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

The Robinson-Patman Act

The purpose of the Robinson-Patman Act is to protect small, independent businesses from injury caused by discriminatory practices. See Respondent's Brief at 33. Congress wanted to ensure that large purchasers would not extract substantially lower and in effect discriminatory prices because of their buying power. Id. In this case, Reeder asserts that Volvo committed a "secondary-line violation" of the Act, injuring competition among Volvo's customers, the independent Volvo dealers. See Reeder-Simco v. Volvo GM Heavy Truck, 374 F.3d 701, 707 (8th Cir. 2004).

The Purchaser Issue

The Act protects actual purchasers, not people who simply enter the market to purchase. See Id. at 708. As the Supreme Court has explained, an unsuccessful bidder is not a purchaser. See Id. Therefore, a sale at one price and an offer to sell at a higher price is generally not thought to violate the Act. See Id. Thus at issue in this case is how broad the Supreme Court will define a purchaser under the Act.

Volvo claims that Reeder is not a purchaser as required under the Act. See Brief for Petitioner at 9-10. Volvo explains that much of the evidence Reeder presented demonstrates situations where Reeder did not buy the trucks from Volvo because they lost the bid. See Id. In most of those cases, the successful bidder was affiliated with one of Volvo's competitors. See Id. In the two instances where Reeder went "head-to-head" with another Volvo dealer, Reeder did not actually purchase any trucks. See Id. Since the transactions where Reeder became a purchaser were not the same transactions where Volvo allegedly discriminated in favor of its other dealers, Reeder cannot show that the Act was violated. See Id. Thus, Volvo is asking the Supreme Court to define a purchaser narrowly in competitive bidding situations. Volvo points to cases such as Terry's Floor Fashions, Inc. v. Burlington Industries, Inc., 763 F.2d 604 (4th Cir. 1985), and M.C. Manufacturing Co. v. Texas Foundries, Inc., 517 F.2d 1059 (5th Cir. 1975), cert. denied, 424 U.S. 968 (1976), which held that the Act does not apply in competitive bidding where "a seller offer[s] different prices to two firms that were bidding against each other for a sale, but only one of those firms ultimately purchased from the defendant." Brief for Petitioner at 27.?

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Reeder, on the other hand, is asking for a more liberal understanding of purchaser. In support of their proposition, Reeder points to cases such as American Can Co. v. Bruce's Juices, Inc., 187 F.2d 919, 924 (5th Cir. 1951), which held that "even in the absence of an actual purchase[,] if the purchaser's failure to make the specific purchase was directly attributable to defendant's own discriminatory practice" then the price discrimination is actionable. See Respondent's Brief at 49. Thus in order to prove price discrimination, Reeder presented numerous examples in which they previously purchased Volvo trucks for some of their successful bids, then compared those successful sales to actual sales made by other dealers. See Reeder-Simco v. Volvo GM Heavy Truck, 374 F.3d 701, 709 (8th Cir. 2004). Reeder is arguing that minimal purchases made by an otherwise unsuccessful bidder are enough for a bidder to bring a claim under the Act. Many circuits are split on this issue but the Eighth Circuit Court of Appeals agreed with Reeder on this point, holding that these successful bids "clearly gave Reeder purchaser status." See Id.

The Competition Issues

In order to establish a claim under the Act, a plaintiff must show that it was in actual competition with a favored purchaser and that the alleged price discrimination harmed the competition. See Respondent's Brief at 20. A key issue the Supreme Court will decide is whether indirect competition is sufficient to meet this requirement.

In Volvo's view, Reeder offered only one instance in which they lost a bid to a favored Volvo dealer. Brief for Petitioner at 7. According to Volvo, this is not sufficient to bring Reeder under the protections of the Act. See Id. at 12. Reeder contends, however, that companies competing in the same geographic are in fact in competition with each other even when they are not competing for the same exact customers. See Respondent's Brief at 33. In other words, Reeder argues they were in fact competing with other Volvo dealers who received higher concessions. Reeder has pointed to competition in Volvo's Southwest region that the Court may find convincing in this regard. See Id. Reeder explains that in a highly mobile society, customers can and often do travel to different locations looking for the best deal. Id. As a result customers often find different prices from different Volvo dealers which will ultimately affect their choice of purchase. See Id. In other words, Reeder claims that because potential buyers can freely travel from one Volvo dealer to another, Volvo dealers are in fact competing with one another.

Related to the competition issue, is whether a plaintiff must show that Reeder was injured in a specific transaction against a favored dealer, or if it is sufficient to show that the difference in prices concessions generally prevented Reeder from competing. See Id. at 712.The Eighth Circuit Court of Appeals concluded that Reeder presented enough evidence to conclude that Volvo's discriminatory concessions resulted in loss profits and sales to Reeder. See Id.

Volvo is also asking the court to acknowledge that the Act was meant to protect competition, not individual competitors. See Brief for Petitioner at 12. Volvo asserts that a reading of the legislative and statutory language easily leads to this conclusion. Id. Volvo also points out that such a decision would merely be an extension of a decision the Supreme Court made in a case dealing with primary line violations. See Id.?