Court Opinion

ID: 9477153
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:15:42.253144+00
Date Added: 2024-06-11T17:45:43.611055
License: Public Domain

MIKVA, Circuit Judge,
dissenting:
The majority today tells the Federal Trade Commission (“FTC”) that manufacturers who charge different prices to competing retailers cannot be held to have violated price discrimination law — unless the FTC somehow overcomes evidence that competition persists in the affected business sector. Apparently, the majority imposes this new evidentiary burden to avoid a result it finds economically unappealing. Even if the majority is right in its economic *1153appraisal, however, the choice is not ours to make. Though born of good intentions, today’s decision disregards the policies that Congress purposefully created more than fifty years ago.
There can be no doubt that Congress’ chief aim in enacting Robinson-Patman was to combat discrimination that favored big retailers — to counter “the impact upon secondary-line competition of the burgeoning of mammoth purchasers, notably chain stores.” FTC v. Anheuser-Busch, Inc., 363 U.S. 536, 544, 80 S.Ct. 1267, 1271, 4 L.Ed.2d 1385 (1960) (footnote omitted). Congress thus sought to ensure the survival of small retailers by requiring that they be placed on an equal footing with larger competitors.
Congress had a second objective in enacting Robinson-Patman. As I demonstrate below on the basis of its legislative history, Robinson-Patman was passed by a Congress that believed price discrimination favoring large buyers ultimately harmed competition itself. Congress was convinced that, by protecting small businesses, it was also protecting the operation of a competitive economy.
Two factors thus set Robinson-Patman apart from the rest of antitrust law. First, the fate of small retailers remained the Act’s primary concern. Secondly, Congress determined that the proscribed activity — price discrimination between competing buyers (so-called “secondary-line” injury)— tended by its very nature to injure competition. Unlike many Sherman and Clayton Act cases, then, price discrimination suits would not require every court to reestablish the likelihood of market injury. Under Robinson-Patman, Congress had already identified and condemned the harmful consequences of this discrimination.
Today’s decision disregards these crucial facts about Robinson-Patman law. It ignores, first, how much this case resembles the paradigm of Robinson-Patman discrimination. A giant, favored buyer here competes with smaller disfavored retailers. Secondly, the majority injects Sherman and Clayton Act doctrine into the distinct jurisprudence of Robinson-Patman’s secondary-line cases. The majority in effect holds that, where a party can demonstrate continuing competition in a business sector— the sort of showing that might shield a conventional antitrust defendant from liability for restraint of trade — that party avoids liability for price discrimination, too. This novel proposition contradicts numerous judicial precedents concerning the evidence required to show secondary-line injury. It also threatens to frustrate FTC enforcement of Robinson-Patman. Because “[t]he determination whether to alter the scope of [Robinson-Patman] must be made by Congress, not this Court,” Falls City Industries v. Vanco Beverage, Inc., 460 U.S. 428, 436, 103 S.Ct. 1282, 1289, 75 L.Ed.2d 174 (1983), I dissent.
1. Evidentiary Showing Required
Evidence concerning the competitive structure of a business sector is precisely the sort that the Supreme Court has said need not be presented by complaint counsel in § 2(a) cases and need not be considered before a court finds unlawful price discrimination. In FTC v. Morton Salt Co., 334 U.S. 37, 68 S.Ct. 822, 92 L.Ed. 1196 (1948), the Supreme Court explained the advisability of dispensing with such evidence. “It would greatly handicap effective enforcement of the Act,” the Court held, “to require testimony to show that which we believe to be self-evident, namely, that there is a ‘reasonable possibility’ that competition may be adversely affected by a practice under which manufacturers and producers sell their goods to some customers substantially cheaper than they sell like goods to the competitors of these customers.” Id. at 50, 68 S.Ct. at 830. Of course, not every disparity in the prices charged to competing retailers justifies the inference of an “adverse effect” on competition. But, “where the record indicates a price differential substantial enough to cut into the purchaser’s profit margin ... [or one] that, if reflected in a resale price cut, would have a noticeable effect on the decisions of customers in the retail market, an inference of injury may properly be indulged.” Foremost Dairies, Inc. v. FTC, 348 F.2d 674, 680 (5th Cir.) (footnote omit*1154ted), cert. denied, 382 U.S. 959, 86 S.Ct. 435, 15 L.Ed.2d 362 (1965).
Once the inference of injury is justified, the burden logically shifts to the defendant to rebut the presumption. The Supreme Court made this evidentiary consequence explicit when it recently reaffirmed the “inference of injury” doctrine in Falls City Industries v. Vanco Beverage, Inc., 460 U.S. 428, 103 S.Ct. 1282, 75 L.Ed.2d 174 (1983). The effect of invoking the inference, the Court said, is that the Robinson-Patman defendant can then present a specific type of rebuttal evidence. “In the absence of direct evidence of displaced sales, this inference may be overcome by evidence breaking the causal connection between a price differential and lost sales or profits.” Id. at 435.
