Amicus Curiae Brief — Innovation Ventures, LLC, et al., Petitioners v. U.S. Wholesale Outlet & Distribution, Inc., et al.

Supreme Court briefJun 6, 2024

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No. 23-1099

IN THE

Supreme Court of the United States

INNOVATION VENTURES, LLC, ET AL.,

Petitioners,

U.S. WHOLESALE OUTLET &

DISTRIBUTION, INC., ET AL.,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

BRIEF FOR THE RETAIL LITIGATION

CENTER, INC. AS AMICUS CURIAE

IN SUPPORT OF PETITIONERS

DEBORAH R. WHITE

LARISSA M. WHITTINGHAM

RETAIL LITIGATION

CENTER, INC.

99 M St., SE, Suite 700

Washington, D.C. 20003

HASHIM M. MOOPPAN

Counsel of Record

TRACI L. LOVITT

KATE M. BROCKMEYER

ALEXIS ZHANG

JONES DAY

51 Louisiana Ave., NW

Washington, DC 20001

(202) 879-3939

hmmooppan@jonesday.com

Counsel for Amicus Curiae

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...................................... ii

INTEREST OF AMICUS CURIAE ........................... 1

SUMMARY OF ARGUMENT .................................... 2

ARGUMENT .............................................................. 5

THE NINTH CIRCUIT’S PER SE TEST FOR

COMPETITION UNDER THE RPA IGNORES

ECONOMIC REALITIES AND THUS WOULD

INFLICT ECONOMIC HARMS ................................... 5

A. The Ninth Circuit’s Three-Prong Test

Compels A Finding Of Competition

Even When Resellers Are Not Actually

Competing For The Same Customers ........... 5

B. The Ninth Circuit’s Overbroad Test

Serves No Valid Purpose, But Would

Injure Manufacturers, Resellers, And

Consumers ................................................... 11

II. THE NINTH CIRCUIT’S PER SE TEST

EXACERBATES THE TENSION BETWEEN THE

RPA AND THE REST OF ANTITRUST LAW ............ 14

CONCLUSION ......................................................... 16

TABLE OF AUTHORITIES

Page(s)

