The Supreme Court/The Supreme Court.iso/pc/ascii/misc/7_2048o

Text File | 1990-06-24 | 60.0 KB | 1,061 lines

Subject: 87-2048--OPINION, TEXACO INC. v. HASBROUCK




NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.
SUPREME COURT OF THE UNITED STATES


No. 87-2048



TEXACO INC., PETITIONER v. RICKY HASBROUCK, dba RICK'S TEXACO, et al.

on writ of certiorari to the united states court of appeals for the ninth
circuit

[June 14, 1990]



    Justice Stevens delivered the opinion of the Court.

    Petitioner (Texaco) sold gasoline directly to respondents and several
other retailers in Spokane, Washington, at its retail tank wagon prices
(RTW) while it granted substantial discounts to two distributors.  During
the period between 1972 and 1981, the stations supplied by the two
distributors increased their sales volume dramatically, while respondents'
sales suffered a corresponding decline.  Respondents filed an action
against Texaco under the Robinson-Patman Amendment to the Clayton Act
(Act), 38 Stat. 730, as amended, 49 Stat. 1526, 15 U. S. C. 13, alleging
that the distributor discounts violated 2(a) of the Act, 15 U. S. C. 13(a).
Respondents recovered treble damages, and the Court of Appeals for the
Ninth Circuit affirmed the judgment.  We granted certiorari, 490 U. S.
(1989), to consider Texaco's contention that legitimate functional
discounts do not violate the Act because a seller is not responsible for
its customers' independent resale pricing decisions.  While we agree with
the basic thrust of Texaco's argument, we conclude that in this case it is
foreclosed by the facts of record.

I


    Given the jury's general verdict in favor of respondents, disputed
questions of fact have been resolved in their favor.  There seems,
moreover, to be no serious doubt about the character of the market,
Texaco's pricing practices, or the relative importance of Texaco's direct
sales to retailers ("through put" business) and its sales to distributors.
The principal disputes at trial related to questions of causation and
damages.

    Respondents are 12 independent Texaco retailers.  They displayed the
Texaco trademark, accepted Texaco credit cards, and bought their gasoline
products directly from Texaco.  Texaco delivered the gasoline to
respondents' stations.

    The retail gasoline market in Spokane was highly competitive throughout
the damages period, which ran from 1972 to 1981.  Stations marketing the
nationally advertised Texaco gasoline competed with other major brands as
well as with stations featuring independent brands.  Moreover, although
discounted prices at a nearby Texaco station would have the most obvious
impact on a respondent's trade, the cross-city traffic patterns and
relatively small size of Spokane produced a city-wide competitive market.
See, e. g., App. 244, 283- 291.  Texaco's through put sales in the Spokane
market declined from a monthly volume of 569,269 gallons in 1970 to 389,557
gallons in 1975.  Id., at 487-488.  Texaco's independent retailers' share
of the market for Texaco gas declined from 76% to 49%. {1}  Ibid.  Seven of
the respondents' stations were out of business by the end of 1978.  Id., at
22-23, R. 501.

    The respondents tried unsuccessfully to increase their ability to
compete with lower priced stations.  Some tried converting from full
service to self-service stations.  See, e. g., App. 55-56.  Two of the
respondents sought to buy their own tank trucks and haul their gasoline
from Texaco's supply point, but Texaco vetoed that proposal.  Id., at
38-41, 59.

    While the independent retailers struggled, two Spokane gasoline
distributors supplied by Texaco prospered.  Gull Oil Company (Gull) had its
headquarters in Seattle and distributed petroleum products in four western
States under its own name.  Id., at 94-95.  In Spokane it purchased its gas
from Texaco at prices that ranged from six to four cents below Texaco's RTW
price.  Id., at 31-32.  Gull resold that product under its own name; the
fact that it was being supplied by Texaco was not known by either the
public or the respondents.  See, e. g., id., at 256.  In Spokane, Gull
supplied about 15 stations; some were "consignment stations" and some were
"commission stations."  In both situations Gull retained title to the
gasoline until it was pumped into a motorist's tank.  In the consignment
stations, the station operator set the retail prices, but in the commission
stations Gull set the prices and paid the operator a commission.  Its
policy was to price its gasoline at a penny less than the prevailing price
for major brands.  Gull employed two truck drivers in Spokane who picked up
product at Texaco's bulk plant and delivered it to the Gull stations.  It
also employed one supervisor in Spokane.  Apart from its trucks and
investment in retail facilities, Gull apparently owned no assets in that
market.  App. 96-109, 504-512.  At least with respect to the commission
stations, Gull is fairly characterized as a retailer of gasoline throughout
the relevant period.

