefore fall under the RPA.

Question

Can a seller be held liable for discriminatory pricing under the Robinson- Patman Act if the purchaser loses profits to competitors that do not purchase from the seller, but does not lose profits to any competitor that "receives the benefit of" the price discrimination?

Media for Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc.

Audio Transcription for Oral Argument - October 31, 2005 in Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc.

Audio Transcription for Opinion Announcement - January 10, 2006 in Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc.

John G. Roberts, Jr.:

Justice Ginsburg has the opinion in No. 04-905, Volvo Trucks North America versus Reeder-Simco GMC.

Ruth Bader Ginsburg:

This case, calling for interpretation of a federal law, the Robinson-Patman Price Discrimination Act, involves specially ordered products, heavy-duty Volvo trucks, sold by franchised dealers through a competitive bidding process.

In this process, the retail customer states its specifications and invites bids, generally from dealers franchised by different manufacturers.

Only when a Volvo dealer’s bid proves successful does the dealer arrange to purchase the trucks, which Volvo then builds to meet the customers’ specifications.

Reeder-Simco, an Arkansas Volvo dealer, sued Volvo, alleging that Reeder’s sales and profits declined, because Volvo offered other dealers price concessions more favorable than the discounts Volvo offered to Reeder.

Seeking travel damages under the Robinson-Patman Act and compensatory damages under the Arkansas Franchise Practices Act, Reeder prevailed on both federal and state claims at trial and on appeal to the 8th Circuit.

We granted review on the federal claim to resolve this question: may a manufacturer offering different wholesale prices to different dealers be held liable under the Robinson-Patman Act absent the showing that the manufacturer discriminated between dealers contemporaneously competing to resell to the same retail customer?

State law protecting franchisees may provide, and in this case has provided, a remedy for the dealer exposed to conduct of the kind Reeder alleged; but the federal Robinson-Patman Act, we hold, does not cover Reeder’s complaint.

The Act centrally addresses price discrimination between purchases of products of light grade and quality who compete to resell those products.

Competition of that character ordinarily is not involved when a product subject to special order is sold to a customer-specific competitive bidding process.

Congress passed the Robinson-Patman Act in 1936 to combat perceived harm to competition occasioned by powerful buyers, rather than sellers; specifically, Congress responded to the advent of large chain stores, enterprises with the clout to obtain lower prices for goods than smaller buyers could demand.

Reeder presented three principle categories of proof at trial: first, Reeder compared concessions it received on four occasions when it bid successfully against non-Volvo dealers and thus purchased Volvo trucks with more favorable concessions other successful Volvo dealers received were bidding process in which Reeder did not participate; second, Reeder compared concessions Volvo offered on several occasions when Reeder bid unsuccessfully, again, against non-Volvo dealers with more favorable concessions received by other Volvo dealers who gained contracts, again, on which Reeder did not bid; finally, Reeder brought up two instances in which Reeder did bid against other Volvo dealers for a particular sale.

In one, Volvo initially offered Reeder and the other dealer the same concession; Volvo ultimately granted a larger concession to the other dealer, but only after that dealer had won the bid.

In the second instance of head-to-head competition that Reeder identified, Volvo increased Reeder’s initial discount to match the discount offered to the other competing Volvo dealer; neither dealer won the bid.

Mixed and matched selective comparisons of the manipulable kind Reeder presented, we hold, do not show the injury to competition targeted by the Robinson-Patman Act.

Reeder did not establish that it was disfavored vis-à-vis the other Volvo dealers in the uncommon instances in which they competed for the same sale, let alone that the alleged discrimination was substantial.

For the reasons just sketched and more fully drawn out in the Court’s opinion, the judgment of the Court of Appeals is reversed.

Justice Stevens has filed a dissenting opinion, in which Justice Thomas joins.