59 L.Ed.

2d 153
99 S.Ct. 925
440 U.S. 69

GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.,

Petitioner,
v.
FEDERAL TRADE COMMISSION.
No. 77-654.
Argued Dec. 4, 1978.
Decided Feb. 22, 1979.

Syllabus
Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act,
prohibits price discrimination by sellers, but under 2(b) the seller may
rebut a prima facie case of price discrimination by showing that his lower
price was made in good faith to meet a competitor's equally low price.
Section 2(f) makes it unlawful "for any person engaged in commerce, in
the course of such commerce, knowingly to induce or receive a
discrimination in price which is prohibited by this section." Petitioner, in
an effort to achieve cost savings, entered into an agreement with its
longtime supplier, Borden Co., under which Borden would supply
"private label" (as opposed to "brand label") milk to petitioner's stores in
the Chicago area. Petitioner refused Borden's initial offer in
implementation of the agreement and solicited offers from other
companies, resulting in a lower offer from one of Borden's competitors. At
this point petitioner's buyer informed Borden that its offer was "not even
in the ball park" and that a $50,000 improvement in the offer "would not
be a drop in the bucket." Borden then submitted a new offer that was
substantially better than its competitor's and petitioner accepted it. Based
on these facts, the Federal Trade Commission charged petitioner with
violating 5 of the Federal Trade Commission Act for allegedly
misleading Borden during contract negotiations by failing to inform it that
its second offer was better than its competitor's, and with violating 2(f)
by knowingly inducing or receiving price discrimination from Borden.
The FTC dismissed the 5 charge on the ground that the issue was what
amount of disclosure is required of the buyer during contract negotiations

and that to impose a duty of affirmative disclosure would be "contrary to

normal business practice" and "contrary to the public interest," but held
that petitioner had violated 2(f), the FTC rejecting, inter alia, petitioner's
defense that the Borden offer had been made to meet competition. The
Court of Appeals affirmed. Held: A buyer who has done no more than
accept the lower of two prices competitively offered does not violate
2(f) provided the seller has a meeting-competition defense, and here
where Borden had such a defense and thus could not be liable under 2(b)
petitioner, who did no more than accept Borden's offer, cannot be liable
under 2(f). Pp. 75-85.
(a) Since liability under 2(f) is limited to price discrimination
"prohibited by this section," and since only 2(a) and (b) deal with seller
liability for price discrimination, a buyer, under 2(f)'s plain meaning,
cannot be liable if a prima facie case cannot be established against a seller
or if the seller has an affirmative defense. Automatic Canteen Co. of
America v. FTC, 346 U.S. 61, 73 S.Ct. 1017, 97 L.Ed. 1454. In either
situation, there is no price discrimination "prohibited by this section." And
the legislative history of 2(f) confirms the conclusion that buyer liability
under 2(f) is dependent on seller liability under 2(a). Pp. 75-78.
(b) To rewrite 2(f) to hold a buyer liable even though there is no price
discrimination "prohibited by this section" would contravene the rule that
this Court "cannot supply what Congress has studiously omitted," FTC v.
Simplicity Pattern Co., 360 U.S. 55, 67, 79 S.Ct. 1005, 3 L.Ed.2d 1079.
Pp. 78-79.
(c) Imposition of 2(f) liability on petitioner would lead to price
uniformity and rigidity contrary to the purposes of other antitrust
legislation. P. 80.
(d) A duty of affirmative disclosure requiring a buyer to inform a seller
that his bid has beaten competition would frustrate competitive bidding
and, by reducing uncertainty, would lead to price matching and
anticompetitive cooperation among sellers. P. 80.
(e) The effect of the finding that petitioner's same conduct violated 2(f)
as violated 5 of the Federal Trade Commission Act is to impose the
same duty of affirmative disclosure that the FTC condemned as
anticompetitive, "contrary to the public interest," and "contrary to normal
business practice," in dismissing the 5 charge. Pp. 80-81.
(f) The test for determining when a seller has a valid meeting-competition
defense is whether he can "show the existence of facts which would lead a

reasonable and prudent person to believe that the granting of a lower price
would in fact meet the equally low price of a competitor." FTC v. A. E.
Staley Mfg. Co., 324 U.S. 746, 65 S.Ct. 971, 89 L.Ed. 1338. Under the
circumstances of this case, Borden did act reasonably and in good faith
when it made its second bid, since, in light of its established business
relationship with petitioner, it could justifiably conclude that petitioner's
statements about the first offer were reliable and that it was necessary to
make another bid offering substantial concessions to avoid losing its
account with petitioner. Pp. 82-84.
557 F.2d 971, reversed.
Denis McInerney, New York City, for petitioner.
Frank H. Easterbrook, Washington, D. C., for respondent.
Mr. Justice STEWART delivered the opinion of the Court.

The question presented in this case is whether the petitioner, the Great Atlantic
& Pacific Tea Co. (A&P), violated 2(f) of the Clayton Act, 38 Stat. 730, as
amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. 13(f),1 by
knowingly inducing or receiving illegal price discriminations from the Borden
Co. (Borden).

The alleged violation was reflected in a 1965 agreement between A&P and
Borden under which Borden undertook to supply "private label" milk to more
than 200 A&P stores in a Chicago area that included portions of Illinois and
Indiana. This agreement resulted from an effort by A&P to achieve cost savings
by switching from the sale of "brand label" milk (milk sold under the brand
name of the supplying dairy) to the sale of "private label" milk (milk sold under
the A&P label).

