Great Atlantic & Pacific Tea Co. v. Federal Trade Commission

1979-02-22

Headline: Grocery chain cleared of liability for accepting a lower supplier bid; Court limits buyer liability under the Robinson-Patman Act and protects competitive bidding when a supplier can show it was meeting competition.

Holding: The Court held that a grocery chain that accepted a lower competitive supplier bid did not violate §2(f) because the supplier had a valid meeting‑competition defense, so buyer liability was unavailable in these circumstances.

Real World Impact:

Allows buyers to accept lower competitive supplier bids without automatic liability.
Reduces pressure on buyers to disclose competing bid details to suppliers.
Protects competitive bidding by avoiding a duty of affirmative disclosure.

Topics: price discrimination, retail contracting, antitrust rules, buyer liability

Summary

Background

A large grocery chain (A&P) asked its longtime dairy supplier (Borden) to bid to supply private‑label milk for over 200 stores. After Borden’s initial offer, A&P solicited other bids and received a lower offer from a rival (Bowman). A&P told Borden it had a competing bid but gave no details. Borden then submitted a much lower second bid, stating it was made to meet Bowman’s price, and A&P accepted that bid. The Federal Trade Commission charged A&P with unlawfully inducing or receiving illegal price discrimination.

Reasoning

The Court addressed whether a buyer who accepts a lower competitive price can be held liable under §2(f) of the Robinson‑Patman Act when the seller can claim a meeting‑competition defense. The Court read §2(f) to require that any buyer liability depend on whether the seller’s price discrimination would itself be unlawful. Citing prior decisions and the statute’s language, the Court warned that forcing buyers to disclose competing bids would frustrate competitive bidding and risk anticompetitive price uniformity. The Court concluded that a buyer who merely accepts the lower of two competitive bids does not violate §2(f) if the seller acted in good faith to meet competition.

Real world impact

The ruling leaves buyers freer to accept lower supplier offers without an automatic duty to disclose competing bid details when the supplier can legitimately claim it was meeting competition. It also cautions agencies against imposing a duty of affirmative disclosure that could chill competitive bidding. The Court reversed the lower court’s judgment and remanded no further factual finding on the seller’s defense was required here.

Dissents or concurrances

One Justice would have remanded for factfinding about the seller’s defense, and another Justice criticized the Court’s rule as overly narrow and urged a different test for buyer liability.