    The Dompier Oil Company (Dompier) started business in 1954 selling
Quaker State Motor Oil.  In 1960 it became a full line distributor of
Texaco products, and by the mid-1970's its sales of gasoline represented
over three-quarters of its business.  App. 114-115.  Dompier purchased
Texaco gasoline at prices of 3.95 to 3.65 below the RTW price.  Dompier
thus paid a higher price than Gull, but Dompier, unlike Gull, resold its
gas under the Texaco brand names.  Id., at 24, 29-30.  It supplied about
eight to ten Spokane retail stations.  In the period prior to October 1974,
two of those stations were owned by the president of Dompier but the others
were independently operated.  See, e. g., id., at 119- 121, 147-148.  In
the early 1970's, Texaco representatives encouraged Dompier to enter the
retail business directly, and in 1974 and 1975 it acquired four stations.
{2}  Id., at 114-135, 483-503.  Dompier's president estimated at trial that
the share of its total gasoline sales made at retail during the middle
1970's was "probably 84 to 90 percent."  Id., at 115.

    Like Gull, Dompier picked up Texaco's product at the Texaco bulk plant
and delivered directly to retail outlets.  Unlike Gull, Dompier owned a
bulk storage facility, but it was seldom used because its capacity was less
than that of many retail stations.  Again unlike Gull, Dompier received
from Texaco the equivalent of the common carrier rate for delivering the
gasoline product to the retail outlets.  Thus, in addition to its discount
from the RTW price, Dompier made a profit on its hauling function. {3}
App. 123-131, 186-192, 411-413.

    The stations supplied by Dompier regularly sold at retail at lower
prices than respondents'.  Even before Dompier directly entered the retail
business in 1974, its customers were selling to consumers at prices barely
above the RTW price.  Id., at 329-338; Record 315, 1250-1251.  Dompier's
sales volume increased continuously and substantially throughout the
relevant period.  Between 1970 and 1975 its monthly sales volume increased
from 155,152 gallons to 462,956 gallons; this represented an increase from
20.7% to almost 50% of Texaco's sales in Spokane.  App. 487-488.

    There was ample evidence that Texaco executives were well aware of
Dompier's dramatic growth and believed that it was attributable to "the
magnitude of the distributor discount and the hauling allowance." {4}  See
also, e. g., App. 213-223, 407-413.  In response to complaints from
individual respondents about Dompier's aggressive pricing, however, Texaco
representatives professed that they "couldn't understand it."  Record
401-404.

II


    Respondents filed suit against Texaco in July 1976.  After a four week
trial, the jury awarded damages measured by the difference between the RTW
price and the price paid by Dompier.  As we subsequently decided in J.
Truett Payne Co. v. Chrysler Motors Corp., 451 U. S. 557 (1981), this
measure of damages was improper.  Accordingly, although it rejected
Texaco's defenses on the issue of liability, {5} the Court of Appeals for
the Ninth Circuit remanded the case for a new trial.  Hasbrouck v. Texaco,
Inc., 663 F. 2d 930 (1981), cert. denied, 459 U. S. 828 (1982).

    At the second trial, Texaco contended that the special prices to Gull
and Dompier were justified by cost savings, {6} were the product of a good
faith attempt to meet competition, {7} and were lawful "functional
discounts."  The District Court withheld the cost justification defense
from the jury because it was not supported by the evidence and the jury
rejected the other defenses.  It awarded respondents actual damages of
$449,900. {8}  The jury apparently credited the testimony of respondents'
expert witness who had estimated what the respondents' profits would have
been if they had paid the same prices as the four stations owned by
Dompier.  See 634 F. Supp. 34, 43; 842 F. 2d, at 1043-1044.