CASES

Atalanta Trading Corp. v. FTC,

258 F.2d 365 (2d Cir. 1958) ................................... 7

Automatic Canteen Co. of Am. v. FTC,

346 U.S. 61 (1953) ................................................ 16

Boise Cascade Corp. v. FTC,

837 F.2d 1127 (D.C. Cir. 1988) ............................ 15

Brooke Grp. Ltd. v. Brown & Williamson

Tobacco Co.,

509 U.S. 209 (1993) .............................................. 15

Cont’l T.V. v. GTE Sylvania,

433 U.S. 36 (1977) ................................................ 10

E. Auto Distribs., Inc. v. Peugeot Motors

of Am., Inc.,

795 F.2d 329 (4th Cir. 1986) .................................. 6

Feesers, Inc. v. Michael Foods, Inc.,

591 F.3d 191 (3d Cir. 2010) ............................. 6, 15

Fla. Seed Co. v. Monsanto Co.,

105 F.3d 1372 (11th Cir. 1997) ............................ 15

FTC v. Fred Meyer, Inc.,

390 U.S. 341 (1968) ................................ 5, 7, 10, 11

FTC v. Henry Broch & Co.,

363 U.S. 166 (1960) .............................................. 11

iii

Great Atl. & Pac. Tea Co. v. FTC,

440 U.S. 69 (1979) ................................................ 15

Gulf Oil Corp. v. Copp Paving Co.,

419 U.S. 186 (1974) .............................................. 10

Kirtsaeng v. John Wiley & Sons, Inc.,

568 U.S. 519 (2013) ................................................ 1

Leegin Creative Prods. v. PSKS, Inc.,

551 U.S. 877 (2007) .............................................. 10

Lewis v. Philip Morris, Inc.,

355 F.3d 515 (6th Cir. 2004) .............................. 8, 9

NCAA v. Bd. of Regents,

468 U.S. 85 (1984) ................................................ 14

Simplicity Pattern Co. v. FTC,

258 F.2d 673 (D.C. Cir. 1958) ............................ 8, 9

South Dakota v. Wayfair, Inc.,

585 U.S. 162 (2018) ................................................ 1

United States v. Concentrated Phosphate

Export Ass’n,

393 U.S. 199 (1968) .............................................. 10

USPS Bd. of Govs. v. Aikens,

460 U.S. 711 (1983) ................................................ 7

Volvo Trucks N. Am., Inc. v. Reeder-Simco

GMC, Inc.,

546 U.S. 164 (2006) ................................ 6, 7, 15, 16

STATUTES

15 U.S.C. § 13 ................................................ 1, 2, 5, 12

OTHER AUTHORITIES

80 Cong. Rec. 8213 (May 28, 1936) ........................... 12

14 Phillip E. Areeda & Herbert Hovenkamp,

Antitrust Law (2022) ...................................... 13, 14

Robert H. Bork, The Antitrust Paradox (1982) ........ 15

Dep’t of Justice, Report on the RobinsonPatman Act (1977) ......................................... 13, 14

FTC Staff Report, Feeding America In A

Time of Crisis: The United States

Grocery Supply Chain and the

COVID-19 Pandemic (Mar. 21, 2024) ..... 12, 13, 14

INTEREST OF AMICUS CURIAE

The Retail Litigation Center, Inc. (RLC) is the only

trade association dedicated to representing the retail

industry in the courts. 1 The RLC seeks to provide

courts with the retail industry’s perspective on

important legal issues affecting its members. Those

members include many of the country’s largest and

most innovative retailers, and they collectively

employ millions of workers nationwide, provide goods

and services to tens of millions of consumers, and

generate tens of billions of dollars in annual sales.

Since its founding in 2010, the RLC has filed more

than 200 amicus briefs, and this Court and others

have favorably cited its briefs. See, e.g., South Dakota

v. Wayfair, Inc., 585 U.S. 162, 184 (2018); Kirtsaeng v.

John Wiley & Sons, Inc., 568 U.S. 519, 542 (2013).

This case is of great significance to the RLC and the

retail industry.

Manufacturers often offer

payments—known as promotional funding—to

resellers of their products to subsidize services that

encourage more sales of the products, such as product

displays or demonstrations. Promotional funding

benefits competition because it can enable the reseller

to sell more of the manufacturer’s products at lower

prices to consumers. Nevertheless, Section 2(d) of the

Robinson-Patman Act (RPA) restricts the ability of a

manufacturer to offer promotional funding to one

reseller if it does not offer proportionally equal

1 No counsel for a party authored any part of this brief, and no

person other than the RLC, its members, or its counsel made any

monetary contribution intended to fund its preparation or

submission. The parties’ counsel of record received timely notice

of the RLC’s intent to file this brief.

funding to other resellers “competing” to resell the

manufacturer’s products. 15 U.S.C. § 13(d). In the

decision below, to determine whether resellers are

“competing” under Section 2(d), the Ninth Circuit

adopted an overbroad per se test, which disregards

material evidence that particular resellers are not

actually competing with one another because

customers do not treat them as substitutes. The RLC

submits this amicus brief to highlight why the Ninth

Circuit’s legally flawed holding will impose economic

harms at every level of the supply chain and

ultimately harm competition, rather than benefit it.

This Court should grant certiorari and reverse.

SUMMARY OF ARGUMENT

Section 2(d) of the RPA restricts the ability of

manufacturers to offer promotional funding to

resellers of their products:

It shall be unlawful for any person engaged in

commerce to pay or contract for the payment of

anything of value to or for the benefit of a

customer of such person in the course of such

commerce as compensation or in consideration

for any services or facilities furnished by or

through such customer in connection with the

processing, handling, sale or offering for sale of

any products or commodities manufactured, sold,

or offered for sale by such person, unless such

payment or consideration is available on

proportionally equal terms to all other customers

competing in the distribution of such products or

commodities.

15 U.S.C. § 13(d). Critically, this nondiscrimination

mandate to offer “proportionally equal” promotional

funding to resellers applies only insofar as the

resellers are actually “competing” with each other to

resell the manufacturer’s products. Id.

