## Facts

- Great Atlantic & Pacific Tea Co., Inc. (A&P), a large grocery chain, sought to shift to private-label milk sales in the Chicago area in 1965.
- A&P asked its long-time supplier, Borden Co., to bid to supply private-label milk; A&P found Borden’s initial offer unsatisfactory.
- A&P solicited competing bids, including from Bowman Dairy Co.; Bowman offered a lower price than Borden’s first bid.
- A&P told Borden its offer was far from competitive; Borden then submitted a second offer that was substantially better than Bowman’s bid, and A&P accepted.
- The FTC alleged Borden’s second offer constituted unlawful seller price discrimination and that A&P “knowingly” induced or received that discrimination in violation of Robinson-Patman Act § 2(f).
- The FTC also alleged A&P acted unfairly under FTC Act § 5 by failing to disclose that Borden’s second bid undercut Bowman’s, but the FTC dismissed that charge as inconsistent with normal business practice and the public interest.
- The FTC nevertheless sustained § 2(f) liability, and the Second Circuit affirmed; the Supreme Court granted review.

## Issues

1. Whether a buyer violates Robinson-Patman Act § 2(f) by accepting a lower, competitively offered price when the seller’s price reduction is protected by the § 2(b) meeting-competition defense.
2. Whether § 2(f) buyer liability can exist when the challenged price discrimination is not “prohibited” against the seller because an affirmative defense applies.

## Decision

- The Supreme Court reversed, holding 7–1 that A&P did not violate § 2(f).
- A buyer that does no more than accept the lower of two competitively offered prices does not violate § 2(f) if the seller has a valid § 2(b) meeting-competition defense.
- Because Borden’s conduct was shielded by § 2(b), the price difference was not discrimination “prohibited” by § 2, and A&P could not be liable for “knowingly” inducing or receiving it.
- The Court rejected the view that a seller loses the meeting-competition defense merely because its final price falls below a competitor’s price, so long as the reduction was made in good faith to meet competition.

## Legal Principles

- Section 2(f) buyer liability is limited to receiving or inducing price discrimination that is “prohibited” by § 2; it is tied to seller liability under § 2(a), as qualified by defenses such as § 2(b).
- The § 2(b) meeting-competition defense protects a seller’s good-faith price reduction made to meet a competitor’s equally low price, and it can defeat both seller and derivative buyer liability.
- “Mere acceptance” of a competitively offered low price, without additional wrongful conduct, is insufficient for § 2(f) liability when the seller’s price is legally justified.
- The “knowingly” element in § 2(f) presupposes an underlying price discrimination that is actionable against the seller; where § 2(b) applies, there is no prohibited discrimination for the buyer to knowingly induce or receive.

## Conclusion

The Court set aside the FTC’s order against A&P, holding that § 2(f) does not impose liability on a buyer who simply accepts a competitively offered lower price when the seller’s reduction is protected by the Robinson-Patman Act’s § 2(b) meeting-competition defense.


Great Atl. & Pac. Tea Co. v. FTC, 440 U.S. 69 (1979)