No. 15-3001 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE SEVENTH CIRCUIT 

––––––––––––––––––––––––––––––––––––––––––––– 

WOODMAN’S FOOD MARKET, INC.,

Plaintiff-Appellee, 

v. 

THE CLOROX CO. AND THE CLOROX SALES 

CO., 

Defendants-Appellants

––––––––––––––––––––––––––––––––––––––––––––– 

On Appeal from the United States District Court 

for the Western District of Wisconsin 

No. 14-cv-00734-slc 

Hon. Stephen L. Crocker 

––––––––––––––––––––––––––––––––––––––––––––– 

BRIEF OF AMICUS CURIAE THE FEDERAL TRADE COMMISSION 

IN SUPPORT OF DEFENDANTS-APPELLANTS AND REVERSAL 

––––––––––––––––––––––––––––––––––––––––––––– 

DEBORAH L. FEINSTEIN

Director 

MICHAEL BLOOM

Assistant Director 

JAMES F. MONGOVEN

Deputy Assistant Director 

JULIE GOSHORN

CHRISTOPHER M. GRENGS

Attorneys 

Bureau of Competition 

JONATHAN E. NUECHTERLEIN

General Counsel 

JOEL MARCUS

Director of Litigation 

BRADLEY GROSSMAN

Attorney 

Office of the General Counsel 

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W. 

Washington, D.C. 20580 

(202) 326-2994 

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TABLE OF CONTENTS 

Table of Authorities ....................................................................................................... ii

Interest of Amicus Curiae ............................................................................................. v

Introduction and Summary ........................................................................................... 1

Statement ....................................................................................................................... 3

A. FTC Implementation Of The Robinson-Patman Act .................................... 3

B. Facts And Procedural History ....................................................................... 5

Argument ....................................................................................................................... 6

I. Section 2(e) Applies Only To Advertising And Other Promotional 

Services .................................................................................................................. 7

A. The FTC And Courts Have Properly Confined Section 2(e) To Its 

Original Purpose Of Preventing Covert Price Discrimination 

Through Promotional Services ...................................................................... 8

B. Applying Section 2(e) To Require That Sellers Distribute Products 

Uniformly To All Customers Would Contradict Settled Antitrust 

Policies And Deter Procompetitive Behavior.............................................. 10

II. The FTC’s 1940 Luxor Decision Is At Odds With The Modern 

Understanding Of Section 2(e) And Subsequent FTC Guidance ....................... 15

A. Post-Luxor Decisions Have Confined Section 2(e)’s Scope To 

Discrimination In Advertising And Similar Promotional Services ........... 16

B. Luxor Would Unreasonably Deter Procompetitive Distribution 

Practices ....................................................................................................... 18

III. Section 2(e) Prohibits Discrimination In Package Sizes Only When The 

Size Primarily Serves A Promotional Function .................................................. 21

Conclusion .................................................................................................................... 25

 

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TABLE OF AUTHORITIES 

Cases Page

Atalanta Trading Corp. v. FTC, 258 F.2d 365 (2d Cir. 1958) .................................... 23 

Automatic Canteen Co. of America v. FTC, 346 U.S. 61 (1953) ............................. 7, 10 

Boise Cascade Corp. v. FTC, 837 F.2d 1127 (D.C. Cir. 1988) ...................................... 7 

Cecil Corley Motor Co. v. General Motors Corp., 380 F. Supp. 819 

 (M.D. Tenn. 1974) ............................................................................................... 13, 16 

Centex-Winston Corp. v. Edward Hines Lumber Co., 447 F.2d 585 

 (7th Cir. 1971) ...................................................................................................... 8, 17 

Checker Motors Corp. v. Chrysler Corp., 283 F. Supp. 876 (S.D.N.Y. 1968) ............. 21 

Chicago Seating Co. v. S. Karpen & Bros, 177 F.2d 863 (7th Cir. 1948) ................... 19 

Chicago Spring Prods. Co. v. U.S. Steel Corp., 371 F.2d 428 (7th Cir. 1966) ..... 14, 21 

Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977) ......................... 12, 20 

Corn Products Ref. Co. v. FTC, 324 U.S. 726 (1945) .................................................. 18 

David R. McGeorge Car Co. v. Leyland Motor Sales, Inc., 504 F.2d 52 

 (4th Cir. 1974) .......................................................................................................... 13 

DeLong Equip. Co v. Washington Mills Abrasive Co., 887 F.2d 1499 

 (11th Cir. 1989) ........................................................................................................ 21 

Elizabeth Arden Sales Corp. v. Gus Blass Co., 150 F.2d 988 (8th Cir. 1945) ........... 18 

FTC v. Borden Co., 383 U.S. 637 (1966) ..................................................................... 21 

FTC v. Fred Meyer, Inc., 390 U.S. 341 (1968) ............................................. 4, 7, 8, 9, 17 

FTC v. Simplicity Pattern Co., 360 U.S. 55 (1959) ................................... 4, 8, 9, 17, 21 

Hanson v. Pittsburgh Plate Glass Indus., Inc., 482 F.2d 220 (5th Cir. 1973) ........... 14 

Harper Plastics, Inc. v. Amoco Chems. Corp., 617 F.2d 468 (7th Cir. 1980) ............. 11 

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Hinkleman v. Shell Oil Co., 962 F.2d 372 (4th Cir. 1992) ....................... 10, 11, 13, 14 

Holleb & Co. v. Produce Terminal Cold Storage Co., 532 F.2d 29 

 (7th Cir. 1976) .......................................................................................................... 13 

Kirby v. P.R. Mallory & Co., 489 F.2d 904 (7th Cir. 1973) ............ 3, 7, 8, 9, 14, 16, 22 

L & L Oil Co. v. Murphy Oil Corp., 674 F.2d 1113 (5th Cir. 1982) ..... 8, 10, 13, 17, 24 

O’Connell v. Citrus Bowl, Inc., 99 F.R.D. 117 (E.D.N.Y. 1983) ................................ 21 

P. Lorillard Co. v. FTC, 267 F.2d 439 (3d Cir. 1959) ................................................. 18 

Purdy Mobile Homes, Inc. v. Champion Home Builders Co., 594 F.2d 1313 

 (9th Cir. 1979) .................................................................................................... 10, 13 

Skinner v. U.S. Steel Corp., 233 F.2d 762 (5th Cir. 1956) .......................................... 16 

United States v. Colgate & Co., 250 U.S. 300 (1919) ............................................ 11, 19 

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

 546 U.S. 164 (2006) ...................................................................................... 10, 18, 20 

FTC Decisions

Diaperwite, Inc., 61 F.T.C. 504 (1962) ........................................................................ 24 

General Foods Corp., 52 F.T.C. 798 (1956) ....................................................... 6, 15, 16 

General Motors Corp., 103 F.T.C. 641 (1984) ....................................................... 10, 17 

Harper & Row Publishers, Inc., 122 F.T.C. 113 (1996) ................................................ 4 