    In Texaco's motion for judgment notwithstanding the verdict, it claimed
as a matter of law that its functional discounts did not adversely affect
competition within the meaning of the Act because any injury to respondents
was attributable to decisions made independently by Dompier.  The District
Court denied the motion.  In an opinion supplementing its oral ruling
denying Texaco's motion for a directed verdict, the Court assumed,
arguendo, that Dompier was entitled to a functional discount, even on the
gas that was sold at retail, {9} but nevertheless concluded that the
"presumed legality of functional discounts" had been rebutted by evidence
that the amount of the discounts to Gull and Dompier was not reasonably
related to the cost of any function that they performed. {10}  634 F.
Supp., at 37-38, and n. 4.

    The Court of Appeals affirmed.  It reasoned:

    "As the Supreme Court long ago made clear, and recently reaffirmed,
there may be a Robinson-Patman violation even if the favored and disfavored
buyers do not compete, so long as the customers of the favored buyer
compete with the disfavored buyer or its customers.  Morton Salt, 334 U. S.
at 43-44 . . . ; Perkins v. Standard Oil Co., 395 U. S. 642, 646-47 . . .
(1969); Falls City Indus., Inc. v. Vanco Beverages, Inc., 460 U. S. 428,
434-35 (1983).  Despite the fact that Dompier and Gull, at least in their
capacities as wholesalers, did not compete directly with Hasbrouck, a
section 2(a) violation may occur if (1) the discount they received was not
cost- based and (2) all or a portion of it was passed on by them to
customers of theirs who competed with Hasbrouck.  Morton Salt, 334 U. S. at
43-44, . . . ; Perkins v. Standard Oil, 395 U. S. at 648-49, . . . ; see 3
E. Kintner & J. Bauer, supra, 22.14.

    "Hasbrouck presented ample evidence to demonstrate that . . . . the
services performed by Gull and Dompier were insubstantial and did not
justify the functional discount."  842 F. 2d, at 1039.


    The Court of Appeals concluded its analysis by observing:

"To hold that price discrimination between a wholesaler and a retailer
could never violate the Robinson-Patman Act would leave immune from
antitrust scrutiny a discriminatory pricing procedure that can effectively
serve to harm competition.  We think such a result would be contrary to the
objectives of the Robinson-Patman Act."  Id., at 1040 (emphasis in
original).

III


    It is appropriate to begin our consideration of the legal status of
functional discounts {11} by examining the language of the Act.  Section
2(a) provides in part:


    "It shall be unlawful for any person engaged in commerce, in the course
of such commerce, either directly or indirectly, to discriminate in price
between different purchasers of commodities of like grade and quality,
where either or any of the purchases involved in such discrimination are in
commerce, where such commodities are sold for use, consumption, or resale
within the United States or any Territory thereof or the District of
Columbia or any insular possession or other place under the jurisdiction of
the United States, and where the effect of such discrimination may be
substantially to lessen competition or tend to create a monopoly in any
line of commerce, or to injure, destroy, or prevent competition with any
person who either grants or knowingly receives the benefit of such
discrimination, or with customers of either of them . . . ."  15 U. S. C.
13(a).


    The Act contains no express reference to functional discounts. {12}  It
does contain two affirmative defenses that provide protection for two
categories of discounts, those that are justified by savings in the
seller's cost of manufacture, delivery or sale, {13} and those that
represent a good faith response to the equally low prices of a competitor.
Standard Oil Co. v. FTC, 340 U. S. 231, 250 (1951).  As the case comes to
us, neither of those defenses is available to Texaco.

    In order to establish a violation of the Act, respondents had the
burden of proving four facts: (1) that Texaco's sales to Gull and Dompier
were made in interstate commerce; (2) that the gasoline sold to them was of
the same grade and quality as that sold to respondents; (3) that Texaco
discriminated in price as between Gull and Dompier on the one hand and
respondents on the other; and (4) that the discrimination had a prohibited
effect on competition.  15 U. S. C. 13(a).  Moreover, for each respondent
to recover damages, he had the burden of proving the extent of his actual
injuries.  J. Truett Payne, 451 U. S., at 562.

    The first two elements of respondents' case are not disputed in this
Court, {14} and we do not understand Texaco to be challenging the
sufficiency of respondents' proof of damages.  Texaco does argue, however,
that although it charged dif- ferent prices, it did not "discriminate in
price" within the meaning of the Act, and that, at least to the extent that
Gull and Dompier acted as wholesalers, the price differentials did not
injure competition.  We consider the two arguments separately.

