## Facts

- Several independent egg processors and marketers sued a large, vertically integrated egg producer for antitrust violations arising from the producer’s discounted sales of surplus eggs to supermarkets.
- The egg industry was described as highly competitive, with a fungible product and many sellers; eggs were perishable and surplus inventory had to be sold quickly.
- The defendant used concessionary prices (“specials”) to sell surplus eggs to supermarkets rather than selling surplus to industrial “breakers” at low prices.
- Plaintiffs alleged the “specials” undercut their sales and were (a) unlawful price discrimination under Robinson–Patman Act § 2(a) and (b) predatory pricing intended to drive rivals out or discipline them.
- A jury found for plaintiffs and awarded substantial damages; the district court entered judgment notwithstanding the verdict (and alternatively ordered a new trial), and plaintiffs appealed.

## Issues

1. Whether the defendant’s discounted “specials” constituted unlawful price discrimination under Robinson–Patman Act § 2(a), including proof of injury to competition.
2. Whether the evidence supported predatory pricing, including sales below an appropriate measure of cost and a dangerous probability of recoupment.
3. Whether the district court properly granted judgment notwithstanding the verdict based on insufficiency of evidence.

## Decision

- The court of appeals affirmed judgment notwithstanding the verdict for the defendant.
- The evidence did not permit a reasonable finding of the competitive injury required for a Robinson–Patman § 2(a) violation.
- The evidence did not establish predatory pricing because plaintiffs failed to prove below-cost pricing and failed to show a plausible prospect of recoupment in a competitive commodity market.
- Because the judgment notwithstanding the verdict was affirmed, the alternative new-trial ruling was not dispositive.

## Legal Principles

- Robinson–Patman Act § 2(a) requires proof of injury to competition, not merely harm to particular competitors from lower prices.
- Price reductions and increased output that benefit buyers are generally consistent with competition; antitrust law protects competition rather than insulating rivals from price pressure.
- Predatory pricing requires strong proof of (a) pricing below an appropriate measure of cost and (b) a realistic ability to recoup losses later through supracompetitive pricing.
- In highly competitive markets for fungible goods, later recoupment is unlikely because rivals can expand output and undercut attempted price increases.
- Disposing of perishable surplus at discounted prices may be rational competitive behavior and does not, without more, establish unlawful predation or exclusion.

## Conclusion

The Seventh Circuit held that discounted surplus egg sales to supermarkets could not support Robinson–Patman liability or a predatory pricing verdict absent concrete proof of harm to competition, below-cost pricing, and a feasible recoupment strategy; it therefore affirmed judgment for the defendant notwithstanding the jury’s verdict.


A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1396 (7th Cir. 1989)