## Facts

- Falls City Industries, a brewer, sold beer to wholesalers in Indiana and Kentucky.
- Vanco Beverage was Falls City’s sole wholesale distributor in Vanderburgh County, Indiana.
- Henderson County, Kentucky and Vanderburgh County, Indiana formed a single metropolitan market divided by a state line.
- From 1972 to 1978, Falls City charged Vanco (Indiana) higher prices than it charged its sole wholesaler in Henderson County (Kentucky).
- Indiana regulation required brewers to sell to all Indiana wholesalers at a single price and imposed in-state/out-of-state restrictions on wholesaler and retailer transactions.
- Although the Indiana and Kentucky wholesalers did not sell to the same retailers, they competed for consumer sales within the metropolitan area.
- Falls City’s pricing produced lower retail prices in Kentucky than in Indiana, leading some Indiana consumers to buy Falls City beer from Kentucky retailers.
- The disparity impaired Vanco’s ability to compete and reduced Vanco’s sales to Indiana retailers.

## Issues

1. Whether the evidence established “competitive injury” sufficient to make a prima facie case of price discrimination under Robinson-Patman Act § 2(a).
2. Whether Falls City proved the Robinson-Patman Act § 2(b) “meeting-competition” defense by showing its lower Kentucky price was made in good faith to meet an equally low competitor price, given its state-wide pricing practices and state-law constraints.

## Decision

- The Supreme Court unanimously vacated the judgment and remanded.
- The Court held that the findings more than established the competitive-injury element required for a prima facie § 2(a) violation.
- The Court held that the lower courts applied an overly restrictive approach to the § 2(b) meeting-competition defense and required reconsideration under the proper good-faith standard.

## Legal Principles

- A plaintiff may establish a prima facie Robinson-Patman Act § 2(a) violation by showing a reasonable possibility that a price difference may harm competition.
- Competitive injury may be supported by direct evidence that discriminatory pricing diverted sales or impaired the disfavored purchaser’s ability to compete, including in an economically integrated cross-border market.
- Under Robinson-Patman Act § 2(b), a seller avoids liability if it shows the lower price was made in good faith to meet an equally low price of a competitor.
- “Good faith” under § 2(b) is a fact-sensitive inquiry that must account for market conditions and relevant regulatory constraints; courts may not effectively foreclose the defense through rigid requirements about pricing structure (such as insisting on customer-by-customer adjustments).

## Conclusion

The Court confirmed that evidence of diverted sales and impaired competitive ability in an integrated metropolitan market can satisfy § 2(a)’s competitive-injury requirement, but it required renewed consideration of whether the brewer’s interstate price differential was justified under § 2(b) as a good-faith response to competition in light of the applicable market and regulatory conditions.


Falls City Indus., Inc. v. Vanco Beverage, Inc., 460 U.S. 428 (1983)