Court Opinion

ID: 9468374
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:13:20.307189+00
Date Added: 2024-06-11T17:40:50.535351
License: Public Domain

GIBBONS, Circuit Judge,
dissenting:
Ferro Corporation appeals from an order denying its motion for a judgment notwithstanding the verdict returned by a jury in a suit by 0. Hommel Company for damages resulting from price discrimination in violation of Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act. 15 U.S.C. § 13(a). The standard for granting such a motion is the same as that for the grant of a directed verdict. For that purpose there must be either a complete absence of proof on an issue material to the cause of action relied upon, or a complete absence of controverted fact issues on which reasonable men could differ. The motion may be granted only if, without weighing the credibility of the evidence, there can be but one reasonable conclusion. Moreover, it is not sufficient for the grant of a motion that the evidence be undisputed, so long as it is rationally possible to draw conflicting inferences from it on the material fact in issue. Fireman’s Fund Insurance Co. v. Videfreeze Corp., 540 F.2d 1171, 1178-79 (3d Cir. 1976), cert. denied, 429 U.S. 1053, 97 S.Ct. 767, 50 L.Ed.2d 770 (1977); Neville Chemical Company v. Union Carbide Corporation, 422 F.2d 1205 (3d Cir.), cert. denied, 400 U.S. 826, 91 S.Ct. 51, 27 L.Ed.2d 55 (1970). In considering the motion, both the trial court and this court must view the evidence in the light most favorable to the party which obtained the verdict, and must give to that party the benefit of all inferences supporting it which the evidence permits, even though contrary inferences might reasonably be drawn. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 696, 82 S.Ct. 1404, 1409, 8 L.Ed.2d 777 (1962). This standard of review, the narrowest in federal appellate practice, is required by the seventh amendment. See Galloway v. United States, 319 U.S. 372, 63 S.Ct. 1077, 87 L.Ed. *3551458 (1943). In applying it we must determine, first, what are the material elements of the cause of action on which the jury returned a verdict, and second, whether from the stipulated facts and the evidence a reasonable jury could have found them.
A plaintiff seeking damages under Section 4 of the Clayton Act, 15 U.S.C. § 15, must establish that the defendant violated one of the antitrust laws and must show damage to his business or property caused by that violation. Ferro contends that there is no evidence from which a jury could find either violation or injury to Hommel’s business or property. On violation, it contends further, that even if there is evidence from which the jury could infer the elements of a Robinson-Patman Act violation which were set out in the court’s charge, the charge was erroneous as a matter of law. Reviewing the record by the appropriate standard of review, I am not persuaded that there is no evidence from which the jury could find the material elements of a violation as defined in the court’s instruction. Moreover, that instruction is consistent with the interpretation of Section 2(a) announced by the Supreme Court. Finally, there is evidence from which the jury could find that Hommel lost profits as a result of Ferro’s sales below cost to selected customers. Thus I would affirm.
I.
The stipulated facts establish that both Ferro and Hommel are manufacturers of an industrial raw material called frit, an ingredient in the enamel finish of bathtubs, lavatories, and major consumer appliances such as stoves, washing machines and refrigerators. This raw material is processed by the manufacturers of those products into a porcelain enamel “slip,” which is applied as a coating, dried, and fused by heat to produce a porcelain enamel finish. Frit is also the basic raw material for the glaze coating on pottery products such as dishes, and both Hommel and Ferro manufacture frit for this use. Sales and shipments of both types of frit are in interstate commerce. Ferro, a multi-national, diversified manufacturer, has 65 plants throughout the world, and manufactures frit at 20 of them. It manufactures frit in the United States at plants in Cleveland, Nashville, and Los Angeles. Hommel’s sole business is the manufacture and sale of frit and other materials needed to produce a glaze product. It has one plant in Carnegie, Pennsylvania. Sales involved in this case were, with one exception, to manufacturers of porcelain enamel. Five manufacturers in the United States produce frit for porcelain enamel, and their respective shares of total frit sales for that use were:
Chicago IngrahamYear Ferro Vitreous Pcmco Hommel Richardson
1973 42% 23% 21% 7% 7%
1974 43% 23% 22% 6%
1975 42% 25% 22% 5%
1976 41% 25% 25% 4%
1977 40% 24% 24% 7% 5%