The Ninth Circuit held that it is “sufficient to

establish … actual competition” if the following threeprong test is satisfied: “(1) one customer has outlets

in geographical proximity to those of the other; (2) the

two customers purchased goods of the same grade and

quality from the seller within approximately the same

period of time; and (3) the two customers are

operating on a particular functional level such as

wholesaling or retailing.” Pet.App. 21a, 28a-29a

(cleaned up). As Judge Miller recognized, the result

of this holding is to “mak[e] any other evidence” as to

the presence or absence of competition “irrelevant.”

Pet.App. 44a (Miller, J., dissenting in part). Such a

per se rule is both wrong and worthy of certiorari, as

well explained by Petitioners. The RLC submits this

amicus brief to emphasize two additional reasons why

this Court’s intervention is especially warranted here.

First, the Ninth Circuit’s per se test ignores

economic realities and thus would inflict economic

harms. Even where resellers are geographically

proximate, are contemporaneously purchasing goods

of same grade and quality, and are operating at the

same functional level, they may not actually be in

competition with one another. A variety of additional

factors—such as a reseller’s range of product offerings

and average price points—could cause customers not

to view two resellers as competitive substitutes.

Applying Section 2(d) to such resellers under the

Ninth Circuit’s per se test would impose significant

costs with no countervailing benefits. On the one

hand, Congress passed the RPA to protect smaller

resellers from price-related discrimination favoring

their larger competitors, but resellers need no

protection from those with whom they are not

competing at all. They thus will derive no legitimate

benefit from courts restricting the ability of

manufacturers to offer better promotional funding to

their non-competitors.

On the other hand,

manufacturers, resellers, and consumers will all be

injured by such gratuitous restrictions. The most

likely consequence is that manufacturers will reduce

the amount of promotional funding available, leading

to decreased sales of the manufacturer’s products

and/or increased promotional costs borne by resellers

and potentially passed onto consumers.

Second, the Ninth Circuit’s per se test exacerbates

the tension between the RPA and the rest of antitrust

law. Modern antitrust principles seek to protect

competition for the benefit of consumers, typically by

restricting conduct that is likely to lead to increased

prices (or decreased output). By contrast, the RPA is

geared to protecting smaller resellers from the

disadvantage of manufacturers offering better price

discounts and subsidies to larger competing resellers,

notwithstanding that such effective price reductions

tend to benefit consumers rather than harm them.

Accordingly, this Court has repeatedly emphasized, in

decisions spanning more than half a century, that the

RPA should be narrowly construed to mitigate this

tension. The Ninth Circuit’s holding does the exact

opposite: it broadly construes the RPA to prohibit

price-related discrimination that benefits consumers

even where the resellers are not actually competitors.

ARGUMENT

THE NINTH CIRCUIT’S PER SE TEST FOR

COMPETITION UNDER THE RPA IGNORES

ECONOMIC REALITIES AND THUS WOULD

INFLICT ECONOMIC HARMS

The antidiscrimination requirement that Section

2(d) of the RPA imposes on a manufacturer when

offering promotional funding to resellers of its product

applies only if the resellers are actually “competing”

with each other for the same customers. 15 U.S.C.

§ 13(d). Whether particular resellers compete turns

on the “economic realities” of the situation, not

theoretical constructs. See FTC v. Fred Meyer, Inc.,

390 U.S. 341, 349 (1968). Namely, based on a “careful

analysis of each parties’ customers,” are “the parties

each directly after the same dollar”? See Pet.App. 40a

(Miller, J., dissenting in part) (citing cases) (cleaned

up). The Ninth Circuit, however, failed to consider all

indicia of whether such competition exists, instead

adopting a per se test limited to three factors. This

overbroad rule will sweep in resellers who are not

viewed as potential competitive substitutes by their

actual customers in light of additional factors that the

rule disregards. Extending Section 2(d)’s restriction

on promotional funding to such non-competing

resellers would serve no procompetitive purpose, but

would harm manufacturers, resellers, and consumers.

A. The Ninth Circuit’s Three-Prong Test

Compels A Finding Of Competition

Even When Resellers Are Not Actually

Competing For The Same Customers

Under the Ninth Circuit’s per se test, it “is sufficient

to establish … actual competition” that two resellers

of the same product “operated at the same functional

level,” “in the same geographic area,” “within

approximately the same period of time.” Pet.App.

