Opinion ID: 1386621
Heading Depth: 1
Heading Rank: 2

Heading: The Price Discrimination Claim.

Text: In its second cause of action plaintiff claimed treble damages under ORS 646.140 for lost profits due to unlawful price concessions obtained by Allstate from competing body shops. This claim depends on proof of the relevant elements defined by the Antiprice Discrimination Law, ORS 646.010  646.180. [19] The prohibitions of this law are mostly addressed to the purveyor of goods or services who grants the forbidden concession. The obligation of the recipient is stated in ORS 646.090, which reads: No person engaged in commerce or food commerce, or both, in the course of such commerce, shall knowingly induce or receive a discrimination in price which is prohibited by ORS 646.040 to 646.080. Thus the injured plaintiff in an action under ORS 646.140 or 646.150 must show (1) that the defendant was engaged in trade or commerce within this state, ORS 646.020, (2) that the defendant induced or received a discrimination in price, (3) that this occurred in the course of such commerce, (4) that the price discrimination was one prohibited by ORS 646.040 to 646.080, (5) that the defendant induced or received the forbidden price concession knowingly. Plaintiff must also show that he sustained damages from defendant's actual or threatened violation of the statute, but damages equal to the amount of the unlawful discrimination are conclusively presumed. ORS 646.160. The fourth of these elements of a case against the recipient of a discriminatory concession requires proof that the concession was a violation of the statute by his seller or purveyor. In this case, the section which plaintiff apparently claims to have been violated is ORS 646.040. [20] Proof of a violation of ORS 646.040 in the present context, in turn, requires (1) that the seller or purveyor was engaged in commerce, (2) that he directly or indirectly discriminated in price between different purchasers of commodities, or services or output of a service trade, of like grade and quality, (3) that this occurred in the course of such commerce, as above, (4) that the effect of such discrimination may be substantially (a) to lessen competition in any line of commerce, or (b) to tend to create a monopoly in any line of commerce, or (c) to injure, destroy or prevent competition (i) with either party to the discriminatory concession or (ii) with customers of either of them. [21] Moreover, subsection (2) of ORS 646.040 excludes certain practices, especially cost-based price differentials based on quantity, which however are not involved here. [22] Under the Federal Robinson-Patman Act the allocation of the burden to prove these elements of violation and defense in a case against the recipient of concessions has been complex and controversial. See Automatic Canteen Co. of America v. FTC, 346 U.S. 61, 73 S.Ct. 1017, 97 L.Ed. 1454 (1953), Kintner, A Robinson-Patman Primer 254-262 (1970), Shniderman, Price Discrimination in Perspective 139-147 (1977). It is easier for the Federal Trade Commission to assume a large share of that burden under the federal law than it is for injured plaintiffs under the state law, who are likely to be smaller enterprises than a defendant who can obtain a price concession. ORS 646.050 provides that once the discrimination itself is shown, the burden of rebutting the prima facie case thus made by showing justification is upon the person charged with the violation. [23] While this section applies most directly to cases against the discriminating seller, no reason is immediately apparent why the same allocation should not apply when the seller's violation of the statute is an element in a case against a recipient of the price concession. In the present case, plaintiff contended that the following constituted unlawful price discriminations obtained by Allstate from plaintiff's competitors. First, there was evidence from which the jury could find that Allstate asked Top Service to give it a discount on the hourly rate for labor on repairs for which Allstate had to pay, which Top Service declined to do, and that Allstate did receive a five percent discount from Gold Coast Body Shop. Second, Allstate's estimates of repair costs used a schedule of painting costs developed by Allstate itself, which was substantially lower than the manuals otherwise used by body shops to estimate these painting costs. In negotiating the total price of a repair job with body shops, Allstate requested and received acceptance of its paint schedule from competing shops, though not from Top Service, and the jury could infer that other customers of the competing shops were charged for painting at a higher rate. Third, there was evidence from which the jury could find that competing shops, in order to get Allstate's business, sometimes omitted repairs to the vehicles of Allstate's insurance claimants which Allstate's adjusters did not wish included in the claim for which it was obligated. This third charge, however, is not a discrimination in price for services of like grade and quality under ORS 646.040. Its essence is that other body shops were willing to make repairs of lower grade or quality for Allstate than for other insurance companies, not that they charged less