To implement this plan, A&P asked Borden, its longtime supplier, to submit an
offer to supply under private label certain of A&P's milk and other dairy
product requirements. After prolonged negotiations, Borden offered to grant
A&P a discount for switching to private-label milk provided A&P would accept
limited delivery service. Borden claimed that this offer would save A&P
$410,000 a year compared to what it had been paying for its dairy products.
A&P, however, was not satisfied with this offer and solicited offers from other
dairies. A competitor of Borden, Bowman Dairy, then submitted an offer which
was lower than Borden's.2

At this point, A&P's Chicago buyer contacted Borden's chain store sales
manager and stated: "I have a bid in my pocket. You [Borden] people are so far
out of line it is not even funny. You are not even in the ball park." When the
Borden representative asked for more details, he was told nothing except that a
$50,000 improvement in Borden's bid "would not be a drop in the bucket."

Borden was thus faced with the problem of deciding whether to rebid. A&P at
the time was one of Borden's largest customers in the Chicago area. Moreover,
Borden had just invested more than $5 million in a new dairy facility in Illinois.
The loss of the A&P account would result in underutilization of this new plant.
Under these circumstances, Borden decided to submit a new bid which doubled
the estimated annual savings to A&P, from $410,000 to $820,000. In presenting
its offer, Borden emphasized to A&P that it needed to keep A&P's business and
was making the new offer in order to meet Bowman's bid. A&P then accepted
Borden's bid after concluding that it was substantially better than Bowman's.

* Based on these facts, the Federal Trade Commission filed a three-count

complaint against A&P. Count I charged that A&P had violated 5 of the
Federal Trade Commission Act by misleading Borden in the course of
negotiations for the private-label contract, in that A&P had failed to inform
Borden that its second offer was better than the Bowman bid.3 Count II
involving the same conduct, charged that A&P had violated 2(f) of the
Clayton Act, as amended by the Robinson-Patman Act, by knowingly inducing
or receiving price discriminations from Borden. Count III charged that Borden
and A&P had violated 5 of the Federal Trade Commission Act by combining
to stabilize and maintain the retail and wholesale prices of milk and other dairy
products.

An Administrative Law Judge found, after extended discovery and a hearing

that lasted over 110 days, that A&P had acted unfairly and deceptively in
accepting the second offer from Borden and had therefore violated 5 of the
Federal Trade Commission Act as charged in Count I. The Administrative Law
Judge similarly found that this same conduct had violated 2(f). Finally, he
dismissed Count III on the ground that the Commission had not satisfied its
burden of proof.

On review, the Commission reversed the Administrative Law Judge's finding as

to Count I. Pointing out that the question at issue was what amount of
disclosure is required of the buyer during contract negotiations, the
Commission held that the imposition of a duty of affirmative disclosure would
be "contrary to normal business practice and we think, contrary to the public

interest." Despite this ruling, however, the Commission held as to Count II that
the identical conduct on the part of A&P had violated 2(f), finding that
Borden had discriminated in price between A&P and its competitors, that the
discrimination had been injurious to competition, and that A&P had known or
should have known that it was the beneficiary of unlawful price
discrimination.4 The Commission rejected A&P's defenses that the Borden bid
had been made to meet competition and was cost justified.5
9

A&P filed a petition for review of the Commission's order in the Court of
Appeals for the Second Circuit. The court held that substantial evidence
supported the findings of the Commission and that as a matter of law A&P
could not successfully assert a meeting-competition defense because it, unlike
Borden, had known that Borden's offer was better than Bowman's.6 Finally, the
court held that the Commission had correctly determined that A&P had no
cost-justification defense. 557 F.2d 971. Because the judgment of the Court of
Appeals raises important issues of federal law, we granted certiorari. 435 U.S.
922, 98 S.Ct. 1483, 55 L.Ed.2d 515.

II
10

The Robinson-Patman Act was passed in response to the problem perceived in

the increased market power and coercive practices of chainstores and other big
buyers that threatened the existence of small independent retailers.
Notwithstanding this concern with buyers, however, the emphasis of the Act is
in 2(a), which prohibits price discriminations by sellers. Indeed, the original
Patman bill as reported by Committees of both Houses prohibited only seller
activity, with no mention of buyer liability.7 Section 2(f), making buyers liable
for inducing or receiving price discriminations by sellers, was the product of a
belated floor amendment near the conclusion of the Senate debates.8
As finally enacted, 2(f) provides:

11

"That it shall be unlawful for any person engaged in commerce, in the course of
such commerce, knowingly to induce or receive a discrimination in price which
is prohibited by this section." (Emphasis added.)

12

Liability under 2(f) thus is limited to situations where the price discrimination
is one "which is prohibited by this section." While the phrase "this section"
refers to the entire 2 of the Act, only subsections (a) and (b) dealing with
seller liability involve discriminations in price. Under the plain meaning of
2(f), therefore, a buyer cannot be liable if a prima facie case could not be

established against a seller or if the seller has an affirmative defense. In either

situation, there is no price discrimination "prohibited by this section."9 The
legislative history of 2(f) fully confirms the conclusion that buyer liability
under 2(f) is dependent on seller liability under 2(a).10
13

The derivative nature of liability under 2(f) was recognized by this Court in
Automatic Canteen Co. of America v. FTC, 346 U.S. 61, 73 S.Ct. 1017, 97
L.Ed. 1454. In that case, the Court stated that even if the Commission has
established a prima facie case of price discrimination, a buyer does not violate
2(f) if the lower prices received are either within one of the seller's defenses or
not known by the buyer not to be within one of those defenses. The Court
stated:

14

"Thus, at the least, we can be confident in reading the words in 2(f), 'a
discrimination in price which is prohibited by this section,' as a reference to the
substantive prohibitions against discrimination by sellers defined elsewhere in
the Act. It is therefore apparent that the discriminatory price that buyers are
forbidden by 2(f) to induce cannot include price differentials that are not
forbidden to sellers in other sections of the Act . . . . For we are not dealing
simply with a 'discrimination in price'; the 'discrimination in price' in 2(f)
must be one 'which is prohibited by this section.' Even if any price differential
were to be comprehended within the term 'discrimination in price,' 2(f), which
speaks of prohibited discriminations, cannot be read as declaring out of bounds
price differentials within one or more of the 'defenses' available to sellers, such
as that the price differentials reflect cost differences fluctuating market
conditions, or bona fide attempts to meet competition, as those defenses are set
out in the provisos of 2(a) and 2(b)." 346 U.S., at 70-71, 73 S.Ct., at 1022
(footnotes omitted).

