The Antitrust Attorney Blog
Authors: Steven Cernak and Cansu Gunel
In May 2024, this blog discussed a rare plaintiff victory in a Robinson-Patman case. In February 2026, the Ninth Circuit affirmed that victory in L.A. International Corp. v. Prestige Brands Holdings, Inc. In doing so, the court confirmed our key takeaways from 2024 — a successful Robinson-Patman case, while possible, will be expensive and lengthy and will only get easier if more plaintiff-friendly opinions, like this one from the Ninth Circuit, are written. In crafting that opinion, however, the court might have created a split with at least the Second Circuit that the Supreme Court could find interesting.
Robinson-Patman and Case History
This blog has recounted the elements and history of Robinson-Patman in prior posts. In summary, RP is a Depression-era amendment of the Clayton Act that makes certain manufacturer discounts to some (usually large) resellers but not to other (usually small) resellers illegal if there is the requisite harm to competition.
For decades, the FTC and private plaintiffs brought numerous cases that generated many opinions, including from the Supreme Court. As antitrust law evolved to focus nearly exclusively on benefits to consumers, especially lower prices, the FTC stopped bringing cases and private cases dwindled. The few cases brought often resulted in plaintiff losses and defendant-friendly precedent. Still, the non-zero risk of RP enforcement meant that most manufacturers and retailers paid at least some attention to RP. Because the FTC has become more interested in RP enforcement, including bringing two cases recently, RP clearly is not “gone” and now might not even be “forgotten.”
L.A. International Corp. v. Prestige Consumer Healthcare, Inc., is one of those rare private RP suits and even rarer plaintiff wins. As we detailed in 2024, Defendants manufacture and distribute Clear Eyes eye drops. The suit alleged that Defendants sold Clear Eyes at a lower price and with greater promotional allowances to Costco (specifically, Costco Business Centers that resell to retailers) than to Plaintiffs. Plaintiffs are several distributors that also buy and resell such products to retailers like local convenience stores.
After years of litigation, the case was tried to a jury, which found for Plaintiffs and allocated around $700,000 in damages among the several distributors. The lower court rejected various objections to its jury instructions by Defendants, which formed the basis of Ninth Circuit appeal.
Competitive Injury Standards: A Circuit Split
The Ninth Circuit’s “Geographic Proximity” Approach
The Ninth Circuit affirmed, applying what it characterized as the traditional “chain-store paradigm,” where wholesalers and large retailers like Costco both “carried and resold an inventory of [a product] to all comers.” The court found that “to establish that two customers are in general competition, it is sufficient to prove that:
- one customer has outlets in geographical proximity to those of the other;
- the two customers purchased goods of the same grade and quality from the seller within approximately the same period of time; and
- the two customers are operating on a particular functional level such as wholesaling or retailing.”
Critically, the Ninth Circuit rejected any requirement that competitive injury be “substantial,” holding that “Congress strung together the clauses in Section 2(a) with the disjunctive ‘or,’ which requires that we treat the clauses separately.” Section 2(a), in relevant part, states:
. . . where the effect of such 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 . . .
Thus, in rejecting the Defendants’ claim that the instructions should have included the “substantial” requirement because “the word ‘substantially’ … modifies the phrase ‘to injure, destroy, or prevent competition,” the court concluded that “[w]holesalers needed to show only that the effects of Prestige’s discriminatory actions ‘may be … to injure, destroy, or prevent competition’” and that “the district court did not err when it instructed the jury that the plaintiff was required to establish ‘a reasonable possibility of harm to competition.’”
The Ninth Circuit rejected Defendants’ argument for three reasons:
- the ABA Model Jury Instructions only requires plaintiffs to show “a reasonable possibility of harm to competition;”
- standard canons of construction would not have “substantially” in the first element of the list modify the third element; and
- Ninth Circuit precedent never addressed the issue explicitly but did describe the element as “a reasonable possibility that a price differential may harm competition.”
The Ninth Circuit buttressed this finding with a reference to the Supreme Court’s most recent RP opinion, Volvo v. Reeder-Simco, noting that the Court “omitted the word ‘substantially’ when recounting the elements for secondary-line injury, requiring that a plaintiff need only show that ‘the effect of [the price] discrimination may be to injure, destroy, or prevent competition.’”
Importantly, and consistent with its rejection of any “substantial” harm requirement, the Ninth Circuit also clarified that the Morton Salt inference—which permits courts to presume competitive injury from substantial price differences sustained over time—operates as an affirmative presumption once such a sustained price disparity is shown. As the court explained, this presumption generally suffices to establish a reasonable possibility of injury to competition without requiring proof of substantiality or significant direct lost sales. This approach aligns with the foundation laid by the Supreme Court in Federal Trade Commission v. Morton Salt Co. which held that a factfinder may infer injury to competition from a sustained, substantial price differential because such disparities can impair the competitive opportunities of individual merchants and thereby create a “reasonable possibility” that competition itself may be harmed.
The Second Circuit’s “Substantial Harm” Requirement
This Ninth Circuit language seems inconsistent with the Second Circuit’s opinion in 2015’s Cash & Henderson’s Drugs, Inc. v. Johnson & Johnson. There, the Second Circuit affirmed a summary judgment for Defendants because Plaintiffs’ showing of a loss of approximately .25% of customers to the favored purchasers was de minimis, thus inadequate to show the requisite harm to competition. In doing so, the court found that plaintiffs “failed to raise a question of material fact as to whether they suffered competitive injury” because they “could not generate evidence tending to show that they lost more than a de minimis number of customers to the favored purchasers, indicating that competition was not substantially harmed or threatened by the price difference in question.” [emphasis added]