The Falls City Court cited a Fifth Circuit decision as an illustration of the type of evidence that could refute a “causal connection.” Id. In Chrysler Credit Corp. v. J. Truett Payne Co., 670 F.2d 575 (5th Cir.), cert. denied, 459 U.S. 908, 103 S.Ct. 212, 74 L.Ed.2d 169 (1982), the court rejected a car dealer’s claim that a manufacturer’s bonus program constituted price discrimination. Ultimately, the court found the price differential too small to warrant an inference of injury. But, the court also noted that plaintiff’s franchise (unlike its competitors’) was not located in an expanding sector of the city, that plaintiff had been unable to obtain financing for its used cars, and that plaintiff had shifted its sales focus from new car purchasers to fleet purchasers. Id. at 581. These factors supplied independent reasons for plaintiff’s poorer performance among car dealers and thus could have broken a “causal connection” between the price differential and any decline in relative profits or market share.
As these precedents demonstrate, data concerning the level of competition in a given business sector usually does not fall within the range of rebuttal evidence. Thus, the majority today instructs the FTC to consider evidence that Falls City and Morton Salt say it is not obliged to assess. The majority rebukes the FTC for having “waved aside” evidence that “competition among dealers generally was healthy,” maj. op. at 1143, and specifically directs the FTC to consider (1) the relative profit margins of retailers, wholesalers, and dual distributors, maj. op. at 1144-45, (2) the “longstanding nature” of discounts given to Boise, “[i]n light of the flourishing condition of the industry generally and the selected dealers specifically,” id. at 1146, (3) the absence of a “cabal between Boise and the six manufacturers,” id. at 1147, and (4) the fact that the discriminating sellers “have followed neutral, objective criteria” in establishing price differentials. Id. at 1147.
Though it requires the Commission to assimilate this eclectic array of evidence, the majority insists it is “adherpng] to traditional principles of Robinson-Patman law.” Maj. op. at 1146 n. 16. The majority cannot cite a single precedent, however, that finds this broad range of evidence to be a proper “rebuttal” to Morton Salt’s inference of injury. The majority also protests that it has not imposed a “new eviden-tiary burden on the FTC.” Id. But obviously the majority expects the Commission to do more with this evidence than simply accept it into the record. As the majority makes clear with its repeated references to the “intense competition” and the “absence of anti-competitive forces” in the office supplies sector, maj. op. at 1135, the FTC must somehow undercut or overcome such evidence of “competition” before the majority will countenance a finding of competitive injury. The practical effect of today’s remand, then, is to force the Commission to “rebut the rebuttal.” This does impose a new evidentiary burden on the FTC. Moreover, nothing in Robinson-Patman commands such an inquiry into market dynamics, and the Supreme Court has expressly pronounced it unnecessary.
As I read today’s decision, my colleagues offer two justifications for diverging from the Supreme Court’s evidentiary guidelines. First, “[tjhis is not a case of the ‘Big Five’ retailers (Morton Salt), the ‘Big Three’ book distributors (Doubleday), the long-established, large jobbers who enjoyed manufacturer protection from uppity newcomers (Mueller) or the Hoosier beer dis*1155tributor which happened to be on the ‘wrong’ side of the Indiana-Kentucky state line (Falls City).” Maj. op. at 1147. The majority goes too far in reading any “big vs. small” element out of this record. It is true that many small wholesalers benefit from the functional discounts at issue. But the only wholesaler charged with using those discounts to compete against disfavored retailers is the largest distributor of office products in the nation: the Boise Cascade Corporation. J.A. at 46.
The majority’s second reason for believing that “[t]his case is simply not of the lineage of Morton Salt,” maj. op. at 1139 n. 14, is that it involves dual distributors. Applying price discrimination law to a dual distributor, however, is hardly a novel proposition. Indeed, the mass distributor of the ’20s and ’30s, against whom Robinson-Patman was originally aimed, “invested capital in facilities for performing bulk storage, redelivery, and financing, so as to ‘integrate’ the retailing and wholesaling functions within his own organization and to eliminate middleman profits by dealing with the manufacturer directly.” F. Rowe, Price Discrimination Under the Robinson-Patman Act 4 (1962). See, e.g., Purolator Products, Inc. v. FTC, 352 F.2d 874, 882 (7th Cir.1965), cert. denied, 389 U.S. 1045, 88 S.Ct. 758, 19 L.Ed.2d 857 (1968) (even discounts that do no more than compensate an integrated competitor for the cost of its integration are proscribed; “some WDs [warehouse distributors] have costs peculiar to their manner of doing business[, which] does not show ... that competitors of these WDs would not be injured if some of those costs are paid by” the manufacturer).
Thus, the majority’s true reason for contending that the FTC is “venturing into relatively new territory,” maj. op. at 1139 n. 14, is not that the case involves dual distributors. Rather, the majority is impressed by the “powerful and eloquent voices ... railing against” the type of enforcement action presented in this case. Id. Among those voices, my colleagues are particularly persuaded by Dean Pitofsky who, as a Commissioner, dissented from the FTC’s complaint against Boise. Id.