15

The Court thus explicitly recognized that a buyer cannot be held liable under
2(f) if the lower prices received are justified by reason of one of the seller's
affirmative defenses.

III
16

The petitioner, relying on this plain meaning of 2(f) and the teaching of the
Automatic Canteen case, argues that it cannot be liable under 2(f) if Borden
had a valid meeting-competition defense. The respondent, on the other hand,
argues that the petitioner may be liable even assuming that Borden had such a
defense. The meeting-competition defense, the respondent contends, must in
these circumstances be judged from the point of view of the buyer. Since A&P
knew for a fact that the final Borden bid beat the Bowman bid, it was not

entitled to assert the meeting-competition defense even though Borden may

have honestly believed that it was simply meeting competition. Recognition of
a meeting-competition defense for the buyer in this situation, the respondent
argues, would be contrary to the basic purpose of the Robinson-Patman Act to
curtail abuses by large buyers.
A.
17

The short answer to these contentions of the respondent is that Congress did not
provide in 2(f) that a buyer can be liable even if the seller has a valid defense.
The clear language of 2(f) states that a buyer can be liable only if he receives
a price discrimination "prohibited by this section." If a seller has a valid
meeting-competition defense, there is simply no prohibited price
discrimination.

18

A similar attempt to amend the Robinson-Patman Act judicially was rejected

by this Court in FTC v. Simplicity Pattern Co., 360 U.S. 55, 79 S.Ct. 1005, 3
L.Ed.2d 1079. There the Federal Trade Commission had found that a
manufacturer of dress patterns had violated 2(e) of the Clayton Act as
amended by the Robinson-Patman Act, by providing its larger customers
services and facilities not offered its smaller customers.11 The manufacturer
attempted to defend against this charge by asserting that there had been no
injury to competition and that its discriminations in services were cost justified.
Since liability under 2(e), unlike 2(a), does not depend upon competitive
injury or the absence of a cost-justification defense, the manufacturer's primary
argument was that "it would be 'bad law and bad economics' to make
discriminations unlawful even where they may be accounted for by cost
differentials or where there is no competitive injury." 360 U.S., at 67, 79 S.Ct.,
at 1013 (footnote omitted). The Court rejected this argument. Recognizing that
"this Court is not in a position to review the economic wisdom of Congress,"
the Court stated that "[w]e cannot supply what Congress has studiously
omitted." Ibid. (footnote omitted). The respondent's attempt in the present case
to rewrite 2(f) to hold a buyer liable even though there is no discrimination in
price "prohibited by this section" must be rejected for the same reason.12

B
19

In the Automatic Canteen case, the Court warned against interpretations of the
Robinson-Patman Act which "extend beyond the prohibitions of the Act and, in
so doing, help give rise to a price uniformity and rigidity in open conflict with
the purposes of other antitrust legislation." 346 U.S., at 63, 73 S.Ct., at 1019.
Imposition of 2(f) liability on the petitioner in this case would lead to just

such price uniformity and rigidity.13

20

In a competitive market, uncertainty among sellers will cause them to compete

for business by offering buyers lower prices. Because of the evils of collusive
action, the Court has held that the exchange of price information by competitors
violates the Sherman Act. United States v. Container Corp., 393 U.S. 333, 89
S.Ct. 510, 21 L.Ed.2d 526. Under the view advanced by the respondent,
however, a buyer, to avoid liability, must either refuse a seller's bid or at least
inform him that his bid has beaten competition. Such a duty of affirmative
disclosure would almost inevitably frustrate competitive bidding and, by
reducing uncertainty, lead to price matching and anticompetitive cooperation
among sellers.14

21

Ironically, the Commission itself, in dismissing the charge under 5 of the

Federal Trade Commission Act in this case, recognized the dangers inherent in
a duty of affirmative disclosure:

22

"The imposition of a duty of affirmative disclosure, applicable to a buyer

whenever a seller states that his offer is intended to meet competition, is
contrary to normal business practice and, we think, contrary to the public
interest.

23

*****

24

"We fear a scenario where the seller automatically attaches a meeting

competition caveat to every bid. The buyer would then state whether such bid
meets, beats, or loses to another bid. The seller would then submit a second, a
third, and perhaps a fourth bid until finally he is able to ascertain his
competitor's bid." 87 F.T.C. 1047, 1050-1051.

25

The effect of the finding that the same conduct of the petitioner violated 2(f),
however, is to impose the same duty of affirmative disclosure which the
Commission condemned as anticompetitive, "contrary to the public interest,"
and "contrary to normal business practice," in dismissing the charge under 5
of the Federal Trade Commission Act. Neither the Commission nor the Court
of Appeals offered any explanation for this apparent anomaly.