Herbert R. Gibson, Sr., 95 F.T.C. 553 (1980), aff’d, 682 F.2d 554 

 (5th Cir. 1982) .......................................................................... 7, 8, 10, 14, 17, 22, 24 

Luxor Ltd., 31 F.T.C. 658 (1940) ........................................................... 6, 15, 16, 17, 19 

Universal-Rundle Corp., 65 F.T.C. 924 (1964) ........................................................... 17 

Statutes

15 U.S.C. § 13(a) ............................................................ 1, 2, 3, 9, 11, 13, 14, 20, 21, 23 

15 U.S.C. § 13(d) ............................................................................................ 3, 6, 12, 17 

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15 U.S.C. § 13(e) .................................................................................................. passim

15 U.S.C. § 25 ................................................................................................................. 4 

Legislative Materials

H.R. Rep. No. 74-2951 (1936) ...................................................................................... 14 

S. Rep. No. 74-1502 (1936) ...................................................................................... 8, 17 

Regulatory Materials

16 C.F.R. §§ 240.1-240.15 .............................................................................................. 4 

16 C.F.R. § 240.1 ............................................................................................................ 4 

16 C.F.R. § 240.7 .................................................................................... 4, 21, 22, 23, 24 

16 C.F.R. § 240.14 .......................................................................................................... 9

Guides for Advertising Allowances and Other Merchandising Payments and 

Services, 53 Fed. Reg. 43,233 (Oct. 26, 1988) .......................................................... 22 

Guides for Advertising Allowances and Other Merchandising Payments and 

Services, 55 Fed. Reg. 33,651 (Aug. 17, 1990) ......................................................... 23 

Guides for Advertising Allowances and Other Merchandising Payments and 

Services, 79 Fed. Reg. 58,245 (Sept. 29, 2014) .................................................. 22, 23 

Other Authorities

VII Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 1441c 

 (3d ed. 2010) ................................................................................................. 11, 12, 20 

Antitrust Modernization Commission, Report and Recommendations 

 (2007) .......................................................................................................................... 4 

Frederick M. Rowe, Price Discrimination under the Robinson-Patman Act 

 (1962) ........................................................................................................................ 19 

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INTEREST OF AMICUS CURIAE 

The Federal Trade Commission, an agency of the United States, files this 

brief under Federal Rule of Appellate Procedure 29(a). The Commission seeks to 

assist the Court in interpreting Section 2(e) of the Robinson-Patman Act, 15 U.S.C. 

§ 13(e). 

The FTC has authority to enforce the Robinson-Patman Act, see 15 U.S.C. 

§§ 21, 45, and publishes nonbinding, interpretive guidance to help businesses 

comply with Section 2(e), see 16 C.F.R. §§ 240.1-240.15. The district court’s 

February 2, 2015, order relied heavily on FTC administrative decisions and 

guidance. The Commission is concerned that an overbroad interpretation of this 

provision could contradict other settled antitrust policies. 

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INTRODUCTION AND SUMMARY 

The Robinson-Patman Act forbids sellers of goods from discriminating 

between competing buyers. Section 2(a) of the Act prohibits direct or indirect price 

discrimination, and Section 2(e) of the Act prohibits indirect price discrimination 

masked as promotional services or facilities. 15 U.S.C. § 13(a), (e). Because 

Congress understood that price discrimination is often procompetitive, Section 2(a) 

prohibits price discrimination only if it would “substantially ... lessen competition.” 

In contrast, Section 2(e) categorically bans all discrimination within its ambit, 

whether it harms or promotes competition. Because an overbroad application of 

that categorical ban would reduce consumer welfare, courts today narrowly 

construe Section 2(e) to reach only obviously promotional activities, thereby 

requiring plaintiffs to rely on Section 2(a) instead for most claims of price 

discrimination. 

 The question in this case is whether offering a specific package size qualifies 

as a promotional “service” under Section 2(e). Woodman’s Food Market alleges that 

Clorox violated Section 2(e) by refusing to sell large-sized packages of various 

consumer items to Woodman’s while selling them to its competitors. Relying on two 

FTC administrative decisions from 1940 and 1956, the district court agreed that 

large-sized packages are a promotional service subject to Section 2(e)’s categorical 

ban. But those decisions contradict modern antitrust doctrine and should no longer 

be followed. Properly understood, Section 2(e) does not generally require 

manufacturers to sell the same package sizes to all buyers who demand them; 

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instead, it prohibits discrimination only in genuinely promotional services or 

facilities distinct from the product itself. 

Here, Woodman’s allegations do not state a plausible claim that Clorox 

violated that narrow prohibition. Woodman’s first claims that it is losing sales 

because consumers want large-sized packages. A.15-17 (¶¶ 59, 66-67). But this is 

not the sort of discrimination covered by the Robinson-Patman Act. For decades, 

courts have recognized that manufacturers may decide with whom they will deal 

and that such choice benefits consumers. Although the district court held that 

Section 2(e) requires equal distribution of package sizes because size “is connected 

to” resale (S.A.8), this logic would apply not just to size, but to any desirable product 

attribute. That rule would radically expand the scope of Section 2(e), subvert 

efficient manufacturer-retailer relationships throughout the economy, and 

contradict the central principles of modern antitrust law. 

Woodman’s also claims that it must now pay, at wholesale, a higher per-unit 

price for Clorox products than some of its rivals, placing it at a disadvantage in the 

retail marketplace. A.14-16 (¶¶ 53, 60). This is the exact sort of contention for 

which Section 2(a)—and its competitive harm test—were designed. But Woodman’s 

is not pursuing a Section 2(a) violation; it invokes only Section 2(e)’s categorical 

prohibition. In allowing Woodman’s suit to proceed, the district court opened the 

door for plaintiffs to invoke Section 2(e) to circumvent the limiting principles that 

Congress deemed necessary for price discrimination claims properly brought under 

Section 2(a). 

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To be sure, there may be special circumstances where package size can be a 

promotional “service” within the meaning of Section 2(e). One potential example is 

when a seller offers free “sample size” packs of a product for retailers to give away 

to their customers. But to trigger Section 2(e), the seller must offer the special 

package size primarily to convey a promotional message, not simply to meet 

demand from retailers or consumers for desirable product attributes or a lower unit 

price. Because Woodman’s does not allege that Clorox offers its packages in large 

sizes primarily to convey a promotional message, it does not raise a proper Section 

2(e) claim. 

STATEMENT 

A. FTC Implementation Of The Robinson-Patman Act 

The Robinson-Patman Act prohibits direct or indirect price discrimination, 

including discrimination disguised as a promotional service. Section 2(a) outlaws 

unjustified price discrimination that causes competitive injury. 15 U.S.C. § 13(a). 

