## Facts

- Utah Pie Company, a Salt Lake City bakery, sold frozen pies in the Salt Lake City market during 1958–1961, where price was the primary means of competition.
- Defendants Continental Baking Company, Carnation Company, and Pet Milk Company were large firms active in frozen pie markets and competed with Utah Pie in Salt Lake City.
- Utah Pie alleged each defendant engaged in discriminatory pricing in Salt Lake City compared with other markets, contributing to an overall decline in local price levels.
- Pet Milk sold pies to Safeway under a private label at prices below Pet’s proprietary label, sold an “economy pie” at times at lower prices than in other markets, and sold proprietary pies in Salt Lake City at lower prices than in California despite freight considerations.
- Pet Milk acknowledged it incurred losses on pie sales for much of the relevant period and admitted sending a spy into Utah Pie’s plant during negotiations with Safeway (while denying use of any information obtained).
- Continental reduced its Utah-area prices in June 1961 to levels well below those charged elsewhere and below its direct cost plus an allocation for overhead.
- Carnation, after losing share, sharply reduced prices in 1960 and for extended periods priced lower in Salt Lake City than in other markets, continuing into 1961.
- Although Utah Pie’s sales volume and market share increased in the expanding market, it claimed the discriminatory pricing narrowed margins and threatened its ability to compete.

## Issues

1. Whether evidence of substantial, geographically targeted price discrimination—sometimes at or below cost—supported a finding that the discrimination “may” substantially lessen competition under § 2(a) of the Robinson-Patman Act.
2. Whether Utah Pie’s increased sales and market share in an expanding market precluded a showing of the requisite likelihood of competitive injury.
3. Whether the court of appeals improperly displaced the jury’s evaluation of evidence on competitive injury and statutory defenses.

## Decision

- The Supreme Court reversed the Tenth Circuit and reinstated the jury verdict for Utah Pie on the § 2(a) price discrimination claims.
- The Court held the record permitted a jury to find that each defendant’s discriminatory pricing created a reasonable possibility of injury to competition in the Salt Lake City market.
- The Court rejected the view that Utah Pie’s growth in sales and share necessarily negated competitive injury under § 2(a).
- The Court treated the pattern of local price cuts, including below-cost pricing and sustained price disparities, as evidence supporting an inference of exclusionary tendencies and threatened harm to the competitive process.

## Legal Principles

- Section 2(a) prohibits selling the same goods to different purchasers at different prices when the effect may be substantially to lessen competition or tend to create a monopoly, absent a statutory justification (including cost justification or meeting competition).
- The competitive-injury requirement under § 2(a) is satisfied by a reasonable possibility (or probability) of harm to competition; proof of completed or total destruction of competition is not required.
- Competitive injury may be inferred from persistent, substantial geographic price differentials and below-cost pricing directed at a local market, particularly when the conduct contributes to a deteriorating price structure.
- An expanding market and the plaintiff’s rising sales do not foreclose a finding that discriminatory pricing threatens competition; the statute focuses on likely effects on competitive conditions, not solely the plaintiff’s short-term performance.
- When a properly instructed jury finds that discriminatory pricing may substantially lessen competition based on record evidence, appellate courts should not reweigh that evidence to substitute their own economic conclusions.

## Conclusion

The Court held that sustained, geographically discriminatory price cutting—often below cost—could support a jury’s finding that price discrimination may substantially lessen competition under Robinson-Patman § 2(a), even where the targeted rival’s sales increased, and it reinstated Utah Pie’s damages judgment.


Utah Pie Co. v. Cont'l Baking Co., 386 U.S. 685 (1967)