Copyright 1997 Chicago Sun-Times, Inc.
December 3, 1997, WEDNESDAY, Late Sports Final Edition
SECTION: FIN; YOU AND THE LAW; Pg. 72
LENGTH: 713 words
HEADLINE: A textbook case of bias in
BYLINE: Steven P. Garmisa
Why are college textbooks so expensive? According to a
lawsuit filed by the National Association of College Stores, college bookstores are
victims of price discrimination by major textbook publishers.
When a book is ordered for classroom use, college bookstores typically get a 20 percent
discount from publishers. But when the same book is ordered by other stores, according to
the association, publishers give discounts ranging from 30 percent to 50 percent. The
association argues that this price difference violates a federal law called the
Since it was enacted in 1936, the Robinson-Patman Act has become the nation's most
criticized antitrust law. While other antitrust laws are designed to protect free
competition (such as by prohibiting monopolies and barring price-fixing agreements) the
Robinson-Patman Act was designed to protect small businesses from the sometimes harsh
consequences of competition. When Congress enacted the Robinson-Patman Act, the Great
Atlantic & Pacific Tea Co. was unleashing a new concept called "supermarkets
" across the country. With high-volume buying and selling, supermarkets had the
economic clout to demand hefty discounts from suppliers. Small stores didn't have the
power to demand the same discounts. Unable to compete, mom and pop grocery stores became
an endangered species.
To protect small entrepreneurs, the Robinson-Patman Act makes it illegal for a company to
sell the same product at the same time for different prices when the favored purchaser and
the disfavored purchaser compete for the same business and there is a reasonable chance
the price discrimination will result in substantially decreased competition.
Critics argue that the Robinson-Patman Act actually raises prices for consumers. But the
statute has endured because of public distrust of big corporations and public affection
for small entrepreneurs.
Small businesses are often on their own when it comes to enforcing the price
discrimination law. In 1979, for example, the American Booksellers Association persuaded
the Federal Trade Commission to launch an investigation into price discrimination by
publishers against the small, independent bookstores that are threatened by the new breed
of superstores. Sixteen years later, the FTC closed the investigation without issuing any
conclusions about whether publishers violated the Robinson-Patman Act.
With the expense and difficulty of proving the amount of damages caused by price
discrimination, a small business might not be able to afford to file a Robinson-Patman
suit. But trade associations can sometimes pursue suits on behalf of their members. In the
textbook case, for example, the association is asking for an injunction ordering the
defendants to stop discriminating against college bookstores.
The publishers responded with a motion to dismiss the complaint. According to the
publishers, the association can't pursue a lawsuit on behalf of its 3,000 members because
the complaint doesn't allege there was actual competition between all the college
bookstores and the superstores that got bigger discounts on textbooks.
Last month in New York, U.S. District Court Judge Shira Scheindlin issued her ruling on
the motion to dismiss. When there is substantial price discrimination, Scheindlin said,
judges and jurors can logically infer that the result will be decreased competition
between favored and disfavored purchasers. The "closer question " was whether
the complaint adequately alleged that the 3,000 members of the association were in direct
competition with the superstores that got the bigger discounts.
The complaint alleges one of the retailers that benefits from the price discrimination is
Amazon.com (the "virtual " bookstore on the Internet). According to the
association, Amazon.com -- which is available to every buyer with access to
the Internet -- is in competition with each of 3,000 college bookstores that
belong to the association.
Since the complaint alleged that all of the college bookstores are in competition with one
of the favored-purchasers, the motion to dismiss the complaint was denied.
Steven P. Garmisa, a partner in the Chicago law firm of Torshen, Spreyer, Garmisa &
Slobig Ltd., specializes in civil litigation.
LOAD-DATE: December 3, 1997