Section 2(d) bars a seller from making payments to promote the resale of its 

products unless it offers such payments to all competing customers on 

proportionally equal terms. 15 U.S.C. § 13(d). Section 2(e) contains a similar 

prohibition, but for promotional services or facilities. 15 U.S.C. § 13(e); see pp. 7-10, 

infra.1 Unlike the discriminatory prices prohibited by Section 2(a), discriminatory 

 

1 As this Court noted, “[a]lthough the text of the two sections contains a spate of 

semantic variation, § 2(e) has long been viewed as coterminous with § 2(d), and 

courts have consistently resolved the two sections into an harmonious whole.” 

Kirby v. P.R. Mallory & Co., 489 F.2d 904, 909 (7th Cir. 1973). 

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promotional payments, services, and facilities are unlawful whether or not they 

injure competition or have a cost justification. FTC v. Simplicity Pattern Co., 360 

U.S. 55, 70-71 (1959). 

The FTC historically played a central role in enforcing the Robinson-Patman 

Act. See FTC v. Fred Meyer, Inc., 390 U.S. 341, 355 (1968). But the FTC has not 

brought an action to enforce Sections 2(d) or 2(e) since 1988.2 Beginning in 1960, 

the FTC has issued and periodically revised nonbinding interpretive guides to help 

businesses comply with Sections 2(d) and 2(e). See 16 C.F.R. §§ 240.1-240.15. 

These guides became known as the Fred Meyer Guides after the Commission 

amended them following the Supreme Court’s decision in Fred Meyer. The Guides 

reflect the Commission’s understanding of the Act’s language and purpose, 

legislative history, and administrative and court decisions. 16 C.F.R. § 240.1. The 

Guides neither have the force of law nor advocate changes in the law. 

The Guides note that although Sections 2(d) and 2(e) prohibit discrimination 

in promotional “services” or “facilities,” these terms “have not been exactly defined 

by the statute or in decisions.” 16 C.F.R. § 240.7. They explain that the services or 

facilities, however defined, must “be used primarily to promote the resale of the 

seller’s product by the customer,” as opposed to the original sale of the product to 

 

2 The Commission dismissed its 1988 complaint several years later because of 

significant industry changes. See Harper & Row Publishers, Inc., 122 F.T.C. 113 

(1996). Although the FTC shares enforcement authority with the Department of 

Justice, see 15 U.S.C. § 25, DOJ “has left civil enforcement of the Act to the FTC 

and has not enforced the criminal provisions since the 1960s.” Antitrust 

Modernization Commission, Report and Recommendations 316 (2007). 

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the customer. Id. The Guides go on to offer several examples of a service or facility 

that could be covered by Sections 2(d) and 2(e) if they primarily promoted resale, 

including cooperative advertising, demonstrations, catalogues, displays, prizes, 

and—of particular relevance here—“[s]pecial packaging, or package sizes.” Id. 

B. Facts And Procedural History 

In 2014, Clorox stopped selling “large pack” versions of several products—

including food storage bags, kitty litter, lighter fluid, bleach, and salad dressing—to 

Woodman’s, a grocery chain with 15 stores in Wisconsin and Illinois. Clorox 

notified Woodman’s that it would sell these large packs only to membership-based 

“club” retailers such as Sam’s Club and Costco, and no longer to “General Market” 

retailers such as Woodman’s. Clorox continued to offer smaller-sized packages to 

Woodman’s. 

Woodman’s sued Clorox in the Western District of Wisconsin, alleging that 

Clorox’s decision violated Sections 2(d) and 2(e) of the Robinson-Patman Act. 

Woodman’s claimed that Clorox’s actions harmed it in two ways: First, because the 

large packs have a lower wholesale price-per-unit, Woodman’s must pay higher 

prices than Sam’s Club or Costco for Clorox products. A.14-16 (¶¶ 53, 60). Second, 

Woodman’s has lost sales from retail customers who prefer large packs due to their 

lower unit price and superior convenience. A.15-17 (¶¶ 59, 66-67). 

Clorox moved to dismiss the Complaint on the ground that these allegations 

failed to state a claim under Sections 2(d) and 2(e) because the sale of packages in 

large sizes is not a promotional service. On February 2, 2015, the district court 

denied Clorox’s motion and ruled that package size is a promotional service. No 

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court had ever addressed the question, but the district court relied on “a pair of oldbut-never-revoked” FTC administrative decisions finding that sellers violated 

Section 2(e) when they declined to supply certain buyers with product sizes that 

retail customers found desirable. S.A.7 (discussing Luxor Ltd., 31 F.T.C. 658 

(1940), and General Foods Corp., 52 F.T.C. 798 (1956)). The court also observed 

that the FTC’s Fred Meyer Guides still list “special packaging, or package sizes” as 

examples of a promotional service. Id. at 7-8. Deeming Luxor and General Foods

“dispositive,” the court concluded that Clorox’s large packs were a promotional 

service because their “special size ... is connected to the resale of those products.”3 

Id. at 8. 

ARGUMENT 

Although Woodman’s contends that “providing a customer with a large pack 

of a particular product constitutes the provision of a promotional service,” A.10 (¶ 

28), Woodman’s alleges no facts to support that contention. Woodman’s does not 

allege that Clorox deprived it of advertising or any similar promotional service; it 

claims only that Clorox refused to sell it products in sizes that have lower wholesale 

unit prices and are preferred by some of its customers. But Section 2(e) does not 

require sellers to distribute their products on equal terms to every buyer.4 Rather, 

 

3 We do not address the district court’s related Order of April 27, 2015, denying 

Clorox’s motion to dismiss Woodman’s complaint as moot in light of Clorox’s 

termination of its customer relationship with Woodman’s. 

4 Woodman’s also alleges that Clorox violated Section 2(d), but it does not claim that 

Clorox made any discriminatory promotional payments to or for the benefit of 

retailers, as that section requires. The FTC therefore confines its analysis to 

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Section 2(e) applies only to discrimination in genuinely promotional services or 

facilities, “such as for advertising.” Herbert R. Gibson, Sr., 95 F.T.C. 553, 725 

(1980), aff’d, 682 F.2d 554 (5th Cir. 1982). Any claim of price discrimination that 

Woodman’s might bring under the facts pleaded is cognizable, if at all, only under 

Section 2(a) and the pro-competitive limiting principles that Congress included in 

that provision. 

I. SECTION 2(e) APPLIES ONLY TO ADVERTISING AND OTHER PROMOTIONAL 

SERVICES 

Section 2(e) prohibits sellers from discriminating among purchasers “of a 

commodity bought for resale” by providing “services or facilities connected with the 

processing, handling, sale, or offering for sale of such commodity” that are “not 

accorded to all purchasers on proportionally equal terms.” 15 U.S.C. § 13(e). In 

part because that language is not “an exemplar of legislative clarity,” Fred Meyer, 

390 U.S. at 350, courts have interpreted it by examining its objectives and its 

relationship with other antitrust laws.5 The FTC and courts—including this one—

have concluded that Section 2(e) prohibits discrimination only in “promotional 

services made available to purchasers who buy for resale.” Kirby v. P.R. Mallory & 

 

Section 2(e). See S.A.6 (Section 2(e) “seems to fit the facts of this case more 

closely”). 

