Pat's Pen Co.manufacturers and sells an inexpensive ball-point pen.Salley's Stationery purchases the pens for $.25 each in quantities of 1,000.Salley's discovered that a national chain,a competitor of Salley's,buys the pen at $.20 for 1,000.If Salley's Stationery sues Pat's Pen Co.for price discrimination:
A) Pat's Pen Co. will win if it can prove that it has been selling to the national chain continuously at the cheaper rate.
B) Pat's Pen Co. will win if it can prove that it did not intend to economically harm Salley's Stationery.
C) Salley's Stationery will win unless Pat's Pen Co. can justify the price differential.
D) Salley's Stationery will win since price discrimination is a per se violation with no real defenses.

Question

Quizplus · Accepted Answer

Price discrimination is illegal under the Robinson-Patman Act unless the seller can demonstrate that there are valid reasons for the price difference, such as quantity discounts or differences in the cost of production or delivery. Pat's Pen Co. may have to justify the price differential in court, and Salley's Stationery would likely win the case unless Pat's Pen Co. can provide a valid defense. The fact that Pat's Pen Co. has been selling to the national chain continuously at a lower rate does not necessarily justify the price differential. Intent to harm is also not a relevant defense.