Though I share my colleagues’ regard for Dean Pitofsky’s eloquence, I must point out that his dissent as a Commissioner was — much like today’s decision — based more on economic philosophy than on an application of the statute before us. Commissioner Pitofsky conceded that Boise’s price advantage “[a]rguably ... leads to an injury to competition, and therefore Section 2(a) of the Robinson-Patman Act is violated.” J.A. at 15. The Commissioner nevertheless opposed FTC action in this case because he found “the Mueller rule[, holding that functional discounts are not exempt from Robinson-Patman’s proscriptions,] is anticompetitive, anti-consumer and anti-efficient.” J.A. at 17. Such economic judgments may well be appropriate when the Commission is deciding upon its enforcement priorities, but this court does not have the same discretion once the FTC has found a Robinson-Patman violation and that finding is brought before us on appeal.
Moreover, Commissioner Pitofsky’s reason for opposing the complaint against Boise is now moot. The Commissioner said he would be willing to judge Boise’s price advantage by the less stringent Doubleday rule (which permits functional discounts under certain conditions), rather than the Mueller doctrine. But the Commissioner was unsure, on the basis of the initial staff investigation, whether a violation could be proven under Doubleday. J.A. at 21 n.*. That uncertainty has now been resolved. Both the AU and the Commission found that the price discrimination favoring Boise was proscribed even under the more accommodating Doubleday rule because disfavored retailers performed many of the functions that Boise performed but Boise alone received a discount. J.A. at 159-61, 200-03. I note that the majority does not challenge that legal conclusion.
In sum, the majority’s two reasons for disregarding traditional Robinson-Patman doctrine — that the price differentials in this case benefit small wholesalers and that they encourage dual distribution — are insufficient. These reasons do not negate the harm that such price discrimination *1156may inflict on retail competitors and competition. Applying price discrimination law to dual distributors may well bring with it inefficiencies. But they are the type of inefficiencies that Congress accepted when it enacted Robinson-Patman. As I explore more fully below, Congress in 1936 set out to help independent retailers at the expense of large chain stores. It cannot have escaped Congress’ notice that the giant retailers were often more efficient.
This case does implicate, then, some of the same concerns about the economic fate of smaller retailers that gave rise to Robinson-Patman. And, even if this case did not implicate such “originalist” concerns, it has long since been established that the Robinson-Patman Act “is of general applicability and prohibits discriminations generally.” FTC v. Sun Oil Co., 371 U.S. 505, 522, 83 S.Ct. 358, 368, 9 L.Ed.2d 466 (1963). “[N]either the scope nor the intent of the statute was limited to th[e] precise situation” that generated the Robinson-Patman amendments. Id. at 520, 83 S.Ct. at 367.
2. Frustrating FTC Enforcement
Just as price discrimination is proscribed regardless of the size of its victims, so the new evidentiary burden imposed by the majority threatens to frustrate Robinson-Pat-man enforcement in every setting. The majority does not confine today’s holding to cases involving dual distributors or even functional discounts. And, by generally instructing the FTC to consider evidence of competitive health in a business sector, the court does much more than expand the record. Even if injury to the structure of competition were the focus of Robinson-Patman (and I indicate below that it is not), the burden of proof that my colleagues impose on the FTC undermines the Supreme Court’s objective in Morton Salt. It permits a Robinson-Patman defendant, once he introduces any evidence that competition persists in his business sector, to stall or frustrate FTC action by forcing complaint counsel to assemble a detailed and time-consuming record.
In some cases, such a record will be irrelevant since we may be asking the Commission to prove something that has not yet occurred. As the Supreme Court has often reminded us, “§ 2(a) is a prophylactic statute which is violated merely upon a showing that ‘the effect of such discrimination may be substantially to lessen competition.’ ” J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 561, 101 S.Ct. 1923,1927, 68 L.Ed.2d 442 (1981) (emphasis in original). Even when the injury is assumed to have already occurred, however, the proof required by the majority will be inappropriate. Where a seller has imposed (or a buyer has benefited from) a substantial price difference that is not cost-justified, placing the burden of proof on that seller (or buyer) to rebut an inferred injury best accords with the equities of the situation. That burden of proof will be meaningless if it can be satisfied (and shifted back to the Commission) by simply showing that competition still exists in the relevant market.
Not only will the majority’s evidentiary innovation often prove irrelevant or inappropriate; it will doubtless prove confusing, too. While the majority does specify which evidence the FTC must consider on remand in this case, maj. op. at 1144-47, my colleagues provide a murky standard for evaluating this evidence. The majority tells the Commission to “determine whether Boise’s evidence demonstrated that no injury or ‘reasonable possibility’ of competitive injury existed.” Maj. op. at 1144. But this simply begs the question: What constitutes such injury? The majority implies, without clearly stating, that competitive injury is manifested only when competition itself threatens to disappear from a given market. If that is the majority’s standard, the majority still needs to tell the Commission how serious that threat must be. But, aside from such questions of degree, the majority’s standard also raises a more fundamental legal issue.