28a-29a. To be sure, those factors are undoubtedly

relevant to whether resellers are actually competing,

and may well be necessary for such competition to

exist. See, e.g., E. Auto Distribs., Inc. v. Peugeot

Motors of Am., Inc., 795 F.2d 329, 335 (4th Cir. 1986)

(if “two retail customers” are “located in separate

geographic markets,” they generally will “not compete

for the same consumers”). But it does not follow that

resellers who meet those three factors will always be

competing for the same consumers, or that no other

factors may be relevant in refuting the existence of

such competition. See Pet.App. 41a-45a (Miller, J.,

dissenting in part).

For example, in Volvo Trucks North America, Inc. v.

Reeder-Simco GMC, Inc., 546 U.S. 164 (2006), this

Court held that, in the context of “a customer-specific

competitive bidding process” for “a product subject to

special order,” the plaintiff dealer could not show that

it “compete[d] with beneficiaries of the alleged

discrimination for the same customer.” Id. at 170, 178;

accord Feesers, Inc. v. Michael Foods, Inc., 591 F.3d

191, 197-207 (3d Cir. 2010).

As Judge Miller

explained, that holding forecloses the Ninth Circuit’s

per se test, which would have been satisfied on Volvo’s

facts. Pet. App. 39a-40a (dissenting in part). Unable

to dispute this point, the panel majority tried to limit

Volvo to the custom-bidding context. See id. at 31a32a. But the fundamental flaw with the per se test

that Volvo illustrates cannot be so cabined.

“[T]he economic reality” is that “markets can be

segmented by more than simply functional level,

geography, and grade and quality of goods” purchased

at the same time. Pet.App. 44a (Miller, J., dissenting).

Depending on the context, material differences in

additional factors like price point and product

selection may show that two resellers are not actually

“competing … for the same customers.” Fred Meyer,

390 U.S. at 356; accord Volvo, 546 U.S. at 178. The

Ninth Circuit’s per se rule thus improperly precludes

“consider[ing] all the evidence,” by giving a subset of

relevant evidence dispositive weight. USPS Bd. of

Govs. v. Aikens, 460 U.S. 711, 714 n.3 (1983).

1. Start with price point. Product pricing is

relevant even under the Ninth Circuit’s test, given the

requirement that resellers be marketing “goods of the

same grade and quality.” Pet.App. 21a. As other

courts have recognized, seemingly similar products

may not be of the same grade and quality if, among

other things, they “pricewise are not competitive,” as

there often will be “little cross-elasticity of demand”

between products at different price points. Atalanta

Trading Corp. v. FTC, 258 F.2d 365, 371 n.5 (2d Cir.

1958). For example, if a car manufacturer offers an

allowance for promotional displays to a retailer that

purchases its top-end model, it does not necessarily

need to offer an allowance to another retailer that

purchases only its entry-level model. See id.

But the Ninth Circuit’s test fails to grasp that the

same economic dynamic applies even to identical

products if the resellers differ in some other material

way that causes them to be situated at vastly

different, non-competing price points. As Judge

Miller cogently observed, “[i]n the New York

geographic market, you can order a Coke both at Le

Bernardin and at McDonald’s, but no one thinks they

are engaged in actual competition.” Pet.App. 44a-45a

(dissenting in part). So too, a luxury department store

and a dollar store a few blocks away may meet the

Ninth Circuit’s categorical criteria for at least some

products that they each happen to sell, but they are

unlikely to be in bona fide competition for the same

consumers even for those shared products. Yet the

decision below would conclusively deem them to be

competitors in this implausible respect.

2. Likewise, the Ninth Circuit’s per se test ignores

that retailers offering dramatically different product

selections may not be in competition even with respect

to particular products they both sell. Depending on

the facts, consumers may not view these retailers as

competitive substitutes.

Take Lewis v. Philip Morris, Inc., where the Sixth

Circuit held that summary judgment was

inappropriate to resolve an RPA claim by vending

machine operators alleging that they competed with

convenience stores in selling cigarettes. 355 F.3d 515,

519, 530-33 (6th Cir. 2004).

As courts have

recognized, “vending machine clientele” may be

different from “counter customers” at stores for

various reasons, including whether they are making a

spur-of-the-moment purchase, looking to buy only one

type of product, etc. See Simplicity Pattern Co. v.

