United States v. Borden Company
United States Supreme Court
370 U.S. 460 (1962)
The Borden Company (Borden) and Bowman Dairy Company (Bowman) (defendants) sold milk to chain grocery stores and independently owned stores at two different prices. Independently operated grocery stores received discounts based on the volume of products purchased. Chain grocery stores received flat discounts. The chains’ flat discounts were higher than the largest possible volume-based discounts available to the independent stores. The United States (plaintiff) sued Borden and Bowman, alleging the price differential charged to chains and independent stores was unlawful price discrimination in violation of the Robinson-Patman Act. As an affirmative defense, Borden and Bowman asserted that the price differential was attributable to differences in cost. Borden provided a cost study that compared the average cost of selling to chains versus the average cost of selling to four groups of independent stores. Bowman provided a cost study that showed independent stores required additional services that were not needed by chains. Most, but not all, independent stores used the additional services. The district court found Borden and Bowman’s cost justifications sufficient and dismissed the suit. The United States appealed directly to the United States Supreme Court.
Rule of Law
Holding and Reasoning (Clark, J.)
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