5 See Automatic Canteen Co. of America v. FTC, 346 U.S. 61, 73 (1953) (reading 

“ambiguous language” from the statute in light of “other antitrust legislation”); 

Boise Cascade Corp. v. FTC, 837 F.2d 1127, 1138 (D.C. Cir. 1988) (“The imprecision 

infecting the statutory language has frequently led courts construing the measure 

to repair to the backdrop against which the Robinson-Patman amendments were 

crafted in 193[6].”). 

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Co., 489 F.2d 904, 909 (7th Cir. 1973) (emphasis added);6 see also Gibson, 95 F.T.C. 

at 725-26. Section 2(e) does not prevent a seller from offering services other than 

promotional ones, or from distributing products in different types, quantities, or 

styles, to particular buyers. 

A. The FTC And Courts Have Properly Confined Section 2(e) To 

Its Original Purpose Of Preventing Covert Price 

Discrimination Through Promotional Services 

Congress enacted Sections 2(d) and 2(e) to prohibit manufacturers from 

engaging in disguised price discrimination through promotional allowances and 

services. Before the Robinson-Patman Act was passed, Section 2 of the Clayton Act 

(into which the Robinson-Patman Act was incorporated) already contained a price 

discrimination ban. An FTC study revealed that large chain stores nevertheless 

used their purchasing power to evade that ban by securing non-price advantages 

not available to independent merchants. Fred Meyer, 390 U.S. at 349-50; 

Simplicity, 360 U.S. at 69. In particular, large retailers would “induc[e] concessions 

from suppliers in the form of advertising and other sales promotional allowances.” 

Fred Meyer, 390 U.S. at 350-51. Congress considered these allowances a form of 

“indirect price discrimination” because their beneficiary could “shift part of his 

advertising costs to his supplier while his disfavored competitor could not.” Id. 

(discussing S. Rep. No. 74-1502, at 7 (1936)). Congress enacted Sections 2(d) and 

 

6 Kirby appears to retreat from the Court’s earlier decision that Section 2(e) 

prohibits discrimination in the timeliness of deliveries. See Centex-Winston Corp. v. 

Edward Hines Lumber Co., 447 F.2d 585, 588 (7th Cir. 1971). Other courts likewise 

have declined to follow Centex-Winston. See, e.g., L & L Oil Co. v. Murphy Oil 

Corp., 674 F.2d 1113, 1119 (5th Cir. 1982). 

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2(e) to “eliminate these inequities.” Simplicity, 360 U.S. at 69; see Fred Meyer, 390 

U.S. at 352. 

Because discriminatory promotional assistance can be difficult to detect, see 

Simplicity, 360 U.S. at 68 & n.12, Congress drafted Sections 2(d) and 2(e) to impose 

a flat ban on such practices. Unlike Section 2(a), which prohibits price 

discrimination only if it injures competition, Sections 2(d) and 2(e) require no 

evidence of competitive injury, nor do they allow a seller to defend itself by showing 

that it had a cost justification for treating buyers unequally. Simplicity, 360 U.S. at 

70-71; compare 15 U.S.C. § 13(a) (permitting price “differentials which make only 

due allowance for differences in the cost, manufacture, sale, or delivery....”).7 

Sections 2(d) and 2(e) thus induce sellers “to confine their discriminatory practices 

to price differentials, where they could be more readily detected ....” Simplicity, 360 

U.S. at 68. 

Because Sections 2(d) and 2(e) impose categorical liability irrespective of 

competitive harm, courts have properly confined them to their original purpose: 

prohibiting hidden price discrimination through promotional services. As this 

Court has explained, “[i]n view of the strict standards of §§ 2(d) and 2(e), which 

focus on resale, it appears quite clear that Congress ... drafted §§ 2(d) and 2(e) to 

apply exclusively to promotional discriminations.” Kirby, 489 F.2d at 910-11. In 

 

7 Sections 2(d) and 2(e) do permit one affirmative defense: a seller can argue that it 

provided the discriminatory payment or service in good faith to meet the 

discriminatory practices of a competing seller. See Simplicity, 360 U.S. at 67; 16 

C.F.R. § 240.14. This is known as the “meeting competition” defense. 

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particular, Section 2(e) requires a showing that (1) the defendant provided 

advertising or other promotional services on disproportionate terms, and (2) the 

services promoted the product’s resale. See, e.g., Hinkleman v. Shell Oil Co., 962 

F.2d 372, 379 (4th Cir. 1992); L & L Oil Co. v. Murphy Oil Corp., 674 F.2d 1113, 

1119 (5th Cir. 1982); Purdy Mobile Homes, Inc. v. Champion Home Builders Co., 

594 F.2d 1313, 1317 (9th Cir. 1979); Gibson, 95 F.T.C. at 725. 

B. Applying Section 2(e) To Require That Sellers Distribute 

Products Uniformly To All Customers Would Contradict 

Settled Antitrust Policies And Deter Procompetitive Behavior 

Courts read Section 2(e) narrowly for a simple reason: Because the statute 

requires no evidence of competitive harm, it may deter conduct that benefits

competition and consumers, undercutting the basic purpose of antitrust law. The 

“primary concern” of antitrust law is to promote consumer welfare through 

competition between brands, and “[t]he Robinson-Patman Act signals no large 

departure from that main concern.” Volvo Trucks North America, Inc. v. ReederSimco GMC, Inc., 546 U.S. 164, 180-81 (2006). Courts thus “construe the 

[Robinson-Patman] Act consistently with the broader policies of the antitrust laws.” 

Id. at 181 (quotation omitted); Automatic Canteen Co. of America v. FTC, 346 U.S. 

61, 74 (1953). The Supreme Court has warned against interpreting the Act in ways 

“geared more to the protection of existing competitors than to the stimulation of 

competition.” Volvo, 546 U.S. at 181.8 An expansive interpretation of Section 2(e) 

 

8 The FTC has likewise noted that “[b]ecause of the easier threshold of proof” in 

Sections 2(d) and 2(e), those sections must be “reasonably, and not expansively, 

construed.” Gibson, 95 F.T.C. at 726; accord General Motors Corp., 103 F.T.C. 641, 

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would ignore that warning and undercut longstanding antitrust principles to the 

detriment of consumer welfare. 

Under bedrock antitrust principles, manufacturers ordinarily may choose the 

retailers with whom they do business or to whom they sell specific products. Absent 

monopoly or collusion, a seller is free to “exercise his own independent discretion as 

to parties with whom he will deal” and “announce in advance the circumstances 

under which he will refuse to sell.” United States v. Colgate & Co., 250 U.S. 300, 

307 (1919). The Robinson-Patman Act expressly adopts this principle: Section 2(a) 

provides that “nothing herein shall prevent persons engaged in selling goods ... in 

commerce from selecting their own customers in bona fide transactions and not in 

restraint of trade.” 15 U.S.C. § 13(a). This Court has recognized that Section 2(e) 

similarly allows a seller to choose its customers. See Harper Plastics, Inc. v. Amoco 

Chems. Corp., 617 F.2d 468, 470 (7th Cir. 1980). 