for the repairs that they did make. With respect to the first two charges, defendant argues generally that the concept of price discrimination, which was designed to deal with differences in the prices charged to different contemporaneous buyers of identical merchandise, does not fit the situation of individually negotiated transactions involving case-by-case estimates and judgments. No doubt proof of discrimination in such situations is more difficult, but since the Oregon statute extends beyond goods or commodities to services or output of a service trade, individual service transactions cannot be excluded altogether. Doubtful as it might be to infer discrimination in such transactions merely from evidence of price differences in comparable sales, when there is direct evidence of a price concession or advantage to one buyer that is identified as such, a prima facie case of discrimination has been made out. Defendant contends that there was nothing to show that the 5 percent discount noted on estimates of Allstate jobs by Gold Coast Body Shop was a discount from a standard price, but the jury could infer that the words meant a discount from the price that Gold Coast would have charged another customer for the same work. As the court noted in W.J. Seufert Land Co. v. National Restaurant Supply Co., 266 Or. 92, 111, 511 P.2d 363 (1973), the purpose of the act is to protect the public from any scheme of special concessions or rebates, any collateral contracts or agreements or any device of any nature whereby discrimination is, in substance or fact, effected, quoting ORS 646.010. Similarly, the substitution of Allstate's schedule to estimate the cost of painting for the schedules in other manuals is plainly a matter for negotiation; but when a jury could infer that Top Service's competitors allowed Allstate a lower rate for painting than they charged their other customers, a prima facie case of discrimination is shown. Of course, it is only a prima facie showing of one of the elements under ORS 646.040. The justification of meeting competition urged by defendant is a matter of defense under ORS 646.050, which the jury could resolve against defendant. [24] Assuming that the first three requirements of ORS 646.040 listed above have been met, plaintiff's case requires evidence that the price concessions Allstate received from Top Service's competitors substantially threatened to have one of the anticompetitive effects stated in that section. This issue was submitted to the jury under instructions which focused almost entirely on competition among body repair shops. These instructions stated repeatedly that there must be an injury to competition, once that there must be a reasonable probability of an effect on competition, and once a reasonable possibility of an effect on competition. [25] The trial court allowed judgment notwithstanding the verdict for plaintiff on this cause of action in part for lack of proof of injury to the health and vigor of the competitive process as required by law. Reading this to mean proof of actual injury, plaintiff points out that potential as well as present substantial lessening of competition satisfies the statute. That is, of course, correct. See Redmond Ready-Mix, Inc. v. Coats, 283 Or. 101, 582 P.2d 1340 (July 25, 1978). Moreover, plaintiff is not precluded from arguing such a potential anticompetitive effect merely because plaintiff itself remains a successful or even dominant competitor. See Utah Pie Co. v. Continental Baking Co., 386 U.S. 685, 87 S.Ct. 1326, 18 L.Ed.2d 406 (1967). However, plaintiff does not point to any evidence of actual or potential lessening of competition or incipient monopolization in the relevant market, either among body repair shops or among automobile insurance companies. Plaintiff's brief merely states that the jury was entitled to infer that such discrimination would result in the injury to competition both among insurance companies and among body shops. It does not cite any evidence in the transcript from which the jury might draw such an inference. The economic effects of Allstate's negotiations for reduced rates for repairs or painting on competition among repair shops or insurance companies are not self-evident nor a matter within the common sense of jurors. Plaintiff does not claim that Allstate bargained for exclusive reductions, not available to other customers of the body shops, or that Allstate would not let other shops than its preferred competitive shops meet the estimates its adjusters calculated and thus compete to repair the cars of Allstate's insurance claimants. If there were actual or potential anticompetitive effects of the discounts and paint schedules  the actions which we have said could be found to be discriminatory  they are not shown in this record. [26] The trial court accordingly did not err in allowing the motion for judgment n.o.v. on this ground. Since the judgment n.o.v. for defendant was correctly granted, we do not reach the additional, and difficult, question what elements of the underlying violation of ORS 646.040 a defendant must have known in order to be liable for knowingly inducing or receiving an unlawful price discrimination under ORS 646.090. Cf. ORS 646.050, discussed above. The judgment is affirmed.