26

As in the Automatic Canteen case, we decline to adopt a construction of 2(f)

that is contrary to its plain meaning and would lead to anticompetitive results.
Accordingly, we hold that a buyer who has done no more than accept the lower
of two prices competitively offered does not violate 2(f) provided the seller

has a meeting-competition defense.15

IV
27

Because both the Commission and the Court of Appeals proceeded on the
assumption that a buyer who accepts the lower of two competitive bids can be
liable under 2(f) even if the seller has a meeting-competition defense, there
was not a specific finding that Borden did in fact have such a defense. But it
quite clearly did.

A.
28

The test for determining when a seller has a valid meeting-competition defense
is whether a seller can "show the existence of facts which would lead a
reasonable and prudent person to believe that the granting of a lower price
would in fact meet the equally low price of a competitor." FTC v. A. E. Staley
Mfg. Co., 324 U.S. 746, 759-760, 65 S.Ct. 971, 977, 89 L.Ed. 1338. "A goodfaith belief, rather than absolute certainty, that a price concession is being
offered to meet an equally low price offered by a competitor is sufficient to
satisfy the 2(b) defense." United States v. United States Gypsum Co., 438
U.S. 422, 453, 98 S.Ct. 2864, 2881, 57 L.Ed.2d 854.16 Since good faith, rather
than absolute certainty, is the touchstone of the meeting-competition defense, a
seller can assert the defense even if it has unknowingly made a bid that in fact
not only met but beat his competition. Id., at 454, 98 S.Ct., at 2882.

B
29

Under the circumstances of this case, Borden did act reasonably and in good
faith when it made its second bid. The petitioner, despite its longstanding
relationship with Borden, was dissatisfied with Borden's first bid and solicited
offers from other dairies. The subsequent events are aptly described in the
opinion of the Commission:

"Thereafter, on August 31, 1965, A&P received an offer

30
31 Bowman Dairy that was lower than Borden's August 13 offer. On or about
from
September 1, 1965, Elmer Schmidt, A&P's Chicago unit buyer, telephoned Gordon
Tarr, Borden's Chicago chain store sales manager, and stated, 'I have a bid in my
pocket. You [Borden] people are so far out of line it is not even funny. You are not
even in the ball park.' Although Tarr asked Schmidt for some details, Schmidt said
that he could not tell Tarr anything except that a $50,000 improvement in Borden's
bid 'would not be a drop in the bucket.' Contrary to its usual practice, A&P then
offered Borden the opportunityto submit another bid." 87 F.T.C., at 1048. (Footnotes

and record citations omitted.)

32

Thus, Borden was informed by the petitioner that it was in danger of losing its
A&P business in the Chicago area unless it came up with a better offer. It was
told that its first offer was "not even in the ball park" and that a $50,000
improvement "would not be a drop in the bucket." In light of Borden's
established business relationship with the petitioner, Borden could justifiably
conclude that A&P's statements were reliable and that it was necessary to make
another bid offering substantial concessions to avoid losing its account with the
petitioner.

33

Borden was unable to ascertain the details of the Bowman bid. It requested
more information about the bid from the petitioner, but this request was
refused. It could not then attempt to verify the existence and terms of the
competing offer from Bowman without risking Sherman Act liability. United
States v. United States Gypsum Co., supra. Faced with a substantial loss of
business and unable to find out the precise details of the competing bid, Borden
made another offer stating that it was doing so in order to meet competition.
Under these circumstances, the conclusion is virtually inescapable that in
making that offer Borden acted in a reasonable and good-faith effort to meet its
competition, and therefore was entitled to a meeting-competition defense. 17

34

Since Borden had a meeting-competition defense and thus could not be liable
under 2(b), the petitioner who did no more than accept that offer cannot be
liable under 2(f).18

35

Accordingly, the judgment is reversed.

36

It is so ordered.

37

Mr. Justice STEVENS took no part in the consideration or decision of this case.

38

Mr. Justice WHITE, concurring in part and dissenting in part.

39

I concur in Parts I, II, and III of the Court's opinion, but dissent from Part IV.
Because it was thought the issue was irrelevant where the buyer knows that the
price offered is lower than necessary to meet competition, neither the
Commission nor the Court of Appeals decided whether Borden itself would
have had a valid meeting-competition defense. The Court should not decide this
question here, but should remand to the Commission, whose job it is initially to

consider such matters.

40

For the reason stated by the Commission and the Court of Appeals, I am also
convinced that the United States made a sufficient, unrebutted showing that
Borden would not have a cost-justification defense to a Robinson-Patman Act
charge.

41

Mr. Justice MARSHALL, dissenting in part.

42

I agree with the Court that the Federal Trade Commission and the Court of
Appeals applied the wrong legal standard in assessing A&P's liability under the
Robinson-Patman Act. However, I cannot join the Court's interpretation of
2(f) as precluding buyer liability under this Act unless the seller could also be
found liable for price discrimination. Neither the language nor the sparse
legislative history of 2(f) justifies this enervating standard for the
determination of buyer liability. To the contrary, the Court's construction
disregards the congressional purpose to curtail the coercive practices of
chainstores and other large buyers. Having formulated a new legal standard, the
Court then applies it here in the first instance rather than remanding the case to
the Commission. Given the numerous ambiguities in the record, I believe the
Court thereby improperly arrogates to itself the role of the trier of fact.

43

* Section 2(f) provides that "[i]t shall be unlawful for any person . . .
knowingly to induce or receive a discrimination in price which is prohibited by
this section." (Emphasis added.) The Court interprets the italicized language as
"plainly meaning" that a buyer can be found liable for knowingly inducing
price discrimination only if his seller is first proved liable under 2(a) and
2(b). Ante, at 76, 81. Under this construction, proceedings involving only the
Commission and a buyer will turn upon proof of a seller's liability, and
whenever a seller could successfully claim the meeting-competition defense,
the buyer must be exonerated.