By generally entitling manufacturers to choose the terms on which they will 

do business, modern antitrust doctrine reflects sound economic principles. In 

competing against other products, a manufacturer must decide whether to sell to 

many dealers that meet only a minimum “quality” threshold or instead to only a few 

dealers that meet “highly selective” standards. VII Phillip E. Areeda & Herbert 

Hovenkamp, Antitrust Law ¶ 1441c1 (3d ed. 2010). A manufacturer may decide to 

 

696 (1984). See also Hinkleman, 962 F.2d at 380-81 (“Because application of a per 

se rule risks adverse consequences, we prefer to limit the scope of section 2(e) to 

that necessary to fulfill the section’s purposes.”). 

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limit the number of dealers “to allow each a sales volume sufficient for efficient 

operation.” Id. A manufacturer’s decision to sell products only to specific dealers 

may “induce retailers to engage in promotional activities or to provide service and 

repair facilities necessary to the efficient marketing of their products.” See

Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 55 (1977). 

Antitrust law permits these “selective distribution” policies because 

prohibiting them “would deprive suppliers of efficient distribution options; would 

eliminate the supplier’s ability to avoid inefficient, inattentive, or untrustworthy 

dealers; and would eliminate the great variety of distribution mechanisms that 

characterize American franchising.” Areeda & Hovenkamp ¶ 1441c1. Although a 

manufacturer’s decision to restrict distributors may reduce competition for a 

particular product by limiting the number of sellers of that product, such a 

restriction often promotes competition between rival products by allowing 

manufacturers to distribute their products more efficiently. GTE Sylvania, 433 

U.S. at 54. Since per se rules of illegality are reserved for “manifestly 

anticompetitive” practices, see id. at 49-50, it is inappropriate, absent clear 

statutory direction, to apply them to selective distribution policies, which may 

benefit competition by allowing manufacturers to determine how they can best 

distribute and sell their products. 

Thus, courts unanimously hold that Section 2(e)—and its sister provision, 

Section 2(d)—do not prevent a manufacturer from selling certain product lines to 

only a subset of its customers, or from providing those customers with a more 

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desirable product mix than other customers. See Holleb & Co. v. Produce Terminal 

Cold Storage Co., 532 F.2d 29, 33 (7th Cir. 1976) (supplier’s sale of “additional 

products ... to some of its customers ... as opposed to advertising or promotional 

services, is not actionable” under the Robinson-Patman Act); David R. McGeorge 

Car Co. v. Leyland Motor Sales, Inc., 504 F.2d 52, 55 (4th Cir. 1974) (discrimination 

in “the commodity itself, as opposed to a service or facility connected with the resale 

of the commodity ... places this case beyond the pale of Robinson-Patman”).9

Because Section 2(e) does not bar discrimination in the sale of products, a 

plaintiff alleging a violation of that provision must show discrimination in an 

advertising or other promotional service distinct from the product itself. For 

example, “the supplier must become active in the resale of the product, by ... 

providing display materials or free advertising.” L & L Oil, 674 F.2d at 1119 

(citations omitted); see also Hinkleman, 962 F.2d at 380 (Section 2(e) only covers 

services that “actively promote” resale). 

If a charge of discrimination does not involve advertising or similar services 

promoting resale, a plaintiff must bring its claim under Section 2(a) and not Section 

2(e). The drafters of the Robinson-Patman Act made clear that “the bill should be 

inapplicable to the terms of sale except as they amount in effect to indirect 

 

9 See also Purdy Mobile Homes, 594 F.2d at 1318 (“refusal to sell a line of products 

to a prospective customer while maintaining sales of the product to other customers 

is ... not the type of discrimination prohibited by the Robinson-Patman Act”); Cecil 

Corley Motor Co. v. General Motors Corp., 380 F. Supp. 819, 848 (M.D. Tenn. 1974) 

(the Act does not cover a “claim that a manufacturer has discriminated in the 

allocation of available supplies of its product”). 

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discriminations in price” under Section 2(a). H.R. Rep. No. 74-2951, at 5 (1936). As 

the Fourth Circuit explained in Hinkleman, “nonpromotional forms of direct or 

indirect discrimination should be judged under the more flexible standards of 

section 2(a) so that the courts can protect procompetitive behavior from 

prosecution.” 962 F.2d at 380-81. This Court has similarly rejected attempts “to 

include within the provisions of §§ 2(d) and (e) such activity or conduct, clearly 

covered by § 2(a).” Chicago Spring Prods. Co. v. U.S. Steel Corp., 371 F.2d 428, 429 

(7th Cir. 1966); see also Kirby, 489 F.2d at 910 (rejecting “the theory that §§ 2(d) 

and 2(e) proscribe acts which are themselves prohibited by § 2(a)”); Gibson, 95 

F.T.C. at 726 (“courts have not hesitated to reject claims under Sections 2(d) and 

2(e) which more properly should be brought under Section 2(a)”). 

Under Section 2(a), once a retailer shows that it had to pay a higher 

wholesale price for a product, it does not necessarily prevail; instead, liability arises 

only if the practice caused competitive harm and the defendant does not establish 

that the price differential is justified by differences in certain costs incurred in 

serving different customers. See, e.g., Hanson v. Pittsburgh Plate Glass Indus., Inc., 

482 F.2d 220, 224-25 (5th Cir. 1973) (denying Section 2(a) claim where differential 

price reflected cost differences). Except in the narrow promotional circumstances to 

which Section 2(e) applies, invocation of that provision’s categorical ban would 

improperly circumvent these economically sound limiting principles, which 

Congress included in Section 2(a) precisely to keep the Robinson-Patman Act from 

harming consumers rather than helping them. 

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II. THE FTC’S 1940 LUXOR DECISION IS AT ODDS WITH THE MODERN 

UNDERSTANDING OF SECTION 2(e) AND SUBSEQUENT FTC GUIDANCE

Woodman’s alleges that Clorox’s exclusive sale of large packages to “club” 

retailers violates Section 2(e) because (1) Woodman’s customers “prefer to purchase 

large packs,” and (2) Woodman’s is now forced to pay a higher wholesale unit cost 

for smaller packs. A.14-17 (¶¶ 53, 59-60, 66-67). Woodman’s does not claim that 

the large packs convey an advertising message or identify how large packs, in and of 

themselves, provide a promotional service, much less that they primarily provide a 

promotional service. The district court nevertheless denied Clorox’s motion to 

dismiss the Section 2(e) claim, concluding that consumer preference for large 

package size is “connected to the resale of those products.” S.A.8. To reach that 

conclusion, the district court relied on two FTC administrative decisions: Luxor, 

Ltd., 31 F.T.C. 658 (1940), and General Foods Corp., 52 F.T.C. 798 (1956). But 

those dated decisions should not be followed because they are inconsistent with 

antitrust jurisprudence as it has developed in the last 60 years. 

