## Facts

- Enterprise Industries, Inc. operated a retail gasoline station and purchased gasoline at wholesale from The Texas Company.
- During a local gasoline “price war,” Texas Co. charged Enterprise a higher wholesale price than it charged certain nearby retail stations that competed with Enterprise at the same functional level.
- The gasoline sold was of like grade and quality, and the transactions were in the same general time period and market.
- The lower wholesale prices given to Enterprise’s competitors enabled them to meet or undercut Enterprise’s retail prices without reducing their margins, placing Enterprise at a competitive disadvantage.
- Enterprise sued under Robinson-Patman Act § 2(a) for unlawful price discrimination and sought damages.
- The district court found a § 2(a) violation and awarded damages equal to the aggregate difference between the higher prices Enterprise paid and the lower prices charged to its favored competitors; Texas Co. appealed.

## Issues

1. Whether Texas Co.’s contemporaneous sales of gasoline at different wholesale prices to competing retail purchasers constituted unlawful price discrimination under Robinson-Patman Act § 2(a).
2. Whether proof that the price differential harmed Enterprise’s competitive position was sufficient to show the required reasonable probability of injury to competition.
3. Whether damages could properly be measured by the full wholesale price differential (the “overcharge” measure), rather than by proof of specific lost profits or lost sales.

## Decision

- The Second Circuit affirmed the judgment for Enterprise.
- The court held that selling the same gasoline to directly competing retail purchasers at different prices during the same period and in the same market satisfied § 2(a)’s discrimination elements.
- The court concluded that the demonstrated competitive harm to Enterprise in its head-to-head rivalry with favored stations was sufficient to establish the requisite probability of injury to competition.
- The court upheld the district court’s damages award computed as the full difference between the prices charged to Enterprise and those charged to its favored competitors for the quantities purchased.

## Legal Principles

- Robinson-Patman Act § 2(a) prohibits price discrimination in sales of commodities of like grade and quality where the effect may be to substantially lessen competition or tend to create a monopoly, including in competition between favored and disfavored purchasers.
- When favored and disfavored purchasers compete directly at the same functional level in the same market, a price differential that places the disfavored buyer at a material disadvantage can support an inference of the required probability of competitive injury.
- A plaintiff’s damages for unlawful price discrimination may be measured by the overcharge: the difference between the unlawful higher price paid and the lower price contemporaneously available to favored competing purchasers, multiplied by the relevant purchase volumes.

## Conclusion

The Second Circuit affirmed Robinson-Patman § 2(a) liability where a supplier charged a disfavored retailer higher wholesale gasoline prices than those given to its direct retail competitors during a price war, and it approved calculating damages by the full wholesale price differential paid on the plaintiff’s purchases.


Enterprise Indus., Inc. v. Tex. Co., 240 F.2d 457 (2d Cir. 1957)