## Facts

- A gasoline price war occurred in Jacksonville, Florida.
- Sun Oil Company supplied branded gasoline to nearly 40 independently owned Sunoco stations in the area.
- One Sun dealer, McLean, operated across from a “Super Test” station owned by a retail chain selling a different gasoline brand.
- Super Test priced gasoline below McLean and further reduced prices; McLean requested price relief from Sun Oil.
- Sun Oil granted McLean a special wholesale price reduction (about two cents per gallon) not offered to other nearby Sun dealers.
- McLean’s sales improved, while other Sun dealers in the vicinity were competitively harmed by the discriminatory wholesale pricing.
- The FTC charged Sun Oil with unlawful price discrimination under § 2(a) of the Clayton Act as amended by the Robinson-Patman Act.
- Sun Oil relied on the § 2(b) “meeting competition” defense, asserting the reduction was made in good faith to allow McLean to meet Super Test’s retail price.

## Issues

1. Whether § 2(b)’s “meeting competition” defense permits a seller to justify discriminatory prices to one customer based on the prices of that customer’s retail competitor, rather than the seller’s own competitor.
2. Whether Sun Oil’s selective wholesale price reduction to one dealer fell within § 2(b) when it injured competition among Sun Oil’s other retail customers.

## Decision

- The Supreme Court reversed the Fifth Circuit and reinstated the FTC’s cease-and-desist order.
- The Court held Sun Oil was not entitled to the § 2(b) defense.
- “Competitor” in § 2(b) refers to the seller’s competitor, not the competitor of the seller’s customer.
- A seller may not selectively lower prices to one buyer to help that buyer meet a rival retailer’s prices when the rival is not a competitor of the seller at the seller’s level of competition.

## Legal Principles

- § 2(a) prohibits price discrimination that may substantially lessen competition or injure competition among purchasers.
- § 2(b) is a narrow, affirmative exception and is construed to allow discriminatory pricing only when made in good faith to meet an equally low price of the seller’s own competitor.
- A seller cannot invoke § 2(b) to justify favoritism among its customers based on competitive pressure faced by one customer from a retailer selling a different brand.
- Preventing injury to competition among the seller’s customers is a central Robinson-Patman concern; selective concessions that harm competing purchasers are not saved by § 2(b) absent seller-level competition being met.

## Conclusion

The Court limited Robinson-Patman § 2(b) to seller-level price competition, holding that a supplier cannot defend discriminatory discounts to a single dealer as “meeting competition” when the relevant low price is set by the dealer’s retail rival rather than by the supplier’s own competitor.


Fed. Trade Comm'n v. Sun Oil Co., 371 U.S. 505 (1963)