IV


    Texaco's first argument would create a blanket exemption for all
functional discounts.  Indeed, carried to its logical conclusion, it would
exempt all price differentials except those given to competing purchasers.
The primary basis for Texaco's argument is the following comment by
Congressman Utterback, an active sponsor of the Act:


    "In its meaning as simple English, a discrimination is more than a mere
difference.  Underlying the meaning of the word is the idea that some
relationship exists between the parties to the discrimination which enti-
tles them to equal treatment, whereby the difference granted to one casts
some burden or disadvantage upon the other.  If the two are competing in
the resale of the goods concerned, that relationship exists.  Where, also,
the price to one is so low as to involve a sacrifice of some part of the
seller's necessary costs and profit as applied to that business, it leaves
that deficit inevitably to be made up in higher prices to his other
customers; and there, too, a relationship may exist upon which to base the
charge of discrimination.  But where no such relationship exists, where the
goods are sold in different markets and the conditions affecting those
markets set different price levels for them, the sale to different
customers at those different prices would not constitute a discrimination
within the meaning of this bill."  80 Cong. Rec. 9416 (1936).


    We have previously considered this excerpt from the legislative
history, and have refused to draw from it the conclusion which Texaco
proposes.  FTC v. Annheuser-Busch, Inc., 363 U. S. 536, 547-551 (1960).
Although the excerpt does support Texaco's argument, we remain persuaded
that the argument is foreclosed by the text of the Act itself.  In the
context of a statute that plainly reveals a concern with competitive
consequences at different levels of distribution, and carefully defines
specific affirmative defenses, it would be anomalous to assume that the
Congress intended the term "discriminate" to have such a limited meaning.
In Annheuser-Busch we rejected an argument identical to Texaco's in the
context of a claim that a seller's price differential had injured its own
competitors, a so called "primary line" claim. {15}  The reasons we gave
for our decision in Annheuser-Busch apply here as well.  After quoting
Congressman Utterback's statement in full, we wrote:


    "The trouble with respondent's arguments is not that they are
necessarily irrelevant in a 2(a) proceeding, but that they are misdirected
when the issue under consideration is solely whether there has been a price
discrimination.  We are convinced that, whatever may be said with respect
to the rest of 2 (a) and 2 (b), and we say nothing here, there are no
overtones of business buccaneering in the 2(a) phrase `discriminate in
price.'  Rather, a price discrimination within the meaning of that
provision is merely a price difference."  363 U. S., at 549.


After noting that this view was consistent with our precedents, we added:

"the statute itself spells out the conditions which make a price difference
illegal or legal, and we would derange this integrated statutory scheme
were we to read other conditions into the law by means of the nondirective
phrase, `discriminate in price.'  Not only would such action be contrary to
what we conceive to be the meaning of the statute, but, perhaps because of
this, it would be thoroughly undesirable.  As one commentator has
succinctly put it, "Inevitably every legal controversy over any price
difference would shift from the detailed governing provisions, "injury,"
cost justification, "meeting competition," etc., over into the
"discrimination" concept of ad hoc resolution divorced from specifically
pertinent statutory text.'  Rowe, Price Differentials and Product
Differentiation: The Issues Under the Robinson-Patman Act, 66 Yale L. J. 1,
38."  363 U. S., at 550-551.


    Since we have already decided that a price discrimination within the
meaning of 2(a) "is merely a price difference," we must reject Texaco's
first argument.

V


    In FTC v. Morton Salt Co., 334 U. S. 37, 46-47 (1948), we held that an
injury to competition may be inferred from evidence that some purchasers
had to pay their supplier "substantially more for their goods than their
competitors had to pay."  See also Falls City Industries, Inc. v. Vanco
Beverage, Inc., 460 U. S. 428, 435-436 (1983).  Texaco, supported by the
United States and the Federal Trade Commission as amici curiae, (the
Government), argues that this presumption should not apply to differences
between prices charged to wholesalers and those charged to retailers.
Moreover, they argue that it would be inconsistent with fundamental
antitrust policies to construe the Act as requiring a seller to control his
customers' resale prices.  The seller should not be held liable for the
independent pricing decisions of his customers.  As the Government
correctly notes, Brief for United States et. al. as Amici Curiae 21-22
(filed Aug. 3, 1989), this argument endorses the position advocated 35
years ago in the Report of the Attorney General's National Committee to
Study the Antitrust Laws (1955).

