Injury to a competitor is not always the equivalent of injury to competition. Awareness of this, and the ability to distinguish one from the other, can forestall much useless litigation. Here is a set of basic questions designed to serve as a yardstick to help the business community identify and measure true injury to competition.
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References
1.
To be illegal under the Act, a price discrimination must be such that its effect 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 …”
2.
Report of The Attorney General's National Committee To Study the Antitrust Laws (Washington, 1955), pp. 164–5. Also see EdwardsCorwin D., The Price Discrimination Law (Washington, Brookings Institution, 1959), pp. 518–45.
3.
Standard Oil Co. of Indiana, 43 F.T.C. 56, 65–6 (1946).
4.
SuttonFrancis X., The American Business Creed (Cambridge, Harvard University Press, 1956), pp. 176–7.
5.
Maintaining Competition (New York, McGraw-Hill Book Company, Inc., 1949), p. 9.
Transcript of Record, Vol. VII, p. 4512, American Tobacco Co., et al., v. U.S., 328 U.S. 781 (1946).
10.
The Cement Institute, 37 F.T.C. 87, 146 (1943).
11.
Letter of July 18, 1956, to Congressman Frank Thompson, Jr.
12.
While our discussion is largely concerned with the broad standard of injury, it must be remembered that the Commission and courts have an additional standard to enforce as well. Under this additional standard of “fairness,” the law can be violated by price discrimination which results in injury to individual competitors, and regardless of the effects on market competition. Even though an enforcing agency finds a violation of the Act in cases where a finding of injury in the broad sense would not be justified, this alone does not mean that the agency has confused “injury to competition” with “injury to competitors.” Since price discrimination can be illegal under either standard, the enforcing agency could hardly dismiss a case where either of them applied. If the agency wished to bring enforcement into accord with an economic approach, however, it could seek to limit its selection of cases for complaint to those in which the broader, economic standard seemed to apply.
13.
The American Individual Enterprise System (New York, McGraw-Hill Book Company Inc., 1946), Vol. II, pp. 592–4.
14.
The American Business Creed, op. cit., pp. 368, 166.
15.
33 F.T.C. 24 (1941).
16.
Ibid., pp. 51–52.
17.
Ibid., p. 52.
18.
See note 17.
19.
See note 17, p. 53.
20.
39 F.T.C. 35 (1944).
21.
Moog Industries, Inc., 51 F.T.C. 931 (1955); Whitaker Cable Corp., 51 F.T.C. 958 (1955); P. and D. Manufacturing Co., 52 F.T.C. 1155 (1956).
Ease of entry would also serve as a limit to effective predation, since new firms might rise up to replace those eliminated at a cost to the predator. I feel, however, that successful use of predatory price discrimination would itself result in a barrier to entry of new firms. See also BrooksRobert C.Jr., “Price Cutting and Monopoly Power,”Journal of Marketing (forthcoming), Vol. 25, 1961.
25.
Maintaining Competition, op. cit., pp. 9–10.
26.
Logically, causality cannot be proved, but can be inferred. The conditions given in the above paragraph would make the inference of “injury” reasonable, and a more solid basis could never be found in such relationships.