3. Distinguishing Robinson-Patman From Other Antitrust Laws
The majority’s willingness to increase the evidentiary burden on the FTC reflects, in my view, a misunderstanding of Robinson-*1157Patman doctrine. The majority proclaims that “Robinson-Patman is directed to the preservation of competition.” Maj. op. at 1143. This description of the statute’s purpose is simply too restrictive. The Congress that enacted Robinson-Patman did not focus on the process of competition to the exclusion of the living players in that process. This point is revealed in the statutory language itself. The majority presents the statute as proscribing only price differentials that tend to “injure, destroy, or prevent competition.” Id. But the full text of this crucial passage banishes discrimination that would “injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with the customers of either of them.” 15 U.S.C. § 13(a) (1982) (emphasis added).
Thus, as the Supreme Court long ago realized, “Congress intended to protect a merchant from competitive injury attributable to discriminatory prices.... ” Morton Salt, 334 U.S. at 49, 68 S.Ct. at 829 (emphasis added). The amendment to the Clayton Act “was intended to justify a finding of injury to competition by a showing of ‘injury to the competitor victimized by the discrimination.’ ” Id. (footnote omitted; emphasis added). On the facts of Morton Salt, the FTC could thus find a § 2(a) violation because “less-than-carload purchasers [of salt] might have been handicapped in competing with the more favored carload purchasers by the differential in price....” Id. at 50, 68 S.Ct. at 830.
The Morton Salt result exemplifies Professor Sullivan’s summary of price discrimination case law:
Robinson-Patman ... secondary line cases lack any requirement that injury be shown to competitive structure or process; they rely instead on injury to particular firms in the market.... There is warrant in the history of the statute for construing it so and the courts have regularly done so.
L. Sullivan, Handbook of the Law of Antitrust 694 (1977) (footnote omitted). Often, injury to competitors does involve (or at least foreshadow) some impact on competition. As the Ninth Circuit pointed out very recently, “Competition does not exist in a vacuum; it consists of rivalry among competitors.” Hasbrouck v. Texaco, Inc., 830 F.2d 1513, 1518 (9th Cir.1987). “With respect to price discrimination claims, the significance of harm to competitors is particularly clear.” Id.
In Morton Salt, for example, the court found that “the competitive opportunities of certain merchants were injured when they had to pay respondent substantially more for their goods than their competitors had to pay.” 334 U.S. at 46-47, 68 S.Ct. at 828 (emphasis added). The Fifth Circuit has similarly held that “a substantial price advantage can afford a favored buyer a material capital advantage by enlarging his profit margin in a highly competitive field or it can enable him to offer customer-attracting services which will give him a substantial advantage over his competition.” Foremost Dairies, Inc. v. FTC, 348 F.2d 674, 680 (5th Cir.), cert. denied, 382 U.S. 959, 86 S.Ct. 435, 15 L.Ed.2d 362 (1965). Indeed, the AU in the present case found that even if victimized retailers experienced growth in their own sales this did not foreclose injury to their ability to compete. “[T]heir growth would have been even greater, and their profits would have increased substantially, if they had enjoyed the pricing which the six manufacturers extended to Boise.” J.A. at 155.
As these examples illustrate, the relationship between injury to competitors and injury to the structure of competition is highly variable. When the former injury does produce the latter, that market impact can be anything from severe to attenuated. The academic commentators are agreed on this range of market effects. See L. Sullivan, Handbook of the Law of Antitrust 681-82 (1977); H. Hovenkamp, Economics and Federal Antitrust Law 344-45 (1985); F. Scherer, Industrial Market Structure and Economic Performance 323-25 (2d ed. 1980).
Notwithstanding the ambiguous relationship between injury to competitors and injury to competitive structure, Congress saw fit to proscribe price discrimination in *1158secondary-line cases even when only the first of these injuries could be proven. To be sure, not every court has recognized this fact. Indeed, Boise identifies several decisions that renounce injury to competitors as a sufficient basis for § 2(a) liability. See Petitioner’s Brief at 81. Most of these cases, however, involve distinguishable (and sometimes unusual) facts. E.g., General Foods Corp., 103 F.T.C. 204 (1984) (primary-line injury); Edward J. Sweeney & Sons v. Texaco, Inc., 637 F.2d 105 (3d Cir.1980), cert. denied, 451 U.S. 911, 101 S.Ct. 1981, 68 L.Ed.2d 300 (1981) (price difference consisted only of a hauling allowance that was even-handedly applied); American Oil Co. v. FTC, 325 F.2d 101 (7th Cir.1963), cert. denied, 377 U.S. 954, 84 S.Ct. 1631, 12 L.Ed.2d 498 (1964) (price difference was of very brief duration). The remaining opinions that Boise cites are simply aberrations. See, for example, Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534 (9th Cir.1983), cert. denied, 465 U.S. 1038, 104 S.Ct. 1315, 79 L.Ed.2d 712 (1984).
If there were any doubt that decisions like Foremost Pro Color stray from the proper reading of Robinson-Patman, it is laid to rest by Robinson-Patman’s own legislative history. That record clearly demonstrates that Congress equated any significant injury to competitors with injury to competition. As the House Report explained the need to amend the Clayton Act:
The existing law has in practice been too restrictive in requiring a showing of general injury to competitive conditions in the line of commerce concerned, whereas the more immediately important concern is in injury to the competitor victimized by the discrimination. Only through such injury in fact can the larger, general injury result. Through this broadening of the jurisdiction of the act, a more effective suppression of such injuries is possible and the more effective protection of the public interest at the same time is achieved.