    After observing that suppliers ought not to be held liable for the
independent pricing decisions of their buyers, {16} and that without
functional discounts distributors might go uncompensated for services they
performed, {17} the Committee wrote:


    "The Committee recommends, therefore, that suppliers granting
functional discounts either to single- function or to integrated buyers
should not be held responsible for any consequences of their customers'
pricing tactics.  Price cutting at the resale level is not in fact, and
should not be held in law, `the effect of' a differential that merely
accords due recognition and reimbursement for actual marketing functions.
The price cutting of a customer who receives this type of differential
results from his own independent decision to lower price and operate at a
lower profit margin per unit.  The legality or illegality of this price
cutting must be judged by the usual legal tests.  In any event, consequent
injury or lack of injury should not be the supplier's legal concern.

    "On the other hand, the law should tolerate no subterfuge.  For
instance, where a wholesaler-retailer buys only part of his goods as a
wholesaler, he must not claim a functional discount on all.  Only to the
extent that a buyer actually performs certain functions, assuming all the
risk, investment, and costs involved, should he legally qualify for a
functional discount.  Hence a distributor should be eligible for a discount
corresponding to any part of the function he actually performs on that part
of the goods for which he performs it."  Id., at 208.


    We generally agree with this description of the legal status of
functional discounts.  A supplier need not satisfy the rigorous
requirements of the cost justification defense in order to prove that a
particular functional discount is reasonable and accordingly did not cause
any substantial lessening of competition between a wholesaler's customers
and the supplier's direct customers. {18}  The record in this case,
however, adequately supports the finding that Texaco violated the Act.

    The hypothetical predicate for the Committee's entire discussion of
functional discounts is a price differential "that merely accords due
recognition and reimbursement for actual marketing functions."  Such a
discount is not illegal.  In this case, however, both the District Court
and the Court of Appeals concluded that even without viewing the evidence
in the light most favorable to the respondents, there was no substantial
evidence indicating that the discounts to Gull and Dompier constituted a
reasonable reimbursement for the value to Texaco of their actual marketing
functions.  842 F. 2d, at 1039; 634 F. Supp., at 37, 38.  Indeed, Dompier
was separately compensated for its hauling function, and neither Gull nor
Dompier maintained any significant storage facilities.

    Despite this extraordinary absence of evidence to connect the discount
to any savings enjoyed by Texaco, Texaco contends that the decision of the
Court of Appeals cannot be affirmed without departing "from established
precedent, from practicality, and from Congressional intent."  Brief for
Petitioner 14. {19}  This argument assumes that holding suppliers liable
for a gratuitous functional discount is somehow a novel practice.  That
assumption is flawed.

    As we have already observed, the "due recognition and reimbursement"
concept endorsed in the Attorney General's Committee's study would not
countenance a functional discount completely untethered to either the
supplier's savings or the wholesaler's costs.  The longstanding principle
that functional discounts provide no safe harbor from the Act is likewise
evident from the practice of the Federal Trade Commission, which has, while
permitting legitimate functional discounts, proceeded against those
discounts which appeared to be subterfuges to avoid the Act's restrictions.
See, e. g., In re Sherwin Williams Co., 36 F. T. C. 25, 70-71 (1943)
(finding a violation of the Act by paint manufacturers who granted
"functional or special discounts to some of their dealer-distributors on
the purchases of such dealer-distributors which are resold by such
dealer-distributors directly to the consumer through their retail
departments or branch stores wholly owned by them"); In re the Ruberoid
Co., 46 F. T. C. 379, 386, 5 (1950) (liability appropriate when functional
designations do not always indicate accurately "the functions actually
performed by such purchasers"), aff'd, 189 F. 2d 893 (CA2 1951), rev'd on
rehearing, 191 F. 2d 294, aff'd, 343 U. S. 470 (1952). {20}  See also, e.
g., In re Doubleday & Co., 52 F. T. C. 169, 209 (1955) ("the Commission
should tolerate no subterfuge.  Only to the extent that a buyer actually
performs certain functions, assuming all the risks and costs involved,
should he qualify for a compensating discount.  The amount of the discount
should be reasonably related to the expenses assumed by the buyer"); In re
General Foods Corp., 52 F. T. C. 798, 824-825 (1956) ("a seller is not
forbidden to sell at different prices to buyers in different functional
classes and orders have been issued permitting lower prices to one
functional class as against another, provided that injury to commerce as
contemplated in the law does not result," but "[t]o hold that the rendering
of special services ipso facto [creates] a separate functional
classification would be to read Section 2 (d) out of the Act"); In re Boise
Cascade Corp., 107 F. T. C. 76, 212, 214-215 (1986) (regardless of whether
the FTC has judged functional discounts by reference to the supplier's
savings or the buyer's costs, the FTC has recognized that "functional
discounts may usually be granted to customers who operate at different
levels of trade, and thus do not compete with each other, without risk of
secondary line competitive injury under the Act"), rev'd on other grounds,
267 U. S. App. D. C. 124, 837 F. 2d 1127 (1988). {21}  Cf. FLM Collision
Parts, Inc. v. Ford Motor Co., 543 F. 2d 1019, 1027 (CA2 1976) ("We do not
suggest or imply that, if a manufacturer grants a price discount or
allowance to its wholesalers (whether or not labelled `incentive'), which
has the purpose or effect of defeating the objectives of the Act, 2(a)'s
language may not be construed to defeat it"); C. Edwards, Price
Discrimination Law 286-348 (1959) (analyzing cases). {22}