The sales of porcelain enamel frit about which Hommel complains were made to Briggs Manufacturing Company, a manufacturer of steel stampings for use at Briggs’ bathtub manufacturing plant in Knoxville, Tennessee, to General Housewares Corporation for use at its Terre Haute, Indiana steel pot and pan plant, and to General Electric Co. for use at its Louisville, Kentucky large appliance plant. Two or more of the porcelain enamel frit manufacturers listed above competed for sales to these three plants. The sales of frit for pottery about which Hommel complains were made to Socio Pottery Company for use in its dinnerware plant in Socio, Ohio. Ferro and Hommel competed for sales to that plant. Total sales of frit for porcelain enamel by the five American manufacturers of that product, in pounds, were:
1973 180,188
1974 144,243
1975 101,484
1976 125,936
1977 134,397
During those years Ferro sold frit to each of the plants listed above at prices below its published price list and below the price charged to other customers for frit of like grade or quality. It was industry custom, followed by Hommel, to extend a freight allowance to equalize the freight cost to the *356customer’s plant with that from the nearest competitor’s plant. The difference in freight from Carnegie, Pennsylvania, to the Briggs plant in Knoxville, and from Ferro’s Nashville plant in 1974 was $.69 per hundred pounds. The difference in freight from Carnegie to General Electric’s Louisville plant and from Ferro’s Nashville plant in 1976 was $.96. The difference in freight shipped to General Housewares’ Terre Haute, Indiana plant and the Carnegie and Nashville plants was $.30 in 1973 through 1975; $.35 in 1976 and $.38 in 1977. Thus in the three instances in which sales were made to industrial customers at prices below those charged others for like grade or quality, the favored plant was one as to which Ferro’s Nashville plant had some competitive advantage over Hommel by virtue of proximity.
In addition to the stipulated facts almost two hundred exhibits were received in evidence and the jury heard the testimony of fifteen witnesses, including an economist expert for each side. From the stipulated facts and these evidentiary sources the jury could find that Ferro is a large diversified company with assets over $250,000,000 and a net worth of $150,000,000, and an average annual profit of $23,000,000. From this deep pocket it was in a position to sustain sales of one product at less than total cost over a long period. Hommel has one plant, a net worth of $2,500,000, annual sales of $7,000,000, and in the five years involved operated at an annual loss of $7,000. Thus it was in no position to make sales below total cost for any protracted period. Ferro selected three plants for the business of which its Nashville frit manufacturing plant was a logical supplier, to which it made sales over a number of years at prices not only below its published prices and below the price charged to others for products of like grade or quality, but also below its average total cost for the production of the product. Ferro maintains, and Hommel disputes, that the evidence is that all the prices in question were above average variable costs. The difference between them is over what should be included in the term average variable costs. From the evidence the jury could conclude that Ferro’s calculation of average variable cost included direct manufacturing cost, but excluded the cost of salesman’s bonus for procuring the sale, the cost of technical service to Briggs and General Electric, the expenses of the sales representative who serviced General Housewares, the cost of additional workmen’s compensation insurance premiums and unemployment insurance contributions on additional payroll, and the cost of invoicing, bookkeeping, and collecting of the three accounts. Assuming the jury found that all these items were excluded from Ferro’s calculation of average variable cost, it could conclude that Ferro’s prices were below what would recapture all fixed costs and several variable costs, although above its average direct manufacturing costs. The jury could find from the evidence that the discounts were not occasional or sporadic incidents in response to competition, but were given to the favored customers over a period of four years. They could find that the discounts were kept secret and could reasonably infer that the purpose of the secrecy was so that owners of plants using frit as a raw material located elsewhere would not learn of them, and demand equal treatment. Moreover they could reasonably infer that the three plants chosen for below cost pricing were plants for which, because of their respective locations Ferro’s Nashville plant and Hommel’s Carnegie plant were the most logical competitive suppliers. There was no “smoking gun” letter, saying that the purpose of the below cost pricing was for the express intention of excluding Hommel from competition at the three locations, but from the totality of the evidence the jury could infer that this was Ferro’s purpose, and thus we must do so. Finally, from the evidence the jury could find that, but for Ferro’s sales below cost, Hommel would in the years in question have retained or obtained a share of the market represented by each of the three plants.