H.R.Rep. No. 2287, 74th Cong., 2d Sess. 8 (1936). See also S.Rep. No. 1502, 74th Cong., 2d Sess. 4 (1936) (similar language). Congress could not have stated more clearly its conviction that, where a competitor was substantially injured, the market would eventually be injured, too. “To catch the weed in the seed,” the Senate Report observed, “will keep it from coming to flower.” Id.
The reason for limiting Robinson-Pat-man’s proscription to price differences that tend to “injure, destroy or prevent competition” was simply to exclude “from the bill otherwise harmless violations of its letter.” Id. In other words, the “injury to competition” test was not intended to leave substantial numbers of price differentials intact. According to the House Report, the bill “prohibited] discriminations in price between purchasers where such discrimina-tions cannot be shown to be justified by differences in the cost_” H.R.Rep. No. 2287, 74th Cong., 2d Sess. 3 (1936) (emphasis added). The same document reiterated Congress’ overriding concern “that the survival of independent merchants, manufacturers, and other businessmen is seriously imperiled and that remedial legislation is necessary.” Id.
At bottom, today’s decision refuses to recognize the inherent tension between the Robinson-Patman Act and the rest of antitrust law. The majority claims the Supreme Court has instructed us not to interpret Robinson-Patman in ways that “ ‘conflict with the purposes of other antitrust legislation.’ ” Maj. op. at 1138 (quoting Automatic Canteen Co. v. FTC, 346 U.S. 61, 63, 73 S.Ct. 1017, 1019, 97 L.Ed. 1454 (1953)). But my colleagues have wrenched this quotation from its context; the Supreme Court counsels us to bend price discrimination law to antitrust principles only when FTC enforcement threatens to “extend beyond the prohibitions of the [Robinson-Patman] Act.” Id. (emphasis added). Indeed, what the Court in Automatic Canteen (and in two subsequent cases) declined to do was “to read [Robinson-Patman’s] ambiguous language” about a seller’s meeting-competition defense in ways that would violate “congressional policy as expressed in other antitrust legislation.” Id. at 73, 73 S.Ct. at 1024. See also Great Atl. & Pac. Tea Co. v. FTC, 440 U.S. 69, 80 & n. *115913, 99 S.Ct. 925, 933 & n. 13, 59 L.Ed.2d 153 (1979); United States v. United States Gypsum Co., 438 U.S. 422, 458-59, 98 S.Ct. 2864, 2884-85, 57 L.Ed.2d 854 (1978).
When, however, a case falls within Robinson-Patman’s clear prohibitions, the Supreme Court recognizes that a special concern for small business and “fairness” animates Robinson-Patman — and that these values sometimes conflict with the free operation of competitive markets. “Congress intended to assure, to the extent reasonably practicable, that businessmen at the same functional level would start on equal competitive footing so far as price is concerned.” FTC v. Sun Oil Co., 371 U.S. 505, 520, 83 S.Ct. 358, 367, 9 L.Ed.2d 466 (1963). “The Robinson-Patman Act was passed to deprive a large buyer of [certain] advantages,” the justices declared in Morton Salt, and its “avowed purpose [was] to protect competition from all price differentials except those based in full on cost savings.” 334 U.S. at 43, 44, 68 S.Ct. at 826, 827.
Commentators have framed the conflict with antitrust principles more starkly. As Professor Scherer observes,
it seems clear that the courts and the Federal Trade Commission are more inclined to err on the side of protecting competitors than protecting competition when the two goals are not congruent. And in this respect, the criteria applied when enforcing the Robinson-Patman Act are at odds with the broader pro-competitive objectives of antitrust.
F. Scherer, Industrial Market Structure and Economic Performance 578 (2d ed. 1980). Professor Hovenkamp is even more blunt in making this point: “[W]hile the Robinson-Patman Act is quite hostile toward competition it is nevertheless disguised as an antitrust law.” H. Hoven-kamp, Economics and Federal Antitrust Law 346 (1985).
Obviously, protecting competitors from this type of price competition does not always maximize “consumer welfare.” Yet, the majority insists that Robinson-Patman enforcement must not diverge from “maximization of consumer welfare,” maj. op. at 1138, because to do so would violate the underlying principles of antitrust. Such a result, the majority says, would suggest “Congressional schizophrenia.” Id. The majority mistakenly equates clearheadedness with singlemindedness. Congress has enacted many laws, under many different circumstances, to serve many disparate purposes. Our role as courts is to apply the laws at issue in a given case without doing violence to related statutes. It is not for us to legislate a consistency that Congress did not enact.