44

In my view, the language of 2(f) does not compel this circuitous method of
establishing buyer liability. Sections 2(a) and 2(b) of the Act define the
elements of price discrimination and the affirmative defenses available to
sellers. When Congress extended liability to buyers who encourage price
discrimination, a ready means of defining the prohibition was to rely on the
elements and defenses already delineated in 2(a) and 2(b). Thus the phrase
"which is prohibited by this section" in 2(f) incorporates these elements and
defenses by reference, making them applicable to buyers. So construed, 2(f)
simply means that the same elements of a prima facie case must be established

and the same basic affirmative defenses available, whether buyer or seller
liability is in issue. The section does not require that another party actually
satisfy all of the conditions of 2(a) and 2(b) before buyer liability can even
be considered. Determining buyer and seller liability independently, I believe,
places less strain on the "plain meaning" of the language of 2(f) than does the
absolutely derivative standard the majority announces today.
45

In construing 2(f), the Court relies on Congress' delay in adding the section to
the final bill and on a remark by Representative Utterback during the legislative
debates. Ante, at 75-77, and n. 10. The delay provides little logical justification
for the Court's interpretation; rather, it more likely reflects Congress' late
realization that halting the abusive practices of buyers1 could not be
accomplished solely through imposition of liability on sellers. Representative
Utterback's statement, 80 Cong.Rec. 9419 (1936), amounts to a slight
paraphrase of 2(f) and in no way supports the Court's derivative standard.

46

I agree with the Court's suggestion, ante, at 80, that we must resolve the
dilemma confronting a buyer who properly invites a seller to meet a
competitor's price and then fortuitously obtains a lower bid. Congress could not
have expected the buyer to choose between asking the seller to increase the bid
to a specific price or accepting the lower bid and facing liability under 2(f).
Rather, it must have intended some accommodation for buyers who act in good
faith yet receive bids that beat competition. This does not mean, however, that a
buyer should be liable under 2(f) only if his seller also would be liable. That
solution to the buyer's dilemma would enable him to manufacture his own
defense by misrepresenting to a seller the response needed to meet a
competitor's bid and then allowing the seller to rely in good faith on incorrect
information. The Court purports to reserve this "lying buyer" issue, ante, at 8182, n. 15, but the derivative standard it adopts today belies the reservation. If
"prohibited by this section" means that a buyer's liability depends on that of the
seller, then absent seller liability, the buyer's conduct and bad faith are
necessarily irrelevant.

47

I would hold that under 2(f), the Robinson-Patman Act defenses must be
available to buyers on the same basic terms as they are to sellers. To be sure,
some differences in the nature of the defenses would obtain because of the
different bargaining positions of sellers and buyers. With respect to the
meeting-competition defense at issue here, a seller can justify a price
discrimination by showing that his lower price was offered in "good faith" to
meet that of a competitor. Ante, at 82-83; United States v. United States
Gypsum Co., 438 U.S. 422, 450-455, 98 S.Ct. 2864, 2880-2882, 57 L.Ed.2d
854 (1978). In my view, a buyer should be able to claim that defense

independently of the sellerif he acted in good faith to induce the seller to

meet a competitor's price, regardless of whether the seller's price happens to
beat the competitor's. But a buyer who induces the lower bid by
misrepresentation should not escape Robinson-Patman Act liability. See
Kroger Co. v. FTC, 438 F.2d 1372 (C.A.6) (Clark, J.), cert. denied, 404 U.S.
871, 92 S.Ct. 59, 30 L.Ed.2d 115 (1971). This definition of the meetingcompetition defense both extricates buyers from an impossible dilemma and
respects the congressional intent to prevent buyers from abusing their market
power to gain competitive advantage.2
48

Automatic Canteen Co. of America v. FTC, 346 U.S. 61, 73 S.Ct. 1017, 97
L.Ed. 1454 (1953), is entirely consistent with this interpretation of 2(f). The
issue there concerned the allocation of "the burden of coming forward with
evidence under 2(f) of the Act," 346 U.S., at 65, 73 S.Ct., at 1020, not the
precise contours of the elements and defenses that determine the scope of buyer
liability. Automatic Canteen's general discussion of 2(f)'s substantive
requirements, quoted ante, at 77-78, merely explains that the affirmative
defenses "available to sellers" must also be available to buyers. Far from
pronouncing that buyer liability is derivative, Automatic Canteen began with
the observation that 2(f) is "roughly the counterpart, as to buyers, of sections
of the Act dealing with discrimination by sellers." 346 U.S., at 63, 73 S.Ct., at
1019 (emphasis added).3

II
49

In my judgment, the numerous ambiguities in the record dictate that this case
be remanded to the Commission. The Court, however, avoids a remand by
concluding in the first instance that A&P's seller necessarily had a meetingcompetition defense.4 In so doing, the Court usurps the factfinding function
best performed by the Commission.5 Neither the Administrative Law Judge,
the Commission, nor the Court of Appeals determined that Borden would have
been entitled to claim the meeting-competition defense. Indeed, the
Administrative Law Judge suggested the opposite, 87 F.T.C. 962, 1021 (1976),
and the Commission stated:

50

"We believe that it is very probable that Borden did not have such a defense. To
have a meeting competition defense, the record must demonstrate the existence
of facts which would lead a reasonable and prudent person to conclude that the
lower price would, in fact, meet the competitor's price. As noted, Borden had
serious doubts concerning whether the competing bid was legal. Specifically, it
believed that the other bid only considered direct costs. It should have asked
A&P for more information about the competing bid. By not making the

request, it was not acting prudently. As the record clearly indicates, A&P had
knowledge of Borden's belief that other dairies might submit bids that did not
include all costs." 87 F.T.C. 1047, 1057 n. 19 (1976) (citations omitted;
emphasis in original).
51

