“goods” is narrowly defined and does not include discrimation in services.A unique feature of the Robinson-Patman Act is that it allows for price differentials to differentcustomers under following conditions:1.When price differences charged to different customer do not exceed the differences in the costof manufacture, sale, or delivery resulting from differing methods or quantities in which suchgoods are sold or delivered to buyers. This condition is called the “cost justification defense.”2.When price differences result from changing market conditions, avoiding obsolescence ofseasonal merchandise, including perishables, or closing out sales.3.When price differences are quoted to selected buyers in good faith to meet competitors’ pricesand are not intended to injure competition. This condition is called the meet-the-competitiondefense.The Robinson-Patman Act also covers promotional allowances, where companies can legally offerpromotional allowances to buyers. The seller must do so on a proportionally equal basis to all buyersdistributing the seller’s products.Deceptive pricing:Price deals that mislead consumers fall into the category of deceptive pricing. Deceptive pricing isoutlawed by the Federal Trade Commission Act. The FTC monitors such practices and has published a regulation titled “Guides against Deceptive Pricing”to help businesspeople avoid a charge of deception.
Five common deceptive pricing practices are:1.Bait and Switcha.The deceptive practice exists when a firm offers a very low price on a product (the bait)to attract customers to a store. Once in the store, the customer is persuaded to purchasea higher priced item (the switch) using a variety of tricks, including:(1) downgrading the promoted item, (2) not having the item in stock, or (3) refusing totake orders for the item.2.Bargains conditional on other purchasesa.This practice may exist when a buyer is offered “1-Cent Sales,” “Buy 1, Get 1 Free,” and“Get 2 for the Price of 1.” Such pricing is legal only if the first items are sold at theregular price, not a price inflated for the offer. Substituting lower quality items on eitherthe first or second purchase is also considered deceptive.3.Comparable value comparisonsa.Advertising such as “Retail Value $100.00, Our Price $85.00” is deceptive if a verified andsubstantial number of stores in the market area do not price the item at $100.4.Comparisons with suggested pricesa.A claim that a price is below a manufacturer’s suggested or list price may be deceptive iffew or no sales occur at that price in a retailer’s market area.5.Former price comparisonsa.When a seller represents a price as reduced, the item must have been offered in goodfaith at a higher price for a substantial previous period. Setting a high price for thepurpose of establishing a reference for a price reduction is considered deceptive.