Thus, we may “harmonize” laws so that enforcement of one does not produce violations of another, cf. Automatic Canteen Co. v. FTC, 346 U.S. at 73, 73 S.Ct. at 1024, but we must not entirely subjugate one law to another. I think that the majority has overstepped this fine line by a quantum leap. The court today makes price discrimination law subservient to the rest of antitrust doctrine, when it declines to enforce Robinson-Patman in any way that might undermine “maximization of consumer welfare.” As the Supreme Court has said of Robinson-Patman enforcement, “we are not free on the basis of our own economic predilections to make the choice between harm to [two groups] ...; that choice is foreclosed by the determination in the statute itself in favor of equality of [price] treatment.” FTC v. Sun Oil Co., 371 U.S. 505, 519, 83 S.Ct. 358, 367, 9 L.Ed.2d 466 (1963). The majority today has opted for what it thinks is good free-market philosophy — at the expense of faithfully interpreting the law that Congress passed. That is not the role of a court interpreting policy made by others.
4. The Commission’s Determination Should be Upheld
Since I decline to impose a new evidentia-ry burden upon the FTC, the question that I believe is before this court is whether the Commission abused its discretion or was unsupported by substantial evidence in holding that the functional discounts in this case constitute proscribed price discrimination. See Ash Grove Cement Co. v. FTC, 577 F.2d 1368, 1378 (9th Cir.) (“appellate *1160review of [FTC] fact-findings [is confined] to a determination whether they are supported by substantial evidence”), cert. denied, 439 U.S. 982, 99 S.Ct. 571, 58 L.Ed.2d 653 (1978); Colonial Stores Inc. v. FTC, 450 F.2d 733, 740 n. 14 (5th Cir.1971) (“even when the Commission’s findings[ ] are framed in terms of legal conclusions, their presumptive validity is considerable. FTC v. Mary Carter Paint Co., 1965, 382 U.S. 46, 48-49 [86 S.Ct. 219, 221-22, 15 L.Ed.2d 128 (1965)].”).
Ultimately, the AU’s and the Commission’s finding of competitive injury rested on one essential fact: the size of the functional discounts that Boise received (which ranged from 5 to 33 percent) exceeded the net profit rates of the dealers. These profit margins were quite low because of the intense competition in the office supplies business. “Considering these facts,” the ALJ stated, “the only possible inference is that the effect of the substantial and sustained price discriminations favoring Boise may be to destroy or prevent competition with the unfavored dealers.” J.A. at 152.
The fact that a substantial price discount exceeds the disfavored dealers’ profit margins or occurs in a highly competitive sector has been found to justify the Morton Salt inference of injury in many cases. See, e.g., Corn Products Refining Co. v. FTC, 324 U.S. 726, 742, 65 S.Ct. 961, 969, 89 L.Ed. 1320 (1945); Hasbrouck v. Texaco, Inc., 830 F.2d 1513, 1519 (9th Cir.1987); Kroger Co. v. FTC, 438 F.2d 1372 (6th Cir.), cert. denied, 404 U.S. 871, 92 S.Ct. 59, 30 L.Ed.2d 115 (1971); Foremost Dairies, Inc. v. FTC, 348 F.2d 674 (5th Cir.), cert. denied, 382 U.S. 959, 86 S.Ct. 435, 15 L.Ed.2d 362 (1965); United Biscuit Co. v. FTC, 350 F.2d 615 (7th Cir.1965), cert. denied, 383 U.S. 926, 86 S.Ct. 930, 15 L.Ed.2d 845 (1966); Monroe Auto Equip. Co. v. FTC, 347 F.2d 401 (7th Cir.1965), cert. denied, 382 U.S. 1009, 86 S.Ct. 613, 15 L.Ed.2d 525 (1966).
In this case, the inference of injury was not rebutted by any evidence that the price differences were somehow offset or otherwise would not harm disfavored retailers. Indeed, there was evidence reinforcing the likelihood of harm: the AU found that many of the wholesaling functions that ostensibly justified Boise’s discounts were also performed by the retailers who received no discounts. J.A. at 139, 141, 159. Thus, the retailing costs incurred by Boise and its disfavored competitors were likely to be similar. Additional evidence suggested that profit margins were higher for Boise than for its disfavored competitors— although, as the majority points out, these statistics were not strictly comparable. Maj. op. at 1144. Given this evidence and the numerous precedents supporting the Commission’s treatment of substantial price differentials, I believe the Commission’s result must be upheld. Especially is this so, since “[t]he precise impact of a particular practice on the trade is for the Commission, not the courts, to determine.” FTC v. Motion Picture Advertising Service Co., 344 U.S. 392, 396, 73 S.Ct. 361, 364, 97 L.Ed. 426 (1953). See also Corn Products Refining Co. v. FTC, 324 U.S. at 739, 65 S.Ct. at 967.
5. Deference to the Commission’s Expertise
The advisability of deferring to the Commission’s reading of close cases is highlighted, I think, by Judge Williams’ concurrence. In counseling the Commission on what it can conclude from this case, Judge Williams relies on abstract economic models to interpret ambiguous facts and solve real market problems. Apparently, my colleague prefers “black letter economics,” concurring opinion (“con. op.”) at 1149, to black letter law.
