Robinson-Patman Act

Robinson-Patman Act - quantities in which commodities are...

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In the decision making process of providing a 5% discount to one of our distributor is a careful decision because it has to be made ethically and legally. If the decision to provide a 5% discount to Samantha and to Mastercraft is basically absorbed or somehow unfair to Winkley and White there is not only an ethical issue but also a legal one because it will be in violation of the Robinson-Patman Act. The Robinson–Patman Act of 1936 also known as Anti-Price Discrimination Act was enacted to help eliminate anticompetitive practices by producers. According to Sevin (1938), “The frequently mentioned, but probably seldom read section 2 (a) of the Robinson-Patman act limits the extent to which the same commodity can be sold to competing customers of a given seller at various prices. Any price differentials quoted must be based on disparities in the cost of doing business resulting from the differing methods or
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Unformatted text preview: quantities in which commodities are sold or delivered” (p.214). This would relate to our case if we knowingly sell to Samantha at a lower cost than what we are charging Mastercraft and Winkley & White without paying attention to the cost at which we are making the product. In this case, we are not breaking the Robinson-Patman law because even though it cost less to make the product for Samantha due to savings such as the $5 for rockwool insulation, the $1 for the door gasket per oven and some other factors, we are unable to provide the 5% discount to Samantha OEM. In the event we were to provide the discount under the current conditions then we will be in direct violation of the Robinson-Patman Act. References Sevin, C. (1938). Sales Cost Accounting and the Robinson-Patman Act. Journal of Marketing , 2 (3), 214-218. Retrieved from Business Source Complete database....
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This note was uploaded on 01/13/2011 for the course ACCT 670 taught by Professor Lieman during the Spring '10 term at George Mason.

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