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Last Rev. 03/15/19 07:402am

Antitrust and Other Business-Injury Claims

For more than 40 years I have been seeing small businesses being injured by the activities of major corporations. This is nothing new. It was happening during the late 1800's and early 1900's, culminating in the 1890 predecessor to the Clayton Act to try to protect small businesses from the price discrimination being practiced by the oil and railroad interests. In 1936, the price-discrimination statute was upgraded to eliminate some major loopholes, in a statute known as the "Robinson-Patman Act", and until the Nixon Administration this statute was administered in a way that eliminate the worst price discrimination and gave small business interests a real opportunity to compete against major corporations at the wholesale, jobber and retail levels of distribution.

All this changed, however, with the Nixon Administration, which ordered that its Justice Department not be involved with any Robinson-Patman enforcement, and further ordered or encouraged the Federal Trade Commission (the second U.S. agency to have enforcement jurisdiction, to scale down its enforcement efforts, which up to that time had been superb). Because of such FTC enforcement activities, Ford Motor Company's top attorney advised Ford officials that they could not defend any discrimination in price exceeding 5%.

Now, unfortunately, because of the total lack of enforcement by the U.S. government, the major retailers are buying goods at about 1/2 of the manufacturer's cost. You should look at my Robinson-Patman Act website for an explanation of why this is taking place. See . In order to try to make up their losses, these same manufacturers are selling to competitors of Wal-Mart and the other major retailers at 50% over the manufacturers' cost. This technique has thrown hundreds of thousands of small wholesalers, jobbers, retailers, distributors, salespersons, manufacturers' representatives and eventually many manufacturers themselves out of business because you can't keep selling below cost to Wal-Mart, and at a higher cost to Wal-Mart's competitors. Obviously, the competitors are going to fold, as we see occurring right now. Borders is apparently unable to compete successfully with larger Barnes & Noble. Various video retailers have been unable to compete with Wal-Mart and have gone out of business, or are heading that way.

The interesting thing about the Robinson-Patman Act is that it has greater enforceability than the nation's number one antitrust statute, the Sherman Act. The Sherman Act is based on a determination of being "unreasonable", something about which judges can easily disagree, especially if they are oriented in finding for the major corporations. But with the Robinson-Patman Act claims, there is mathematical certainty involved. It is not a question of being "unreasonable", whatever that means, but that Wal-Mart is paying $.50 per unit when a competitor is buying the same item from the same manufacturer at the same time for $1.50 per item, and is unable to remain in business as a result.

When reviewing the problems of small business, I do look at the possible antitrust claims, federal and state, including such things as boycott, concerted refusals to deal, price fixing, tie-in sales, mergers and acquisions creating or tending to create a monopoly in one or more "markets" (i.e., product or service market within a specific geographic market), and activities of monopolizing or tending to monopolize. These are all antitrust claims to consider, some better than others, but in today's environment there could well be a resurgence of antitrust law enforcement, because it should be clear to most people by now that the total lack of enforcement of various laws during the Bush-II administration and before, starting with the Nixon Administration, has created the economic conditions in the U.S. where the largest corporations take away the jobs and savings and opportunities from the nation's residents and do so with government help. By having enforcement of law, these wholesale theft opportunities would be reduced to the pre-Nixon era.

There are various other claims for small business, such as breach of contract, breach of an implied covenant of good faith and fair dealing which is inherent in every contract, whether oral or written; there are claims for tortious destruction of a business; also you should consider whether present or former employees or partners have been in breach of any duty they may have to hold your company's proprietary information (such as the list of customers) in confidence.

There are many types of claims available to small businesses, and the best thing a small business can do is to consult with a lawyer about possible claims the business may think it has. Also, don't forget that claims have different expiration dates. To give you an extreme situation, in New York State a lawsuit must be commenced within 6 years for the breach of an oral (or written) contract. In California, a lawsuit for breach of an oral contract must be brought within one year.

I am interested in helping small businesses with their litigation problems, either to commence a lawsuit, or to defend a lawsuit. Sometimes whether you are a plaintiff or defendant depends on who gets to the courthouse first.