DEFINITION of 'Robinson-Patman Act'

A federal law passed in 1936 to outlaw price discrimination. The Robinson-Patman Act is an amendment to the 1914 Clayton Antitrust Act and is supposed to prevent "unfair" competition. The act requires a business to sell its products at the same price regardless of who the buyer is and was intended to prevent large-volume buyers from gaining an advantage over small-volume buyers. The act only applies to sales of tangible goods that are completed within a reasonably close timeframe and where the goods sold are similar in quality. The act does not apply to the provision of services such as cell phone service, cable TV and real estate leases.



BREAKING DOWN 'Robinson-Patman Act'

The Robinson-Patman Act does not require, for example, that Wholesale Company ABC and Wholesale Company XYZ both sell 32" flat screen televisions to all big box retailers for $250 per television. What it does require is that if Wholesale Company ABC sells 32" flat screen televisions of equal quality to Target on August 10 and to Mom and Pop's Shop on August 11, that Target and Mom and Pop's Shop are each charged $250 per television.



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