FTC, 258 F.2d 673, 683 n.20 (D.C. Cir. 1958), rev’d in

part on other grounds, 360 U.S. 55 (1959). In Lewis,

the Sixth Circuit allowed the vendors to go to trial

only because they presented specific evidence of

actual competition, offering expert analysis as to the

considerations that influence cigarette purchasers

and also testimony of vendor losses after “customers

kept leaving the premises to buy cigarettes at nearby

convenience stores.” 355 F.3d at 531-33. The clear

corollary was that summary judgment against the

vendors would have been appropriate if they had not

proffered such evidence. See id. And at trial, the jury

ultimately rejected the vendors’ Section 2(d) claims.

See Dkt. No. 451, Lewis v. Philip Morris, Inc., No.

3:99-cv-99 (M.D. Tenn. July 14, 2005) (jury verdict).

In conflict with the Sixth Circuit’s fact-intensive

decision, the Ninth Circuit’s per se rule would

disregard such material evidence of consumer

behavior. It would be sufficient to establish actual

competition that the vendors and convenience stores

both sold directly to consumers, were geographically

proximate, and purchased the same cigarettes at

roughly the same time. All of the vendors’ evidence,

as well as the consideration of that evidence by the

Sixth Circuit and the jury, would be superfluous. So

the vendors would prevail even if they had not made

any such evidentiary showing, and even if the

cigarette manufacturer had offered substantial

countervailing evidence of the economic realities. Cf.

Lewis, 355 F.3d at 531 (“a cross-elasticity study …

would be helpful” to assess whether competition

exists).

3. This case vividly illustrates the significant

evidence of non-competition that the Ninth Circuit’s

per se inquiry improperly rejects.

Petitioners

highlighted evidence of “distinct features” separating

the Respondent Wholesalers from Costco’s wholesale

sales, which “may well have appealed to different

customers” and eliminated any actual competition

between the two. Pet.App. 41a (Miller, J., dissenting

in part). For example, unlike Costco, the Respondent

Wholesalers offered customers in-house credit, a

wider flavor inventory, and the ability to negotiate on

pricing. Id. The parties also presented “dueling

expert[]” testimony, analyzing issues such as whether

customers had switched between Costco and the

Respondent Wholesalers when there were price

differences. Id. at 41a-42a. Yet the panel majority

brushed aside all this evidence as “not relevant to

determining whether Costco and the Wholesalers are

‘customers competing’” under Section 2(d). Pet.App.

29a-31a.

The panel’s blinkered approach defies this Court’s

repeated directive in the antitrust context to focus on

“economic realities.” Fred Meyer, 390 U.S. at 349;

accord, e.g., Gulf Oil Corp. v. Copp Paving Co., 419

U.S. 186, 198 (1974); United States v. Concentrated

Phosphate Export Ass’n, 393 U.S. 199, 208 (1968). The

Court has made clear that per se antitrust rules

should be the rare exception, adopted only in areas

where the courts have had “considerable experience”

and “can predict with confidence” that a bright-line

rule would yield the right outcome in “all or almost all

instances.” Leegin Creative Prods. v. PSKS, Inc., 551

U.S. 877, 886-87 (2007). But as the facts of this case

and the examples in this brief reflect, the Ninth

Circuit’s rule falls well short of that high bar; indeed,

it ignores obvious countervailing factors. The factspecific nature of the question whether resellers are

in competition only underscores why this Court’s

antitrust precedents generally demand a focus on

“demonstrable economic effect rather than … upon

formalistic line drawing.” Id. at 887 (quoting Cont’l

T.V. v. GTE Sylvania, 433 U.S. 36, 58-59 (1977)).

B. The Ninth Circuit’s Overbroad Test

Serves No Valid Purpose, But Would

Injure Manufacturers, Resellers, And

Consumers

The Ninth Circuit’s per se test is both unnecessary

and harmful.

Restricting manufacturers from

offering unequal promotional funding to resellers does

not serve any purpose in leveling the competitive

playing field where the resellers are not competing on

the same field at all. Instead, applying the RPA to

such resellers under the Ninth Circuit’s overbroad

test will simply burden the use of promotional funding

in enabling selected resellers to sell more of the

manufacturer’s products at lower prices to consumers.