Thus the fact pattern before the jury was that of an industry in which there were five established rivals, two of which had plants which by reason of location could economi*357cally supply frit users located at Knoxville, Louisville and Terre Haute. Sales industry-wide declined from 1973 through 1975, but turned upward in 1976. Although there was evidence from which a conclusion of declining demand and permanent excess capacity could be reached, the jury could reasonably conclude that the downturn was the temporary result of the general economy, and that the upturn in 1976 and 1977 suggested an industry situation of relatively stable demand. Either inference would, on the entire evidence, be rationally possible, and thus we must assume that the jury made the inference which, in light of the charge, supports the verdict.
The jury returned a special verdict, answering affirmatively the questions “[h]as the defendant violated ... § 2(a) of the Clayton Act,” and “[h]as the defendants’ violation ... been the proximate cause of any injury to the plaintiff’s business.” Ferro’s motion for judgment notwithstanding the verdict requires that we consider whether those answers have any factual support. Since on a motion for judgment notwithstanding the verdict the court may consider whether a new trial should be granted, Fed.R.Civ.P. 50(b), (d), we must also consider the propriety of the court’s charge.
II.
Before turning to the charge, it is worth noting that in rejecting Ferro’s pre-trial motion for summary judgment the trial court disclosed his understanding of the elements of a Section 2(a) violation.
In order to establish a prima facie Robinson-Patman violation, plaintiff must show 1) that one or more of the purchases involved is “in commerce,” 2) that there has been a discrimination in price between purchasers of products of like grade and quality, and 3) that the effect of the price discrimination “may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination. . . . ” See William Inglis & Sons v. ITT Continental Baking Co., 461 F.Supp. 410 (N.D.Cal.1978). Where there is no direct evidence of an attempt to monopolize under Section 2 of the Sherman Act or a likelihood of injury to competition under Robinson-Patman, these showings may be inferred from a showing of predatory intent, and this intent, under both Acts, may be established by proof of predatory pricing. Utah Pie Co. v. Continental Baking Co., 386 U.S. 685, 87 S.Ct. 1326, 18 L.Ed.2d 406 (1967).. . .
The major issue in dispute in this case concerns the nature of the predatory pricing evidence which will be admissible at trial to permit the inference of predatory intent. Plaintiff contends that evidence of sales below total cost is permissible while defendant argues that sales below marginal cost, or at least variable cost,1 is required before a jury may infer predatory intent.
O. Hommel Co. v. Ferro Corp., 472 F.Supp. 793, 795 (W.D.Pa.1979). Rejecting Ferro’s contention that evidence of sales below total cost should be excluded, and summary judgment entered, the court ruled:
In some circumstances, of course, sales below total cost may enhance competition even though a particular competitor may be injured. Such a result would be consistent with the goal of the antitrust laws. In other circumstances, however, sales below total cost could permit an inference of monopolistic or predatory intent. A determination of these issues cannot be made on a motion for summary judgment; it must await a full trial on the merits.
472 F.Supp. at 796. Thus even at pretrial it was Ferro’s contention that as a matter of law no sales price above variable cost could ever in any circumstances support a finding *358of a Section 2(a) violation. That position, which it also advanced on its motion for judgment notwithstanding the verdict, would if accepted entitle Ferro to a judgment in its favor even if there was other independent evidence from which predatory intent could be inferred.1 It was clear throughout the case that price discriminations were made available to the Louisville, Knoxville and Terre Haute customers and there was no real dispute over whether the sales prices to those plants were below total cost. The main disputed issue in the case was that identified in the ruling on the motion for summary judgment; whether from the totality of the circumstances the jury should be permitted to infer that the discriminations were made with predatory intent. Such an intention would, as the trial court noted, support the additional inference of likelihood of injury to competition.
Although in Point II of its brief on appeal Ferro urges that it is entitled to judgment as a matter of law because Hommel’s percentage share of the total frit market did not decline in the years in question, that was not the ground advanced in its motion for judgment notwithstanding the verdict. Both pre-trial, when it moved for summary judgment, and post-trial, when it moved for judgment notwithstanding the verdict, Ferro contended that because the contested prices were above its average direct cost of production it was entitled to a verdict as a matter of law.2 (Ill A, 802). Ferro’s legal position was that the court need look no further. Additional evidence from which the jury might infer predatory intent could, on this theory, be disregarded.