Furthermore, if the Court truly intends to avoid deciding the "lying buyer"
issue, then it should remand the case for determination of whether the
exception applies here. Testimony before the Administrative Law Judge
directly raised the possibility that A&P misled Borden to believe a still lower
price was necessary than Borden had offered when it first responded to the
Bowman bid. App. 117a-118a, 123a-124a, 141a-142a.6 Both the Administrative
Law Judge and the Commission credited that testimony, see 87 F.T.C., at 979,
1021-1022; 87 F.T.C., at 1049 n. 3., but since evidence of misrepresentation
was not material under the standard they applied, there were no clear findings
of fact on the point. Under these circumstances, this Court should not attempt to
elide such testimony by the unsubstantiated conclusion that Borden's final bid
was unaffected by any misrepresentation. Ante, at 81-82, n. 15; see n. 6,supra.

52

Accordingly, I dissent from the Court's adoption of a derivative standard for

determining buyer liability and its resolution of disputed factual issues without
a remand.

Title 15 U.S.C. 13(f) provides:

"It shall be unlawful for any person engaged in commerce, in the course of such
commerce, knowingly to induce or receive a discrimination in price which is
prohibited by this section."
Title 15 U.S.C. 13(a) and (b) provide in pertinent part:
"(a) . . . It shall be unlawful for any person engaged in commerce, in the course
of such commerce, either directly or indirectly, to discriminate in price between
different purchasers of commodities of like grade and quality, where either or
any of the purchases involved in such discrimination are in commerce, where
such commodities are sold for use, consumption, or resale within the United
States or any Territory thereof or the District of Columbia or any insular
possession or other place under the jurisdiction of the United States, and where
the effect of such discrimination may be substantially to lessen competition or
tend to create a monopoly in any line of commerce, or to injure, destroy, or
prevent competition with any person who either grants or knowingly receives
the benefit of such discrimination or with customers of either of them:

Provided, That nothing herein contained shall prevent differentials which make
only due allowance for differences in the cost of manufacture, sale, or delivery
resulting from the differing methods or quantities in which such commodities
are to such purchasers sold or delivered . . ..
"(b) . . . Upon proof being made, at any hearing on a complaint under this
section, that there has been discrimination in price or services or facilities
furnished, the burden of rebutting the prima-facie case thus made by showing
justification shall be upon the person charged with a violation of this section,
and unless justification shall be affirmatively shown, the Commission is
authorized to issue an order terminating the discrimination: Provided, however,
That nothing herein contained shall prevent a seller rebutting the prima-facie
case thus made by showing that his lower price or the furnishing of services or
facilities to any purchaser or purchasers was made in good faith to meet an
equally low price of a competitor, or the services or facilities furnished by a
competitor."
2

The Bowman bid would have produced estimated annual savings of

approximately $737,000 for A&P as compared with the first Borden bid, which
would have produced estimated annual savings of $410,000.

Section 5(a) of the Federal Trade Commission Act, 38 Stat. 719, as amended,
15 U.S.C. 45(a), provides in relevant part:
"(1) Unfair methods of competition in or affecting commerce, and unfair or
deceptive acts or practices in or affecting commerce, are declared unlawful."

The Commission also found that the interstate commerce requirement of 2(f)
was satisfied.

Under 2(a) and (b) of the Act, a seller who can establish either that a price
differential was cost justified or offered in good faith to meet competition has a
complete defense to a charge of price discrimination under the Act. Standard
Oil Co. v. FTC, 340 U.S. 231, 71 S.Ct. 240, 95 L.Ed. 239. See n. 1, supra.
With respect to the meeting-competition defense, the Commission stated that
even though Borden as the seller might have had a meeting-competition
defense, A&P as the buyer did not have such a defense because it knew that the
bid offered was, in fact, better than the Bowman bid. With respect to the costjustification defense, the Commission found that Commission counsel had met
the initial burden of going forward as required by this Court's decision in
Automatic Canteen Co. of America v. FTC, 346 U.S. 61, 73 S.Ct. 1017, 97
L.Ed. 1454, and that A&P had not then satisfied its burden of showing that the
prices were cost justified, or that it did not know that they were not.

The Commission upheld the Administrative Law Judge's dismissal of Count III
of the complaint.
6

The Court of Appeals, like the Commission, relied on Kroger Co. v. FTC, 438
F.2d 1372 (C.A.6), for the proposition that a buyer can be liable under 2(f) of
the Act even if the seller has a meeting-competition defense. The Kroger case
involved a buyer who had made deliberate misrepresentations to a seller in
order to induce price concessions. While the Court of Appeals in this case did
not find that A&P had made any affirmative misrepresentations, it viewed the
distinction between a "lying buyer" and a buyer who knowingly accepts the
lower of two bids as without legal significance. See n. 15, infra.

H.R. 8442, 74th Cong., 1st Sess. (1935); S. 3154, 74th Cong., 1st Sess. (1935).

F. Rowe, Price Discrimination Under the Robinson-Patman Act 423 (1962).

Section 2(f) has been described by commentators as an "afterthought." Id., at
421; J. McCord, Commentaries on the Robinson-Patman Act 96 (1969).