On the one hand, extending Section 2(d) to cases

where resellers are not in actual competition with

each other is contrary to the RPA’s purpose. Congress

enacted the statute to protect smaller resellers from

the perceived unfair advantages that larger

competing resellers could gain “by virtue of their

greater purchasing power.” FTC v. Henry Broch &

Co., 363 U.S. 166, 168 (1960). Where large chain

stores and smaller merchants were in competition, the

former’s ability to “gain[] discriminatory preferences”

in promotional allowances and other manufacturer

concessions was viewed as “threatening the continued

existence of the independent merchant.” Fred Meyer,

390 U.S. at 349-50. But of course, resellers face no

such threat from other resellers with whom they are

not competing, and they will derive no legitimate

benefit from restricting the promotional funding

available to those other resellers.

Unequal

promotional funding between such resellers will not

impact where their respective customers choose to

purchase because, by definition, customers do not

view non-competing resellers as substitutes. That is

why Section 2(d) is limited to “competing” resellers, 15

U.S.C. § 13(d), and why Congress never intended the

statute to apply when resellers are “not in

competition,” 80 Cong. Rec. 8213, 8230 (May 28, 1936)

(Rep. Boileau).

On the other hand, extending Section 2(d) to such

cases would inflict harm at each level of the supply

chain, from manufacturers through consumers.

Manufacturers provide resellers “significant amounts

of money” for promotional funding “to get their goods

on the retailers’ shelves, to obtain prominent

placement, or to fund discounts, among other

strategies” to better compete against rival

manufacturers. FTC Staff Report, Feeding America

In A Time of Crisis: The United States Grocery Supply

Chain and the COVID-19 Pandemic 18 (Mar. 21,

2024),

https://tinyurl.com/4vadbfkb.

Efficient

allocation of promotional funding is essential to

maximizing those competitive benefits. The Ninth

Circuit’s erroneous expansion of Section 2(d)’s scope

further restricts manufacturers’ ability to efficiently

promote their products against rivals. Instead, they

must decide whether to (i) reduce their use of

promotional funding altogether, (ii) spread their

promotional-funding budget to equally cover even

non-competing resellers, or (iii) increase their

spending on promotional funding to equally cover

those resellers, at the expense of lower pricing or other

business priorities. In all cases, there would be no

improvement in competition among resellers for the

manufacturer’s product, while the entire supply chain

would be harmed.

Although any of these outcomes would be harmful,

especially given the lack of countervailing benefits,

the most likely net result is that manufacturers would

provide less promotional funding.

As historical

experience with Section 2(d) reflects, manufacturers

often are loath to spread their promotional funding

across additional resellers, as doing so will require

spending on situations where “the expense of the

program” would outweigh the “benefit to the seller.”

Dep’t of Justice, Report on the Robinson-Patman Act

92-93 (1977) [hereinafter DOJ Report]. And it often

will be “too expensive” to increase the total amount of

promotional funding. See 14 Phillip E. Areeda &

Herbert Hovenkamp, Antitrust Law ¶ 2340b1 (2022).

Thus, manufacturers will in many cases be forced to

forego promotional funding even though it would

otherwise be “both useful and desired.” DOJ Report,

supra, at 92; cf. Areeda & Hovenkamp, supra,

¶ 2340b1 (“[t]he empirical evidence suggests that

when sellers are forbidden from making selective

price cuts, they generally respond by making none at

all”).

The risk of reduced promotional funding is a

significant concern for resellers. Promotional funding

from manufacturers is a “large and important source”

of money that resellers use to subsidize their efforts to

gain more sales. See FTC Staff Report, supra, at 1819. A reduction in such funding would force retailers

either to engage in fewer promotional activities like

product displays and demonstrations, or to incur

those costs themselves.

And that, in turn, would ultimately harm

consumers. Consumers benefit from promotional

activities that can, for example, “induce [them] to try

new products.” See id. at 18. And likewise, they

benefit when resellers “pass … through directly to

[them]” the cost savings from manufacturers’

subsidization of promotional activities. See id. at 19.