The particular economic model that Judge Williams invokes is the process of arbitrage. Judge Williams believes there can be no price discrimination unless there is a “barrier preventing resales by favored customers to disfavored ones.” Con. op. at 1149. Since, in this case, favored wholesalers do sell to disfavored retailers, my colleague assures us that “[t]he ‘price discrimination’ here cannot lead to the sort of competitive injury evidently feared by Congress.” Con. op. at 1152 (emphasis added). Despite a record clearly demonstrating that disfavored dealers have paid thousands of *1161dollars more than Boise for the same office supplies, Judge Williams is confident that no injury has occurred for one reason: this record does not exhibit any of the “textbook” barriers to arbitrage. I do not share my colleague’s willingness to exalt the model over the record — nor, I imagine, did those who drafted the Robinson-Patman Act.
I indicate below why reliance on a simplified model to infer crucial facts may be misplaced. But it is important to note at the outset that, by focusing upon arbitrage, my colleague transforms Robinson-Patman doctrine in two substantial and related ways. First, Judge Williams is willing to assume that arbitrage (or a viable threat of arbitrage) has done its work if favored purchasers who receive price discounts “perform services of offsetting value to manufacturers.” Con. op. at 1150. Such a showing may satisfy Judge Williams, but it does not satisfy Robinson-Patman. Even under the more accommodating Doubleday rule, a price discount is not legal simply because the beneficiary performs “offsetting services.” Rather, all buyers who perform similar services must also be eligible for the discount. In this case, the FTC expressly found that disfavored retailers perform services similar to those performed by Boise yet are ineligible for the discount. J.A. at 201-02. Thus, the discounts in this case run afoul of Robinson-Patman, even if they pass the “economic” test for injury that my colleague has newly fashioned.
The second way in which the focus upon arbitrage transforms Robinson-Patman doctrine is that it effectively alters the litigation burden. Just as the majority opinion imposes a new evidentiary duty on the FTC, so the concurring opinion, for its part, creates a new presumption favoring defendants. Despite Morton Salt’s inference of injury whenever substantia] price differences are imposed on competing buyers, Judge Williams creates an inference of woninjury whenever his model predicts that arbitrage must have occurred. Evidently, if no physical or other “barriers” between favored and disfavored buyers appear in the record, the courts should presume (whether rebuttably or irrebuttably, I am not sure) that arbitrage has eliminated any ill effects of price discrimination.
Thus, Judge Williams’ reliance on the concept of arbitrage is not compatible with current Robinson-Patman doctrine. Even if it were compatible, however, I would still question my colleague’s willingness to infer that effective arbitrage has occurred (and that competitive injury has been eliminated) on the basis of abstract principles about resale “barriers.” Numerous Robinson-Patman precedents demonstrate the defect in Judge Williams’ approach. Those precedents counsel reliance on “realistic appraisals of relevant competitive facts,” FTC v. Sun Oil Co., 371 U.S. 505, 527, 83 S.Ct. 358, 370-71, 9 L.Ed.2d 466 (1963), not general economic theorems. The “relevant competitive facts” in Morton Salt, for example, suggested none of the barriers to arbitrage that Judge Williams would make prerequisite to § 2(a) violations. Indeed the five buyers who benefited from the lowest prices for Blue Label salt were precisely the sort of integrated retailers that Boise exemplifies in the present case. 334 U.S. at 41 n. 4, 68 S.Ct. at 826 n. 4. The opinion cited no evidence of barriers — physical, legal, contractual or otherwise — that prevented favored buyers from engaging in arbitrage by reselling the salt to disfavored buyers. Nevertheless, the Court found price discrimination and competitive injury.
Judge Williams’ economic model yields only two explanatory “hypotheses” for the facts in Morton Salt. Con. op. at 1150. Since arbitrage is clearly “available” according to the model, either (1) manufacturers are giving “unmerited discounts” to the favored buyers or (2) “there are no unmerited discounts.” Id. “The principle accepted without dissent by economists,” Judge Williams reminds us, “is that the first hypothesis is utterly implausible.” Id. My colleague is right, of course, that economists would not expect “office supply manufacturers [to] engage[ ] in ... a bizarre charitable program.” Id. But simply to recite this conclusion is to recognize its emptiness. The real question is whether economists “accept without dissent” the *1162Hobson’s choice of explanatory “hypotheses” that Judge Williams offers.
Are there “relevant competitive facts,” more compelling than my colleague’s “hypotheses,” that may explain why integrated retailers like Boise (or like Safeway and A & P, in Morton Salt) do not engage in arbitrage? I believe there are. Without trespassing on the work of the FTC, whose familiarity with this record and general expertise in analyzing trade restraints leave it best equipped to evaluate Boise’s price advantage, I would at least point out some aspects of this case that may have thwarted the process of arbitrage. These factors operate on the two levels at which the arbitrage sales might occur: retail and wholesale.
Consider, first, the possibility of arbitrage sales from favored to disfavored retailers. Although retail sales account for only forty-two percent of Boise’s office supplies business, J.A. at 57, this average is misleading. Boise’s proportion of retail business in particular sales regions is usually much lower or much higher. In seven of the eight distribution centers that the FTC examined in this case, Boise’s proportion of retail sales ranged between eighty and ninety percent. J.A. at 58. When a dual distributor chiefly functions in a retail capacity (but purchases its inventory at wholesale rates), it is not to the distributor’s advantage to reduce prices for competing retailers by engaging in arbitrage. Boise’s profit margins are higher if it takes the same items it could sell to competing retailers and, instead, sells them directly to end users. Moreover, if Boise undercuts the prevailing price to the other retailers, those retailers can then lower their own prices to customers, which in turn would adversely affect Boise’s direct sales to end users.