The court in its charge rejected the contention that sales above average direct manufacturing costs must in all circumstances as a matter of law be immune from Robinson-Patman liability in a primary line competition case. Instead, it charged:
Now, I charge you that, where there is competition among members of a relatively stable industry, particularly where one of the members manufactures only the product in question, in this case, frit, porcelain or glaze, each manufacturer should charge prices which, over a period of, say, four years, as in this case, should equal the total cost; and, if a price less than the total cost has been effected or charged by the manufacturer, then, such pricing may amount to predatory pricing; that is, pricing intended to injure a competitor. Of course, to continue to charge less than total cost in this period of time could force one or more of the competitors in the frit industry into bankruptcy. You must make all your costs or you are going to go broke.
(Ill A, 912). This part of the charge described what, from the stipulated facts and the evidence, the jury could have found: that the industry was relatively stable, and that one manufacturer in it, Hommel, was in no financial condition to sell below total *359cost over a period of years. If the jury so found, the court charged, it could, but was not required to, infer that the price differentials were intended to injure Hommel as a competitor.
On the other hand, the court continued, there were circumstances in which the inference of predatory intent was in its view impermissible.
However, were you to find that the market for frit was declining during the years 1973 to 1977, and that the frit industry was a declining industry, and there was a large amount of unused capacity, then, the prices charged by manufacturers need only equal the average variable costs; that is, the direct manufacturing costs.
(Ill A, 913). This part of the charge also described what, from conflicting evidence, the jury could have found: that the industry was in a permanent decline with a large unused capacity. In that ease, the court made clear, the inference of predatory intent could not be made so long as sales were made, even over a long period, at less than total but more than average direct manufacturing costs. This part of the charge is actually more favorable to the defendant than any formulation of a marginal cost floor for predatory pricing proposed in the secondary literature on the Robinson-Pat-man Act, for even the Areeda and Turner formulation is generally considered to refer to short run rather than long run pricing below fixed but above marginal costs. See O. E. Williamson, Predatory Pricing: A Strategic and Welfare Analysis, 87 Yale L.J. 284, 322 n. 88 (1977). That question need not be decided, however, for we must assume that the jury followed the instruction that if it found the industry to be a declining one, it could not infer predatory intent from sales above average direct manufacturing costs.
The charge limited the area of inquiry on predatory intent still further. Even if the jury found a relatively stable industry, or sales below average direct manufacturing costs, it must consider other factors:
In determining whether such conduct was predatory — preying upon others, that is — or merely lawful competition, you may consider whether or not the Defendant enjoyed a dominant position in the frit market at the time, or whether there were healthy, active competitors for the business. You may consider whether there was excess production capacity among the various competitors in the frit business, making price competition naturally more aggressive, since it is obvious that, in a declining business, it is better for a plant to produce some product and sell it at a price that covers at least its direct manufacturing expenses, than to allow its machinery and workmen to stand around idle.
You may consider whether or not there were barriers to potential new competitors entering the frit business in competition with Defendant and Plaintiff. You should consider these and all the other circumstances in the case in determining whether the price at which Ferro sold frit to some of its customers, as testified in this case, was predatory or not.
(Ill A, 913-14). Thus the court charged that the jury could, but certainly did not have to, infer a predatory intention only if (1) in a stable industry Ferro sold below total cost over a long period, or (2) in a declining industry it sold below average direct manufacturing costs. There was evidence from which the jury could legitimately draw either inference. The upturn in sales in 1976 and 1977 supports an inference of long-term reasonable stability. The evidence that variable additional labor costs for workmen’s compensation premiums and unemployment insurance contributions was not taken into account casts doubt on Ferro’s contention that it recaptured all variable manufacturing costs.
The court charged the jury to “consider whether or not geographic discriminations were employed by the Defendant for predatory ends.” If the jury so found, he continued, “[t]hat is evidence from which you may properly conclude that the discriminatory prices may have had the required effect upon competition.” (Ill A, 919). This in*360struction was qualified still further by an instruction:
The Act requires that [sic] a likelihood of adverse competitive impact attributable to unlawful price discrimination either in the form of one, a substantial lessening of competition, or, two, a tendency to create a monopoly.
