Falls City Industries (Falls City) (defendant) sold beer to wholesalers. Falls City sold to an Indiana wholesaler named Vanco Beverage (plaintiff). Falls City charged higher prices in Indiana than in the neighboring state of Kentucky. As a result, Indiana consumers often crossed the border into Kentucky to purchase beer at lower prices. Vanco sued Falls City, alleging the discrepancy in state prices violated the Robinson-Patman Act. Falls City admitted to charging different prices in different states, but argued the discrepancy was permitted under the Robinson-Patman Act’s meeting-competition defense. The meeting-competition defense allows a firm to charge discriminatory prices if the lower price is offered in a good-faith effort to meet the low price of a competitor. The district court and the court of appeals held the meeting-competition defense did not apply, because Falls City had not lowered prices in Kentucky to meet low prices from Kentucky competitors. Rather, Falls City had raised prices in Indiana to meet the higher prices of Indiana competitors and increase profits. The appellate court was also concerned Falls City had reacted generally to competition instead of meeting the price of a specific competitor. The United States Supreme Court granted certiorari.