Commentators have recognized that a finding of buyer liability under 2(f) is

dependent on a finding of seller liability under 2(a). McCord, supra, at 96 ("
[Section] 2(f) cannot be enforced if a prima facie case could not be established
against the seller on the basis of the transaction in question under Section 2(a)
or if he could sustain an affirmative defense thereto"); Rowe, supra, at 421
("the legal status of the buyer is derivative from the seller's pricing legality
under the Act"); H. Shniderman, Price Discrimination in Perspective 136
(1977) (a buyer can be liable under 2(f) only if the price received "cannot be
excused by any defenses provided to the seller").

10

In presenting the Conference Report to the House, Representative Utterback

summarized the meaning of 2(f) by stating: "This paragraph makes the buyer
liable for knowingly inducing or receiving any discrimination in price which is
unlawful under the first paragraph [ 2(a)] of the amendment." 80 Cong.Rec.
9419 (1936).

11

Section 2(e) provides:

"It shall be unlawful for any person to discriminate in favor of one purchaser
against another purchaser or purchasers of a commodity bought for resale, with
or without processing, by contracting to furnish or furnishing, or by
contributing to the furnishing of, any services or facilities connected with the
processing, handling, sale, or offering for sale of such commodity so purchased
upon terms not accorded to all purchasers on proportionally equal terms." 15
U.S.C. 13(e).

12

Contrary to the respondent's suggestion, this interpretation of 2(f) is in no way

inconsistent with congressional intent. "[T]he buyer whom Congress in the
main sought to reach was the one who, knowing full well that there was little
likelihood of a defense for the seller, nevertheless proceeded to exert pressure
for lower prices." Automatic Canteen Co. of America v. FTC, 346 U.S., at 79,
73 S.Ct., at 1027. Here, by contrast, we conclude that a buyer is not liable if the
seller does have a defense under 2(b).

13

More than once the Court has stated that the Robinson-Patman Act should be
construed consistently with broader policies of the antitrust laws. United States
v. United States Gypsum Co., 438 U.S. 422, 98 S.Ct. 2864, 57 L.Ed.2d 854;
Automatic Canteen Co. of America v. FTC, supra, 346 U.S., at 74, 73 S.Ct., at
1024.

14

A duty of affirmative disclosure might also be difficult to enforce. In cases

where a seller offers differing quantities or a different quality product, or offers
to serve the buyer in a different manner, it might be difficult for the buyer to
determine when disclosure is required.

15

In Kroger Co. v. FTC, 438 F.2d 1372 (1971), the Court of Appeals for the Sixth
Circuit held that a buyer who induced price concessions by a seller by making
deliberate misrepresentations could be liable under 2(f) even if the seller has
a meeting-competition defense.
This case does not involve a "lying buyer" situation. The complaint issued by
the FTC alleged that "A&P accepted the said offer of Borden with knowledge
that Borden had granted a substantially lower price than that offered by the only
other competitive bidder and without notifying Borden of this fact." The
complaint did not allege that Borden's second bid was induced by any
misrepresentation. The Court of Appeals recognized that the Kroger case
involved a "lying buyer," but stated that there was no meaningful distinction
between the situation where "the buyer lies or merely keeps quiet about the
nature of the competing bid." 557 F.2d 971, 983.
Despite this background, the respondent argues that A&P did engage in
misrepresentations and therefore can be found liable as a "lying buyer" under
the rationale of the Kroger case. The misrepresentation relied upon by the
respondent is a statement allegedly made by a representative of A&P to Borden
after Borden made its second bid which would have resulted in annual savings
to A&P of $820,000. The A&P representative allegedly told Borden to
"sharpen your pencil a little bit because you are not quite there." But the
Commission itself referred to this comment only to note its irrelevance, and
neither the Commission nor the Court of Appeals mentioned it in considering

the 2(f) charge against A&P. This is quite understandable, since the comment
was allegedly made after Borden make its second bid and therefore cannot be
said to have induced the bid as in the Kroger case.
Because A&P was not a "lying buyer," we need not decide whether such a
buyer could be liable under 2(f) even if the seller has a meeting-competition
defense.
16

Recognition of the right of a seller to meet a lower competitive price in good

faith may be the primary means of reconciling the Robinson-Patman Act with
the more general purposes of the antitrust laws of encouraging competition
between sellers. As the Court stated in Standard Oil Co. v. FTC, 340 U.S., at
249, 71 S.Ct., at 249:
"We need not now reconcile, in its entirety, the economic theory which
underlies the Robinson-Patman Act with that of the Sherman and Clayton Acts.
It is enough to say that Congress did not seek by the Robinson-Patman Act
either to abolish competition or so radically to curtail it that a seller would have
no substantial right of self-defense against a price raid by a competitor."

17

The facts of this case are thus readily distinguishable from Corn Products v.
FTC, 324 U.S. 726, 65 S.Ct. 961, 89 L.Ed. 1320, and FTC v. A. E. Staley Mfg.
Co., 324 U.S. 746, 65 S.Ct. 971, 89 L.Ed. 1338, in both of which the Court held
that a seller had failed to establish a meeting-competition defense. In the Corn
Products case, the only evidence to rebut the prima facie case of price
discrimination was testimony by witnesses who had no personal knowledge of
the transactions in question. Similarly, in the Staley Mfg. Co. case, unsupported
testimony from informants of uncertain character and reliability was
insufficient to establish the defense. In the present case, by contrast, the source
of the information was a person whose reliability was not questioned and who
had personal knowledge of the competing bid. Moreover, Borden attempted to
investigate by asking A&P for more information about the competing bid.
Finally, Borden was faced with a credible threat of a termination of purchases
by A&P if it did not make a second offer. All of these factors serve to show that
Borden did have a valid meeting-competition defense. See United States v.
United States Gypsum Co., 438 U.S., at 454, 98 S.Ct., at 2882.