(Ill A, 919). In considering the likelihood of adverse competitive impact even from intentionally predatory pricing, the jury was instructed:
You should, of course, in this connection consider the instructions I have given you previously as to a declining industry. I must emphasize that the Act is concerned with the effect of price discrimination upon the state of competition and not with its effect upon an individual competitor as such. It has been said that the injury center is the vigor of competition in the marketplace rather than a hardship to the individual businessman. The Act is primarily concerned with the health of the competitive process, not with the individual competitor who must sink or swim in a competitive enterprise system. The crippling of a competitor by price discrimination is not an event of independent significance, but is relevant as a necessary incident.of the injury to competition generally. For the purposes of the Act it is only against the background of the competitive structure that the fate of the individual competitor is significant. If the competitors are so numerous that the elimination of one will only have an infinitesimal effect upon the overall business in the area, then competition has not been injured. On the other hand, where there are relatively few competitors in an industry, the injury to one may shatter the competitive structure and may lead to — may tend to lead to monopoly.
(Ill A, 921). Clearly there was evidence from which the jury could conclude the three plants chosen for discriminatory pricing, Briggs in Knoxville, General Electric in Louisville, and General Housewares in Terre Haute, were selected in order to exclude Hommel from those plants, that Hommel was in no position to compete for business by selling, long term, below cost, that Hommel had geographic disadvantages in competing for business in plants more distant from Carnegie, and that its loss in a five company industry would be likely to have an adverse effect on competition in that industry. There was evidence from which a different conclusion might be drawn, but we must make that which supports the verdict.
The only objection which Ferro makes to the charge is to that part of it which permitted the jury to find that sales below total costs, but above average direct manufacturing costs, continued over a period of time, supported an inference of predatory intention. Appellant’s Brief p. 42-46. It describes this charge as unprecedented. That is hardly so, for in Utah Pie Co. v. Continental Baking Co., 386 U.S. 685, 698, 87 S.Ct. 1326, 1333, 18 L.Ed.2d 406 (1967), the Supreme Court, reversing a Tenth Circuit decision which set aside a jury verdict in a primary line competition case, noted that the offending price was less than defendant’s “direct cost plus an allocation for overhead.” The charge as given was more favorable than that which the Utah Pie court appears to authorize, for it required the additional findings of reasonable market stability and continuation over time. The precedent on which Ferro relies is a secondary one, P. Areeda and D. Turner, Predatory Pricing and Related Practices Under Section 2 of the Sherman Act, 88 Harv.L.Rev. 697 (1975). This article first suggested the analysis which since the beginning of the case Ferro has insisted is required as a matter of law. As the trial judge observed,
Areeda and Turner’s analysis, however, has not survived unscathed. See 0. Williamson, “Predatory Pricing: A Strategic and Welfare Analysis,” 87 Yale L.Rev. 284 (1977); Scherer, “Predatory Pricing and the Sherman Act: A Comment,” 89 Harv.L.Rev. 869 (1976); Scherer, “Some Last Words on Predatory Pricing,” 89 Harv.L.Rev. 901 (1976).
*361472 F.Supp. at 796. But we need not join in the debate between Areeda and Turner and their several critics about the relative merits of marginal cost pricing in general. The charge which Ferro objects to requires a finding of a relatively stable market and below total cost sales over at least four years in an industry whose customers are large, single situs industrial plants, and selective price cuts by the company with the deepest pocket to plants for which the weakest competitor in the industry is a logical competitor. The charge permitted, but did not require, the inference of predatory intent. A factor bearing on that intent was the secrecy of the discriminatory pricing arrangements, which could be found by the jury to have been designed to protect the level of prices to plants more distant from Hommel, and thus more shielded from competition by freight differentials. If that set of circumstances would not support an inference of predatory intention under the Areeda and Turner analysis (which I do not suggest), the analysis is flawed, for those circumstances strongly suggest an intentional move on a financially weak but otherwise effective competitor for the frit trade of those large buyers located where they can be serviced by Ferro’s Nashville plant. The Areeda and Turner thesis is that marginal cost pricing is presumptively rational conduct in the short run because it is either profit maximizing or loss minimizing. Thus, the argument goes, the inference of predatory intent is irrational. But in the long run a policy of sales below total cost is not profit maximizing. If Ferro’s Nashville plant were to continue sales below total costs over the long term it would cease to be a profit center in Ferro’s diversified business. If it could compete with the competitor which was located near enough to users of frit which the Nashville plant could supply only by selling below cost, a rational profit maximizing policy would be to close the plant, not to subsidize it permanently. Thus