Antitrust Law Daily Wrap Up, TOP STORY—D.N.H.: Clayton Act claim dismissed for failure to show heating oil sold below manufacturer’s costs, (Jun 11, 2014)

By Jody Coultas, J.D.

Johnny Prescott & Son Oil Company, Inc. failed to state Clayton Act and New Hampshire Consumer Protection Act claims against competitor Rymes Heating Oils, Inc. for allegedly selling its heating oil at below cost, the federal district court in Concord, New Hampshire (Johnny Prescott & Son Oil Company, Inc. v. Rymes Heating Oils, Inc., June 6, 2014, McCafferty, L.). Prescott failed to allege that Rymes’ prices fell below an appropriate measure of its costs or that Rymes had a reasonable prospect of recouping monies lost through below-cost pricing.

Prescott, a heating fuel distributor, purchases fuel from third-party wholesalers and sells fuel directly to customers and smaller distributors. After Prescott informed Rymes that a third party was entering the market, Rymes began advertising heating oil for approximately 50 cents below any other distributors and below cost for dealers such as Prescott.

Discriminatory pricing. Prescott failed to state a Clayton Act claim for discriminatory pricing, according to the court. To state a claim under the Clayton Act, the prices complained of must be below an appropriate measure of the defendant’s costs and the defendant must have a reasonable prospect of recouping its investment in below-cost prices. Prescott did not allege that Rhymes’ prices fell below an appropriate measure of Rhymes’ costs. To sell at cost, as opposed to below cost, however, does not violate the Clayton Act. Also, Prescott did not allege any facts plausibly showing that Rymes had a reasonable prospect of recouping monies it has lost through below-cost pricing.

Illegal underselling. Prescott’s allegations that Rymes sold and/or contracted to sell goods at prices lower than those sold elsewhere for the purpose of destroying competition or eliminating a competitor relied on Section 3 of the Robinson-Patman Act. However, Section 3 of the Robinson-Patman Act is not part of the Clayton Act and does not permit a private cause of action. Therefore, the claim was dismissed by the court.

Consumer protection claims. The court did not retain jurisdiction over the state law claims after dismissing the federal claims.

The case is No. 13-cv-437-LM.

Attorneys: Biron L. Bedard (Ransmeier & Spellman) for Johnny Prescott & Son Oil Co., Inc. Courtney H. G. Herz (Sheehan Phinney Bass & Green PA) for Rymes Heating Oils, Inc.

Companies: Johnny Prescott & Son Oil Co., Inc.; Rymes Heating Oils, Inc.

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