    Most of these cases involve discounts made questionable because offered
to "complex types of distributors" whose "functions became scrambled."
Doubleday & Co., 52 F. T. C., at 208.  This fact is predictable:
manufacturers will more likely be able to effectuate tertiary line price
discrimination through functional discounts to a secondary line buyer when
the favored distributor is vertically integrated.  Nevertheless, this
general tendency does not preclude the possibility that a seller may pursue
a price discrimination strategy despite the absence of any discrete
mechanism for allocating the favorable price discrepancy between secondary
and tertiary line recipients. {23}

    Indeed, far from constituting a novel basis for liability under the
Act, the fact pattern here reflects conduct similar to that which gave rise
to Perkins v. Standard Oil Co of California, 395 U. S. 642 (1969).  Perkins
purchased gas from Standard, and was both a distributor and a retailer.  He
asserted that his retail business had been damaged through two violations
of the Act by Standard: first, Standard had sold directly to its own
retailers at a price below that charged to Perkins; and, second, Standard
had sold to another distributor, Signal, which sold gas to Western Hyway,
which in turn sold gas to Regal, a retailer in competition with Perkins.
{24}  The question presented was whether the Act, which refers to
discriminators, purchasers, and their customers, covered injuries to
competition between purchasers and the customers of customers of
purchasers.  Id., at 646-647.  We held that a limitation excluding such
"fourth level" competition would be "wholly an artificial one."  Id., at
647.  We reasoned that from "Perkins' point of view, the competitive harm
done him by Standard is certainly no less because of the presence of an
additional link in this particular distribution chain from the producer to
the retailer." {25}  The same may justly be said in this case.  The
additional link in the distribution chain does not insulate Texaco from
liability if Texaco's excessive discount otherwise violated the Act. {26}

    Nor should any reader of the commentary on functional discounts be much
surprised by today's result.  Commentators have disagreed about the extent
to which functional discounts are generally or presumptively allowable
under the Robinson-Patman Act.  They nevertheless tend to agree that in
exceptional cases what is nominally a functional discount may be an
unjustifiable price discrimination entirely within the coverage of the Act.
{27}  Others, like Frederick Rowe, have asserted the legitimacy of
functional discounts in more sweeping terms, {28} but even Rowe concedes
the existence of an "exception to the general rule."  F. Rowe, Price
Discrimination Under the Robinson-Patman Act 174, n. 7 (1962); id., at
195-205. {29}

    We conclude that the commentators' analysis, like the reasoning in
Perkins and like the Federal Trade Commission's practice, renders
implausible Texaco's contention that holding it liable here involves some
departure from established understandings.  Perhaps respondents' case
against Texaco rests more squarely than do most functional discount cases
upon direct evidence of the seller's intent to pass a price advantage
through an intermediary.  This difference, however, hardly cuts in Texaco's
favor.  In any event, the evidence produced by respondents also shows the
scrambled functions which have more frequently signaled the illegitimacy
under the Act of what is alleged to be a permissible functional discount.
Both Gull and Dompier received the full discount on all their purchases
even though most of their volume was resold directly to consumers.  The
extra margin on those sales obviously enabled them to price aggressively in
both their retail and their wholesale marketing.  To the extent that
Dompier and Gull competed with respondents in the retail market, the
presumption of adverse effect on competition recognized in the Morton Salt
case becomes all the more appropriate.  Their competitive advantage in that
market also constitutes evidence tending to rebut any presumption of
legality that would otherwise apply to their wholesale sales.