in the sum of circumstances which the jury could find here — a relatively stable market, two plants located as the Nashville and Carnegie plants are, one of them owned by a diversified deep pocket company and the other a small family business — the inference of predatory intention from long term sales below total cost is not compelled but, as the court charged, certainly legitimate. The jury could well have reasoned that Ferro .intended to deprive Hommel of the Briggs, Knoxville; General Electric, Louisville; and General Housewares, Terre Haute businesses by below cost pricing, knowing that freight differentials insulated its other frit plants from competition from Carnegie, in the expectation that Hommel would fail and that there were sufficient barriers to entry that it would not soon be replaced. See Joskow & Klevorick, A Framework for Analyzing Predatory Pricing Policy, 89 Yale L.J. 213, 227-31 (1979) (discussing the multiple factors which may be barriers to entry). If the recent case of Northeastern Telephone Co. v. AT&T, 651 F.2d 76 (2d Cir. 1981), may be read as committing the Second Circuit to the rule that pricing above marginal cost is always in all circumstances legal, I would not follow it, because such a rule would exclude from the factfinder the authority to draw a legitimate inference of predatory intention from the totality of circumstances. The Supreme Court affirmed the legitimacy of such an inference in Utah Pie Co. v. Continental Baking Co., 386 U.S. 685, 87 S.Ct. 1326, 18 L.Ed.2d 406 (1967). Thus I would reject Ferro’s claim that the charge was in error in the one respect complained of.
III.
Ferro claims on appeal that even if the charge on predatory pricing was correct and the evidence supports the inference of predatory intention, it is entitled to a judgment notwithstanding the verdict nevertheless, because there was no proof of any adverse effect on competition. That contention was not listed among the grounds advanced in Ferro’s motion for judgment notwithstanding the verdict. In the motion for a directed verdict the point was advanced, albeit *362cryptically.3 Since the point was raised below it can be considered here, at least as a ground for a new trial, and perhaps as a ground for ordering the entry of judgment notwithstanding the verdict.4 Ferro’s position is that because the market shares of the five firms which manufactured frit did not significantly change over the years in question, as a matter of law the jury could not find that “the effect of such discrimination may be substantially to lessen competition ... in any line of commerce, or to injure, destroy, or prevent competition with [Ferro]”. 15 U.S.C. § 13(a). Ferro’s argument, however, misconceives the prophylactic purposes of the Robinson-Patman Act. Faced with discriminatory pricing a primary line competitor is not required to wait until the cause of action for injury to its business or property vests in a trustee in bankruptcy. Indeed it can sue for injunctive relief even before any harm to its business or property has occurred, although in such a case the recovery of damages under Section 4 of the Clayton Act would be impermissible. The distinction between the requirements for proving a Section 2(a) violation and those for proving damages recoverable under Section 4 is an important one which was reemphasized by the Supreme Court in Truett-Payne Co. v. Chrysler Motors Corp., - U.S. -, 101 S.Ct. 1923, 68 L.Ed.2d 442 (1981). There the Court’s majority rejected the contention, relied on by Justice Powell dissenting, that because plaintiff’s market share did not shrink over a four year period, he could not establish a Section 2(a) violation. The test for a Section 2(a) violation is whether, based on the evidence, competition, overall or with the discriminator, may be injured. Actual harm is relevant only to the damage claim. The distinction made in TruettPayne is not new to Robinson-Patman jurisprudence. See Utah Pie Co. v. Continental Baking Co., 386 U.S. 685, 702, 87 S.Ct. 1326, 1335, 18 L.Ed.2d 406 (1967).
In evaluating the likelihood of harm to competition with Ferro, the jury could consider the relative financial strength of Ferro and Hommel, the location of the three plants which were selected for below total cost pricing, the duration of the price cuts, and the stipulated fact that Hommel maintained its 6-7% market share over the four years in issue while incurring operating losses in each year. The jury may well have concluded that those operating losses would not have occurred if Ferro had been able to retain some of the Briggs and General Electric and obtain some of the General Housewares business. It could have found that Hommel could not increase its share of business at the limited number of industrial plants which used frit as a raw material because by the custom of the trade, freight was equalized to the nearest producer’s plant, and absorption of freight to distant customers would increase its operating losses. It could have found that the price cuts exposed Hommel to the risk of bankruptcy, in an industry with only five suppliers. Short of this it could have found that by freezing out Hommel from three logical customers, Ferro forced Hommel to compete with it for customers as to which one of its other plants had a freight differential advantage, which would place a floor under its competitors’ prices. In short, there was ample evidence of the possibility of harm to competition in the frit industry in general and of competition with Ferro in particular. The possibility of such harm coupled with *363pricing which could legitimately be inferred to be predatory, suffices to establish a violation of Section 2(a).