The 75-year-old Luxor decision ruled that a manufacturer violated Section 

2(e) by selling its cosmetics in “junior”-sized packages to novelty and variety stores 

but not to competing drug stores. 31 F.T.C. at 663. The Commission found that the 

small packages were a “service or facility” protected by Section 2(e) because the 

package size stimulated “public demand” for resale. Id. Certain consumers 

preferred the smaller packages because they were more “convenient to carry,” 

“reduce[d] the element of waste,” and “add[ed] to the retention of fragrance and 

freshness.” Id. The packages thus “promote[d] convenience in display and sale of 

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respondent’s products.” Id. at 664. The Commission ordered Luxor not to “furnish[] 

any ... commodity packaged in containers of a certain size and style unless all 

purchasers competing in the resale of such commodity are accorded the facility of 

packaging in containers of like size and style, on proportionally equal terms.” Id. at 

665. 

The Commission reaffirmed Luxor without explanation in the 60-year-old 

General Foods case, ruling that a manufacturer violated Section 2(e) by failing to 

sell coffee in “institution”-size packaging on equal terms to competing wholesalers, 

who were able to buy only smaller, “grocery”-size coffee packages. 52 F.T.C. at 826. 

Citing Luxor, the Commission rejected the manufacturer’s argument that “varied 

packaging is not included within ... [Section 2(e)].” Id. 

The FTC is unaware of any cases concerning differential package size in the 

nearly 60 years since General Foods. Indeed, despite Luxor and General Foods, 

differential package sizes sold to varying retailers are now commonplace. The FTC 

does not consider Luxor and General Foods good law. 

A. Post-Luxor Decisions Have Confined Section 2(e)’s Scope To 

Discrimination In Advertising And Similar Promotional 

Services 

The Commission decided Luxor during the infancy of the Robinson-Patman 

Act, before the courts made clear that Section 2(e) applies only to discrimination in 

promotional services. See, e.g., Kirby, 489 F.2d at 909; Skinner v. U.S. Steel Corp., 

233 F.2d 762, 765-66 (5th Cir. 1956); Cecil Corley Motor Co. v. General Motors Corp., 

380 F. Supp. 819, 851 (M.D. Tenn. 1974). By 1980 at the latest, the Commission 

had embraced these holdings and concluded that Section 2(e) has a “narrow 

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scope.”10 Gibson, 95 F.T.C. at 725-26; see also General Motors Corp., 103 F.T.C. 641, 

696 (1984). Luxor recognized no such limiting principles. It instead effectively 

mandated that manufacturers treat retailers equally in all respects that could 

result in “the loss of a sale” or “the loss of a ... customer.” See 31 F.T.C. at 664. 

Luxor also did not consider the legislative history of Section 2(e), which reveals that 

Congress’s purpose was to prohibit “special [promotional] allowances” that enable a 

favored retailer “to shift to his vendor substantial portions of his own advertising 

cost, while his smaller competitor, unable to command such allowances, cannot do 

so.” Fred Meyer, 390 U.S. at 351 (quoting S. Rep. No. 74-1502, at 7 (1936)). 

True to this history, almost all cases finding a valid Section 2(d) or 2(e) claim 

since Luxor have involved (1) subsidized advertising or other promotional services, 

which (2) relieved the buyer of costs it otherwise would have incurred, and thus (3) 

amounted to indirect price discrimination.11 Consider the following examples: 

 Fred Meyer, 390 U.S. at 345-46: Suppliers paid for their products to 

appear in coupon books distributed by a grocery chain. 

 Simplicity, 360 U.S. at 60: A dress pattern manufacturer provided certain 

buyers with free display cabinets and catalogues. 

 

10 Clorox is wrong, however, to assert (at 16, 41-42), that the Commission 

“abandoned” Luxor and General Foods in Universal-Rundle Corp., 65 F.T.C. 924, 

954-55 (1964). That decision addressed the Robinson-Patman Act’s “like grade and 

quality” requirement, see infra note 13, and did not consider whether package sizes 

are a promotional service. 

11 But see supra note 6 (discussing Centex-Winston, 447 F.2d at 588); see also L & L 

Oil, 674 F.2d at 1119 (“Except for Centex-Winston and the cases adopting its holding 

[that Section 2(e) covers product delivery], the only arrangements courts have found 

to be services or facilities are those relating to promotional favors.”). 

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 Corn Products Ref. Co. v. FTC, 324 U.S. 726, 743-44 (1945): A dextrose 

seller paid to advertise a buyer’s candy as “rich in dextrose.” 

 P. Lorillard Co. v. FTC, 267 F.2d 439, 445 (3d Cir. 1959): Sellers 

purchased TV broadcast time for their grocery chain store customers. 

 Elizabeth Arden Sales Corp. v. Gus Blass Co., 150 F.2d 988, 994 (8th Cir. 

1945): A seller paid for sales clerks to promote its perfumes in a buyer’s 

department stores. 

 A supplier’s sale of packages in multiple sizes does not resemble these 

examples of promotional services. Except in the special cases discussed below, the 

size of a package conveys no advertising or other promotional message. Nor does 

the size of the product relieve the buyer of promotional costs it otherwise would 

have incurred, thereby masking indirect price discrimination. Luxor and General 

Foods thus cannot be squared with the modern understanding of Section 2(e). 

B. Luxor Would Unreasonably Deter Procompetitive Distribution 

Practices 

Luxor’s conclusion that a seller must provide all of its products in packages of 

the same size and style to all competing buyers on proportionally equal terms also 

ignores antitrust’s modern focus on sound economic policy. Luxor predated (and 

General Foods ignored) the Supreme Court’s 1953 admonition that an overbroad 

reading of the Robinson-Patman Act could “help give rise to a price uniformity and 

rigidity in open conflict with the purposes of other antitrust legislation.” Automatic 

Canteen, 346 U.S. at 63. Courts now interpret the Act in a manner consistent with 

“the broader antitrust policies that have been laid down by Congress.” Id. at 74; see 

also Volvo, 564 U.S. at 181. Luxor contradicts these principles by requiring—as a 

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per se rule—that manufacturers distribute their products uniformly to all buyers, 

whether or not doing so is efficient or good for consumers. 