So consumers would be harmed if resellers curtailed

their promotional activities or passed through their

increased costs in performing them. See Areeda &

Hovenkamp, supra, ¶¶ 2340a, 2340b1.

Neither law nor logic supports construing the RPA

to inflict these harms on manufacturers, resellers, and

consumers when the resellers receiving the favorable

promotional funding do not even compete with the

resellers who do not. But that is precisely what the

Ninth Circuit’s per se test does.

II. THE NINTH CIRCUIT’S PER SE TEST

EXACERBATES THE TENSION BETWEEN THE

RPA AND THE REST OF ANTITRUST LAW

The Ninth Circuit’s overbroad test is particularly

pernicious because it conflicts with this Court’s longstanding policy of narrowly construing the RPA. The

decision below is a paradigmatic example of the wellrecognized risk that the RPA can be misapplied in

ways that undermine settled antitrust principles.

Courts and commentators have long recognized

that the RPA, if read loosely, sits in tension with

general antitrust law. “[T]he principal objective of

antitrust policy is to maximize consumer welfare by

encouraging firms to behave competitively[.]” Areeda

& Hovenkamp, supra, ¶ 100a.

Accordingly, the

typical application of antitrust law is to restrict

conduct that is likely to harm consumers by leading to

increased prices (or reduced output). See, e.g., NCAA

v. Bd. of Regents, 468 U.S. 85, 107-08 (1984) (Sherman

Act bars certain agreements among competitors that

would harm “consumer welfare” by making the

“[p]rice … higher [or] output lower than they

otherwise would be”); Fla. Seed Co. v. Monsanto Co.,

105 F.3d 1372, 1374-75 (11th Cir. 1997) (“The

objective in preventing certain mergers is to prevent

the acquiring party from obtaining sufficient market

power to raise prices.” (cleaned up)). In contrast, the

RPA seeks to protect smaller resellers from financial

disadvantage by restricting manufacturers’ ability to

offer price discounts and subsidies to larger competing

resellers, notwithstanding that such practices by

manufacturers tend to decrease consumer prices. See

Part I.B, supra; accord, e.g., Robert H. Bork, The

Antitrust Paradox 384 (1982) (criticizing the RPA for

an “enormous” “destruction of national wealth”).

Thus, if read in isolation, the RPA could become an

“anti-competitive island” undermining antitrust law’s

focus on “pro-competitive efficiency and maximization

of consumer welfare.” Boise Cascade Corp. v. FTC,

837 F.2d 1127, 1138 (D.C. Cir. 1988).

Over more than half a century, however, this Court

has repeatedly “resist[ed]” expansive readings of the

RPA and instead “continue[d] to construe the Act

‘consistently with broader policies of the antitrust

laws.’” See, e.g., Volvo, 546 U.S. at 181 (quoting

Brooke Grp. Ltd. v. Brown & Williamson Tobacco Co.,

509 U.S. 209, 220 (1993)); see also Feesers, 591 F.3d at

198-99 (collecting additional cases, and “dutifully

follow[ing] the Supreme Court’s lead by narrowly

construing the RPA”).

The Court has thereby

mitigated the risk that the RPA will “give rise to a

price uniformity and rigidity in open conflict with the

purposes of other antitrust legislation.” Great Atl. &

Pac. Tea Co. v. FTC, 440 U.S. 69, 80 (1979). More

specifically, this Court has warned against wielding

the RPA with an excessive focus on “the protection of

existing competitors” in the intrabrand resale of a

single manufacturer’s products, because “[i]nterbrand

competition” between manufacturers of competing

products “is the primary concern of antitrust law.”

See Volvo, 546 U.S. at 180-81 (cleaned up).

Yet the Ninth Circuit’s per se test does the opposite

and worse. Not only does it restrict manufacturers

from efficiently allocating promotional funding to

better compete with their rivals, but it does so by

“protecting” resellers from discrimination favoring

non-competitors. This unjustifiable extension of the

RPA flouts the Judiciary’s “duty to reconcile [the

statute] … with the broader antitrust policies that

have been laid down by Congress.”

Automatic

Canteen Co. of Am. v. FTC, 346 U.S. 61, 74 (1953).

CONCLUSION

This Court should grant the certiorari petition.

June 6, 2024

Respectfully submitted,