The logic of this economic calculus undoubtedly informed the strategies of mass retailers in the ’20s and ’30s. Indeed, the FTC investigation that spawned the Robinson-Patman Act concluded that “lower selling prices are a very substantial, if not the chief, factor in the growth of chain-store merchandising, and ... lower buying prices than are available to independent [stores] are a most substantial, if not the chief, factor in these lower selling prices.” Federal Trade Commission, Final Report on the Chain-Store Investigation, S.Doc. No. 4, 74th Cong., 1st Sess. 53 (1935). Judge Williams’ conclusion that price discrimination could not occur in such circumstances (because there were no barriers to arbitrage) is unpersuasive. It cannot explain why Robinson-Patman was enacted or why disfavored retailers complained so bitterly before Congress stepped in.
Notwithstanding the fact that the competitive injury in this case is inflicted by dual distributors acting in their retail capacity, Judge Williams expects the injury to be mitigated by arbitrage occurring in a different context: sales by favored wholesalers to disfavored retailers. Con. op. at 1150. One difficulty with this view is that, even if arbitrage effectively eliminated discrimination between wholesalers and disfavored retailers, it still might not mitigate such injury inflicted by favored retailers. This would be true, for example, if wholesalers who engage in arbitrage cannot cut their resale prices as low as favored retailers can because the wholesalers perform more costly “offsetting services.”
Even assuming, however, that arbitrage between wholesalers and retailers could eliminate all competitive injury, there are factors in this record that might interfere with that process. To begin with, the record shows that wholesalers try very hard to stay informed of the prices that manufacturers charge to retailers. Such information largely determines wholesalers’ own pricing toward retailers. J.A. at 51-54. This suggests that manufacturers may be exerting price leadership. If they have indeed established some sort of price umbrella, wholesalers may be forsaking arbitrage for the predictable profits of somewhat higher prices.
Effective arbitrage also entails some threshold costs of identifying disfavored buyers of substantial quantities of each good that is discriminatorily priced and of fashioning the appropriate discount on each of those items for each of those buyers. *1163Price competition on office supplies may be especially difficult — and unrewarding — because wholesalers like Boise carry more than 8,000 products in their catalogue, J.A. at 51, and many retailers may purchase only a small number of items or from only a few manufacturers’ product lines. The record supports this conclusion. Favored wholesalers more frequently compete for retail accounts on the basis of their overall service or their salespersons than by selectively discounting their catalogue prices. J.A. at 54, 61, 123a-124.
The record also reveals that net profit rates for Boise and other wholesalers are significantly higher than among disfavored retailers. J.A. at 62, 121. This suggests that whatever price competition occurs among wholesalers to win retailer accounts is constrained. In other words, wholesalers will not cut their prices below a certain level that preserves their higher profits. Once again, the fact that wholesalers more often compete on the basis of their service than on the basis of discounts supports this conclusion that price competition is limited.
Merely describing these factors that may hinder the process of arbitrage illustrates why a close understanding of a particular market is crucial for determining whether price discrimination has occurred. It is precisely that detailed familiarity with the facts that the FTC possesses and that this court lacks. Absent some indication that the Commission has erred in the law or not supported its conclusions with the evidence, I would refrain from foisting this court’s own theory of the case upon the FTC. The operation vel non of a process of arbitrage is one of those matters on which “the inferences to be drawn from [the facts proven] are for the Commission to determine, not the courts.” Corn Products Refining Co. v. FTC, 324 U.S. at 739, 65 S.Ct. at 967-68.
Implicit in Judge Williams’ instructions to the FTC is a fear that Robinson-Patman doctrine will not accommodate economic realities like arbitrage unless this court forces the issue. But the defense of availability, which has been repeatedly recognized by the courts, allows a defendant to defeat a charge of price discrimination precisely by proving that the lower prices were available to the disfavored purchasers from some other source — i.e., from an arbitrager. See Tri-Valley Packing Ass’n v. FTC, 329 F.2d 694 (9th Cir.1964). In this case, Boise raised the availability defense, and the FTC found it was unsupported by the evidence. J.A. at 124-29.
The majority today rewrites a controversial law with its decision to send the case back to the FTC. I may share my colleagues’ doubts about whether the price discrimination enjoined in this case produces such pernicious effects. But I am unwilling to create new doctrine in order to accommodate my policy views. Just as “[t]he Fourteenth Amendment does not enact Mr. Herbert Spencer’s Social Statics,” Lochner v. New York, 198 U.S. 45, 75, 25 S.Ct. 539, 546, 49 L.Ed. 937 (1905) (Holmes, J., dissenting), so Congress did not mandate a “turbulent sea of pro-competitive efficiency and maximization of consumer welfare,” maj. op. at 1138, when it enacted Robinson-Patman. That Act has been held repeatedly to proscribe price differences of the substantial size and duration that are exhibited here. I would uphold the Commission’s injunction.

I dissent.