Luxor’s failure to consider economic consequences is especially troublesome 

because its logic goes far beyond package size alone. Luxor rests on two premises: 

(1) there is “public demand” for different-sized packages, and (2) the inability of a 

retailer to sell each size may result in lost sales and lost customers. 31 F.T.C. at 

663-64. But innumerable attributes of a product and its packaging might 

conceivably attract “public demand.” Carried to its logical conclusion, that 

reasoning would thwart efficient manufacturer-retailer relationships in countless 

settings throughout the economy. Manufacturers would be required to sell all

popular types, styles, and sizes of a given product to every buyer for resale on 

proportionally equal terms—without any showing of harm to competition. That 

result would contradict the established antitrust principle that, absent monopoly, a 

seller may choose the parties with which it will deal. Colgate, 250 U.S. at 307.12 

Luxor’s reasoning also would deter conduct that benefits competition and 

consumers. Since Section 2(e) applies per se, Luxor would require manufacturers to 

uniformly make available their package sizes (and potentially other product 

attributes) to all retailers, thereby impeding product and package innovation, 

 

12 More than fifty years ago, a leading commentator called the Luxor and General 

Foods rulings “aberrational” and “esoteric,” and observed that the premise of these 

cases has been “repudiated” by appellate decisions holding that the RobinsonPatman Act does not impose a duty to sell specific products. Frederick M. Rowe, 

Price Discrimination under the Robinson-Patman Act 381-82 (1962) (citing Chicago 

Seating Co. v. S. Karpen & Bros, 177 F.2d 863, 866 (7th Cir. 1948)). 

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channel differentiation, and other forms of interbrand competition that may 

enhance consumer welfare. As discussed, antitrust serves consumer interests by 

giving manufacturers wide latitude in deciding how to allocate their products 

among potential dealers. See Areeda & Hovenkamp ¶ 1441c; GTE Sylvania, 433 

U.S. at 54. “Robinson-Patman does not bar a manufacturer from restructuring its 

distribution networks to improve the efficiency of its operations.” Volvo, 546 U.S. at 

181 n.4. Because Luxor elevates intrabrand competition above interbrand 

competition—and individual competitors above the competitive process—it does not 

reflect an antitrust-grounded interpretation of the Robinson-Patman Act. See id. at 

181. 

Thus, Section 2(e) should be read not as Luxor read it, but instead to require 

a plaintiff to demonstrate that a seller provided a promotional service distinct from 

the product itself. On that reading, Woodman’s cannot state a plausible claim 

under Section 2(e) on the theory that it was deprived of products that customers 

desire. See A.15-17 (¶¶ 59, 66-67). 

Nor does Section 2(e) provide a basis for Woodman’s grievance that “because 

the unit price on these large pack items is significantly lower than ... for small 

packs ... Sam’s Club and Costco are generally able to buy and ultimately sell these 

large pack items at significantly lower unit costs.” A.15 (¶ 53). That is a claim of 

overt price discrimination covered by Section 2(a), which requires evidence of 

competitive injury. Section 2(a) is the exclusive remedy when, as here, a buyer 

alleges that discrimination in the “original sale” of products has increased the 

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buyer’s “cost of doing business.” O’Connell v. Citrus Bowl, Inc., 99 F.R.D. 117, 121 

(E.D.N.Y. 1983); see also FTC v. Borden Co., 383 U.S. 637, 639-47 (1966) (Section 

2(a) provides a remedy against a manufacturer that engages in price discrimination 

when selling milk of “like grade and quality” to different retailers under different 

packaging); Chicago Spring, 371 F.2d at 429 (Section 2(e) does not apply to claims 

“clearly covered” by Section 2(a)).13 

In sum, Woodman’s does not allege the type of hidden, promotional 

discrimination that Section 2(e) was meant to combat. See Simplicity, 360 U.S. at 

68 & n.12 (Sections 2(d) and 2(e) induce sellers “to confine their discriminatory 

practices to price differentials, where they could be more readily detected”). 

III. SECTION 2(e) PROHIBITS DISCRIMINATION IN PACKAGE SIZES ONLY WHEN 

THE SIZE PRIMARILY SERVES A PROMOTIONAL FUNCTION 

The FTC’s Fred Meyer Guides state that Section 2(e) covers only services or 

facilities that are “used primarily to promote resale of the seller’s product by the 

customer.” 16 C.F.R. § 240.7. The Guides list several examples of promotional 

 

13 We disagree with Clorox’s assertion (at 3, 26) that a buyer can never bring a 

Section 2(a) claim based on a manufacturer’s sale of an identical substance in 

different-sized packages. Section 2(a) applies to price discrimination in the sale of 

products of “like grade and quality.” 15 U.S.C. § 13(a). Borden held that identical 

products sold in different packages are of like grade and quality. See 383 U.S. at 

639-41. Clorox is correct that when products have different physical properties, 

courts evaluate “consumer use, preference, or marketability” in deciding whether 

the products are of like grade and quality. See Clorox Br. 34, quoting Checker 

Motors Corp. v. Chrysler Corp., 283 F. Supp. 876, 889 (S.D.N.Y. 1968). But when 

different packages contain an identical substance, Borden controls. See also DeLong 

Equip. Co v. Washington Mills Abrasive Co., 887 F.2d 1499, 1517 (11th Cir. 1989) 

(products labeled as “special” and “stock” were of like grade and quality because 

they were “physically identical,” despite consumer preference for the “special” 

product). 

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services, including, as the district court noted, “[s]pecial packaging, or package 

sizes.” S.A.7, quoting 16 C.F.R. § 240.7 (emphasis added). The district court, 

reading the Guides in light of Luxor, concluded that the term “special packaging, or 

package sizes” means that Section 2(e) applies even to “specially-sized products that 

[are] offered on a year-round basis.” Id. at 8. 

In issuing the 2014 version of the Guides, however, the Commission 

“underscore[d] that special packaging or package sizes are covered only insofar as 

they primarily promote a product’s resale.” Guides for Advertising Allowances and 

Other Merchandising Payments and Services, 79 Fed. Reg. 58,245, 58,249 (Sept. 29, 

2014). In other words, the special packaging or package size must convey a 

promotional message to consumers, rather than merely satisfy market demand for 

lower unit prices or desirable product attributes like larger quantities. 

The Guides do not adopt Luxor or General Foods and never have. In fact, in 

1988, when the Commission considered deleting “special packaging, or package 

sizes” from the Guides’ list of examples of promotional services, it noted the 

questionable validity of Luxor and General Foods in light of more recent decisions 

interpreting Sections 2(d) and 2(e) “more strictly.” Guides for Advertising 

Allowances and Other Merchandising Payments and Services, 53 Fed. Reg. 43,233, 

43,235 (Oct. 26, 1988) (citing, e.g., Kirby, 489 F.2d at 910; Gibson, 95 F.T.C. at 724-

30). Although the Commission ultimately decided to retain “special packaging, or 

package sizes” among its list of examples in the 1990 version of the Guides, it 

characterized this as a “close” decision, and ultimately kept the example to address 

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the scenario in which “special packaging” has “appeal to [resale] customers.” 

Guides for Advertising Allowances and Other Merchandising Payments and 

Services, 55 Fed. Reg. 33,651, 33,654 (Aug. 17, 1990) (emphasis added). That 

scenario is markedly different from that addressed in Luxor and General Foods, 

which required sellers to provide their entire range of package sizes for a given 

product to customers in all circumstances, regardless of whether the size serves a 

promotional function. 