IV.
Ferro’s final point is that Hommel’s proof of damages does not satisfy the standard of certainty required by Section 4 of the Clayton Act. It concedes that the court’s charge on proving lost net profits was correct.5 But Ferro urges that Hommel’s evidence establishes that it would have incurred additional overhead expenses in order to produce the extra frit it might have sold but for the illegal pricing, and that the jury damage award fails to take such expense into account. However the jury heard the testimony of Richard 0. Hommel:
Q. Would you — if you had produced an additional 2,000,000 pounds, 3,000,000 pounds a year, which you say you could have done, would you have had any additional costs, other than the materials and the items you have read to us?
A. Nothing of any major consequences.
(II A, 40). If it credited this testimony, the jury was entitled to calculate damages on lost sales without taking into account any additional overhead expense. Thus Ferro’s sole challenge to the amount of the verdict is misdirected. There is ample evidence from which the jury could find lost net profits.
V.
I would affirm the order of the district court denying Ferro’s motion for judgment notwithstanding the verdict.

 Marginal cost is the cost of manufacturing “the last unit.” Variable costs are costs that vary with changes in output, as distinguished from “fixed costs,” which remain constant despite changes in output. The use of variable cost as a substitute for marginal cost is not an issue in this case.

. Actually the grounds advanced in support of the motion refined Ferro’s position somewhat. They included:
(a) The proofs, taken in the light most favorable to the plaintiff, O. Hommel Company, establish as a matter of law, that defendant, in pricing its product above its average variable cost to produce such product, did not injure, lessen or adversely affect competition within the frit industry or otherwise violate any of the standards set down by the Robinson-Patman Amendment to the Clayton Act.
(b) Based upon the proofs adduced at trial, taken in the light most favorable to the plaintiff, the jury could not reasonably conclude that defendant sold either porcelain enamel or pottery frit in the relevant market between 1973 and 1977 at a price below its average variable cost to produce.
(I A, 163-64). (Emphasis supplied).
Thus it sought a ruling that in all circumstances sales at prices above average direct manufacturing costs, excluding other variable costs, were in a primary line Robinson-Patman case as a matter of law permissible. As noted in the text, there was evidence from which the jury could infer that some variable costs were excluded from Ferro’s calculation of its average variable cost to produce.

. Arguably the contention about Hommel’s steady market share was advanced at least cryptically in the motion for a directed verdict (III A, 517). The contention was not made to or discussed by the trial court in the post-trial proceeding. (I A, 195-210).

. Ferro’s attorney argued:
On the Robinson-Patman Act, we have two bases for our motion. One, that in a like competition case, there is the same requisite for showing damage to competition. All, again, that has been shown is that Hommel might have gotten sales. That is the best that was testified to. Nobody — their market share was the same; nobody was excluded from the market. Easy entry into the market is all established at this juncture by the evidence.
(III A, 517).

. But cf. Cone v. West Virginia Pulp & Paper Co., 330 U.S. 212, 67 S.Ct. 752, 91 L.Ed. 849 (1947); Globe Liquor Co. v. San Roman, 332 U.S. 571, 68 S.Ct. 246, 92 L.Ed. 177 (1948); Johnson v. New York, New Haven & Hartford Railroad, 344 U.S. 48, 73 S.Ct. 125, 97 L.Ed. 77 (1952); Garman v. Metropolitan Life Ins. Co., 175 F.2d 24, 28 (3d Cir. 1949).

. The court charged:
[I] instruct you that only lost net profits, before taxes, may constitute an item of actual damages in antitrust cases. Net profit before tax is the total revenue received from sales minus the cost of the goods sold, including labor and material costs, and minus operating expenses and overhead.
(Ill A, 939).