18

Because we hold that the petitioner is not liable under 2(f), we do not reach
the question whether Borden might also have had a cost-justification defense
under 2(a).

See S.Rep.No.1502, 74th Cong., 2d Sess. (1936); H.R.Rep.No.2287, 74th

Cong., 2d Sess., 3-7, 17 (1936); H.R.Conf.Rep.No.2951, 74th Cong., 2d Sess.
(1936); FTC, Final Report on the Chain-Store Investigation, S.Doc.No.4, 74th

Cong., 1st Sess. (1935); FTC v. Henry Broch & Co., 363 U.S. 166, 168-169, 80
S.Ct. 1158, 1160-1161, 4 L.Ed.2d 1124 (1960); W. Patman, Complete Guide to
the Robinson-Patman Act 7-10 (1963); F. Rowe, Price Discrimination Under
the Robinson-Patman Act 8-14 (1962). See generally Hearings on Price
Discrimination (S. 4171) before a Subcommittee of the Senate Committee on
the Judiciary, 74th Cong., 2d Sess. (1936); Hearings on H.R. 8442, H.R. 4995,
and H.R. 5062 before the House Committee on the Judiciary, 74th Cong., 1st
Sess. (1935).
2

See S.Rep.No.1502, 74th Cong., 2d Sess., 3-4, 7 (1936); H.R.Rep.No.2287,

74th Cong., 2d Sess., 3-7, 14-17 (1936); Patman, supra, at 7-10, 148-151;
Rowe, supra, at 8-23.
The Court recently noted in United States v. United States Gypsum Co., 438
U.S. 422, 455 n. 30, 98 S.Ct. 2864, 2882, 57 L.Ed.2d 854 (1978), that "[i]t may
also turn out that sustained enforcement of 2(f) . . . will serve to bolster the
credibility of buyers' representations and render reliance thereon by sellers a
more reasonable and secure predicate for a finding of good faith under 2(b)."
(Citation omitted.) But if neither a buyer nor a seller can be liable when the
seller relies in good faith on the buyer's misrepresentations, then enforcement
of 2(f) will not "bolster the credibility" of buyers. Thus, the derivative
standard of liability adopted by the Court today is inconsistent with the premise
underlying the Court's suggestion in United States Gypsum, see Note, The
Supreme Court, 1977 Term, 92 Harv.L.Rev. 57, 288, 291-294 (1978), and it
eliminates one means of reassuring sellers that they may rely on buyer
representations.

Given this preface to Automatic Canteen, language in that opinion provides

little support for the Court's adoption today of a derivative standard with
respect to the buyer's meeting-competition defense. Moreover, to the extent the
majority believes its resort to literal construction of 2(f) forecloses further
inquiry, it ignores the broader teaching of Automatic Canteen. That case
adopted a common-sense approach for interpreting the often ambiguous
Robinson-Patman Act, tempering a "merely literal reading of the language"
with considerations of "fairness and convenience" when necessary to achieve
Congress' purpose. 346 U.S., at 79, and n. 23, 73 S.Ct., at 1027. On that basis,
Automatic Canteen allocated to the Commission the burden of production
regarding a buyer's cost-justification defense, even though the Commission
does not bear that burden in a proceeding against a seller. Id., at 75-76, 73 S.Ct.,
at 1025-1026; FTC v. Morton Salt Co., 334 U.S. 37, 44-45, 68 S.Ct. 822, 827828, 92 L.Ed. 1196 (1948). Indeed, the Court's interpretation of 2(f) today,
which places buyers in the litigating position of their sellers, may also be
incompatible with Automatic Canteen's specific holding on the burden of

production.
4

Because the Court reverses the judgment without remanding for further
consideration and does not expressly reach the merits of the cost-justification
issue raised by A&P, ante, at 85 n. 18, I need not address that issue either.
Considering the recent admonition in United States Gypsum, supra, at 456, 98
S.Ct., at 2883 n. 31, that "[t]he case-by-case interpretation and elaboration of
the 2(b) defense is properly left to the other federal courts and the FTC in the
context of concrete fact situations," the Court's action is particularly
inappropriate.
While I question the Court's decision to undertake resolution of this factual
question, without even determining which party bore the burden of persuasion, I
do not understand Part IV of its opinion as purporting to modify in any sense
what was said last Term in United States Gypsum about the scope of the
meeting-competition defense for sellers.

The Court's opinion creates the impression that Borden submitted only two
proposals, ante, at 81-82 n. 15, 83-84. In fact, A&P induced Borden to make a
third proposal, even though the second was already more favorable than
Bowman's.
When Borden initially responded to Bowman's bid, the A&P representative
rejected Borden's offer on the ground that it included milk sold in glass gallon
containers, whereas other bidders supposedly had not included that item.
Actually, Bowman's bid had included glass gallons and A&P had subsequently
decided against using glass containers. 87 F.T.C. 962, 979 (1976); App. 73a74a, 116a-118a, 257a-260a, 774a-775a. The effect of forcing Borden to delete
milk sold in glass gallons from the proposal without raising the overall bid, was
to increase the savings to A&P on other products still covered because part of
the promised savings had been derived from the sale of the cheaper glass
gallons. See 87 F.T.C., at 979-980. In addition, while Borden was preparing a
third proposal to reflect the deletion, A&P suggested that Borden make further
price reductions, saying " 'sharpen your pencil a little bit because you are not
quite there.' " App. 118a. As a result, Borden reduced its prices still further to
yield additional savings of approximately $5,000 to $8,000. The bid finally
accepted by A&P incorporated these price reductions as well as those
attributable to the deletion of glass gallons. See id., at 117a-118a, 123a-124a,
141a-142a.