In updating the Guides in 2014, the Commission rejected a proposal from the 

ABA’s Antitrust Section to delete “special packaging, or package sizes” from the list 

of examples of promotional services. 79 Fed. Reg. at 58,248. In so doing, the 

Commission maintained the view that providing a special package or package size 

for a product may amount to a promotional service under Section 2(e). The 

Commission illustrated this scenario with the example, “[d]uring the Halloween 

season, [of] a seller of multi-packs of individually wrapped candy bars offer[ing] to 

provide those multi-packs to retailers in Halloween-themed packaging.” 16 C.F.R. § 

240.7. The primary purpose of adding a Halloween theme to the packaging is “to 

promote customers’ resale of the candy bars,” based on the premise that such a 

theme would appeal to consumers during the Halloween season. Id.14 

 

14 Clorox is mistaken in suggesting (at 4, 14, 19, 29, 33, 40, 42) that special 

packaging and package sizes can never be a promotional service because the 

packaging is always part of the product. Like Section 2(a), Section 2(e) applies to 

discrimination in promotional services when selling products of like grade and 

quality. See Atalanta Trading Corp. v. FTC, 258 F.2d 365, 371 (2d Cir. 1958). As 

discussed, products with different packages containing an identical substance are of 

like grade and quality. See supra note 13. When a seller offers the same substance 

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The Guides also provided a contrasting scenario in which a customer asks a 

seller to package its liquid laundry detergent in special packaging having a square 

footprint instead of a circular footprint. Id. Because the primary purpose of the 

packaging is to assist that customer in warehousing and shipping the product—and 

not in promoting its resale to consumers—the packaging is not a promotional 

service covered by Section 2(e). Id. 

As these scenarios make clear, whether a package-related practice actually 

falls within the ambit of Section 2(e) very much depends on the facts and 

circumstances of each case. For this reason, the Commission, like the courts, has 

not attempted to provide a comprehensive definition of a promotional service or 

facility. See 16 C.F.R. § 240.7 (“The terms ‘services’ and ‘facilities’ have not been 

exactly defined by the statute or in decisions.”); L & L Oil, 674 F.2d at 1117. 

Rather, the FTC “will look realistically at transactions as a whole before deciding to 

apply Sections 2(d) and 2(e).” Gibson, 95 F.T.C. at 729. 

Thus, a package size could be primarily promotional if the manufacturer 

specifically develops it to convey a promotional message, rather than merely to meet 

market demand for, say, larger quantities or lower unit prices. For example, a 

manufacturer might offer a promotional service by providing retailers with “sample 

size” versions of its product to give away to customers for free. See Diaperwite, Inc., 

 

in special and standard packages, the court must ask whether the special package 

is offered primarily to convey a promotional message (in which case Section 2(e) 

applies) or instead to meet market demand for desirable product attributes or a 

lower price. 

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61 F.T.C. 504, 508 (1962). In that scenario, the manufacturer’s primary purpose is 

to advertise the product, and by doing so, it has relieved retailers of promotional 

expenses they would have incurred by opening up standard-sized packages and 

dividing their contents to give away as samples. 

Likewise, a manufacturer might offer a promotional service by supplying 

retailers with chocolates in large, football-shaped packages featuring the 

statements “Super Bowl Size” and “Official Chocolate of the National Football 

League.” The promotional nature of the packaging would be even more apparent if 

the manufacturer supplemented the special packages with in-store display 

materials or advertisements in other media promoting the chocolates in these 

special sizes and shapes. 

By contrast, the products at issue here—such as large bags of kitty litter, 

120-ounce containers of bleach, and big bottles of salad dressing—are not, without 

more, promotional services under Section 2(e). Indeed, Woodman’s does not even 

contend that the large-sized packages convey a promotional message: as noted, its 

grievances concern unit pricing and its inability to obtain desirable products. In the 

absence of any allegation that Clorox is offering the large packs primarily to convey 

a promotional message, Woodman’s cannot state a plausible claim under Section 

2(e), and the district court should have granted Clorox’s motion to dismiss. 

CONCLUSION 

The district court’s February 2, 2015 Order denying Clorox’s motion to 

dismiss Woodman’s Section 2(e) claims should be reversed. 

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Respectfully submitted, 

DEBORAH L. FEINSTEIN

Director

 

MICHAEL BLOOM 

Assistant Director 

JAMES F. MONGOVEN

Deputy Assistant Director 

JULIE GOSHORN

CHRISTOPHER M. GRENGS

Attorneys 

Bureau of Competition 

November 2, 2015 

JONATHAN E. NUECHTERLEIN

General Counsel 

JOEL MARCUS

Director of Litigation 

/s/ Bradley Grossman

BRADLEY GROSSMAN

Attorney

Office of the General Counsel 

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue NW 

Washington, DC 20580 

(202) 326-2994 (telephone) 

(202) 326-2477 (facsimile) 

bgrossman@ftc.gov 

Case: 15-3001 Document: 14 Filed: 11/02/2015 Pages: 34
 

CERTIFICATE OF COMPLIANCE 

This brief complies with Federal Rules of Appellate Procedure 29(d) and 

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This brief complies with the typeface requirements of Federal Rule of 

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because it has been prepared in a proportionally spaced typeface using Microsoft 

Word 2010 in 12-point New Century Schoolbook. 

Dated: November 2, 2015 /s/ Bradley Grossman 

Bradley Grossman 

Attorney 

Office of the General Counsel 

Federal Trade Commission 

600 Pennsylvania Avenue NW 

Washington, DC 20580 

(202) 326-2994 (telephone) 

(202) 326-2477 (facsimile) 

bgrossman@ftc.gov 

 

Case: 15-3001 Document: 14 Filed: 11/02/2015 Pages: 34
 

CERTIFICATE OF SERVICE 

I hereby certify that November 2, 2015, I filed and served the foregoing with 

the Court’s appellate CM/ECF system. I certify that the following counsel of record 

are registered as ECF filers and that they will be served by the CM/ECF system: 

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Kraig A. Byron 

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von Briesen & Roper, s.c. 

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Madison, WI 53703 

Counsel for Plaintiff-Appellee

Thomas G. Hungar 

thungar@gibsondunn.com 

Joshua H. Soven 

jsoven@gibsondunn.com 

Michael R. Huston 

mhuston@gibsondunn.com 

Justin Epner 

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Gibson Dunn & Crutcher LLP 

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Counsel for Defendants-Appellants

 I certify that all participants in the case are registered CM/ECF users and 

that service will be accomplished by the CM/ECF system. 

Dated: November 2, 2015 /s/ Bradley Grossman 

Bradley Grossman 

Attorney 

Office of the General Counsel 

Federal Trade Commission 

600 Pennsylvania Avenue NW 

Washington, DC 20580 

(202) 326-2994 (telephone) 

(202) 326-2477 (facsimile) 

bgrossman@ftc.gov 

Case: 15-3001 Document: 14 Filed: 11/02/2015 Pages: 34