Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Grocery chain alleges Clorox engaged in price discrimination, (Oct 29, 2014)

By Linda O’Brien, J.D., LL.M.

The Clorox Company engaged in price discrimination when it by placed grocery chain Woodman’s Food Market into a different classification than two large warehouse retailers—Sam’s Club and Costco—to justify its decision not to offer Woodman’s special size packages of products on proportionally equal terms, according to a complaint filed in the federal district court in Madison, Wisconsin (Woodman’s Food Market, Inc. v. Clorox Co., October 28, 2014).

Woodman’s has been a customer of Clorox for many years and claims that it sells and competes directly with Sam’s Club and Costco. According to the complaint, in September 2014, Clorox notified Woodman’s that, as of October 1, 2014, Woodman’s would be placed into a “General Market retailers” classification—a different channel than Sam’s Club and Costco—and would no longer be allowed to purchase large packs of any Clorox products. Although Woodman’s could still purchase smaller packages containing identical grade and quality of these products, the unit price was no longer available, and in all cases, the prices of the smaller packages were significantly higher. The discriminatory offer of large packs to Woodman’s competitors without making those large packs available to Woodman’s on proportionally equal terms is per se illegal under the Robinson-Patman Act, the complaint alleges.

The unit prices Woodman’s must pay for the smaller packs being offered under Clorox’s new policy are significantly higher than the prices Woodman’s had been paying, which means that Woodman’s will have to charge higher unit prices for those products than its customers are used to paying. Also, without competition from Woodman’s, Sam’s Club and Costco will allegedly be able to raise their prices on large pack items. Furthermore, Woodman’s is concerned that its customers will stop shopping at Woodman’s and start purchasing those large pack products at Sam’s Club and Costco.

The plaintiff seeks declaratory and injunctive relief, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 3:14-cv-00734.

Attorneys: John A. Kassner and Kraig A. Byron (Von Briesen & Roper, S.C.) for Woodman’s Food Market, Inc.

Companies: Woodman’s Food Market, Inc.; Clorox Co.

News: Antitrust WisconsinNews