    The evidence indicates, moreover, that Texaco affirmatively encouraged
Dompier to expand its retail business and that Texaco was fully informed
about the persistent and marketwide consequences of its own pricing
policies.  Indeed, its own executives recognized that the dramatic impact
on the market was almost entirely attributable to the magnitude of the
distributor discount and the hauling allowance.  Yet at the same time that
Texaco was encouraging Dompier to integrate downward, and supplying Dompier
with a generous discount useful to such integration, Texaco was inhibiting
upward integration by the respondents: two of the respondents sought
permission from Texaco to haul their own fuel using their own tankwagons,
but Texaco refused.  The special facts of this case thus make it peculiarly
difficult for Texaco to claim that it is being held liable for the
independent pricing decisions of Gull or Dompier.

    As we recognized in Falls City Industries, "the competitive injury
component of a Robinson-Patman Act violation is not limited to the injury
to competition between the favored and the disfavored purchaser; it also
encompasses the injury to competition between their customers."  460 U. S.,
at 436.  This conclusion is compelled by the statutory language, which
specifically encompasses not only the adverse effect of price
discrimination on persons who either grant or knowingly receive the benefit
of such discrimination, but also on "customers of either of them."  Such
indirect competitive effects surely may not be presumed automatically in
every functional discount setting, and, indeed, one would expect that most
functional discounts will be legitimate discounts which do not cause harm
to competition.  At the least, a functional discount that constitutes a
reasonable reimbursement for the purchasers' actual marketing functions
will not violate the Act.  When a functional discount is legitimate, the
inference of injury to competition recognized in the Morton Salt case will
simply not arise.  Yet it is also true that not every functional discount
is entitled to a judgment of legitimacy, and that it will sometimes be
possible to produce evidence showing that a particular functional discount
caused a price discrimination of the sort the Act prohibits.  When such
anticompetitive effects are proved, as we believe they were in this case,
they are covered by the Act. {30}

VI


    At the trial respondents introduced evidence describing the diversion
of their customers to specific stations supplied by Dompier.  Respondents'
expert testimony on damages also focused on the diversion of trade to
specific Dompier- supplied stations.  The expert testimony analyzed the
entire damages period, which ran from 1972 and 1981 and included a period
prior to 1974 when Dompier did not own any retail stations (although the
jury might reasonably have found that Dompier controlled the Red Carpet
stations from the outset of the damages period).  Moreover, respondents
offered no direct testimony of any diversion to Gull and testified that
they did not even know that Gull was being supplied by Texaco.  Texaco
contends that by basing the damages award upon an extrapolation from data
applicable to Dompier- supplied stations, respondents necessarily based the
award upon the consequences of pricing decisions made by independent
customers of Dompier.  Texaco argues that the damages award must therefore
be judged excessive as a matter of law.

    Even if we were to agree with Texaco that Dompier was not a retailer
throughout the damages period, we could not accept Texaco's argument.
Texaco's theory improperly blurs the distinction between the liability and
the damages issues.  The proof established that Texaco's lower prices to
Gull and Dompier were discriminatory throughout the entire nine-year
period; that at least Gull, and apparently Dompier as well, was selling at
retail during that entire period; that the discounts substantially affected
competition throughout the entire market; and that they injured each of the
respondents.  There is no doubt that respondents' proof of a continuing
violation of the Act throughout the nine-year period was sufficient.  Proof
of the specific amount of their damages was necessarily less precise.  Even
if some portion of some of respondents' injuries may be attributable to the
conduct of independent retailers, the expert testimony nevertheless
provided a sufficient basis for an acceptable estimate of the amount of
damages.  We have held that a plaintiff may not recover damages merely by
showing a violation of the Act; rather, the plaintiff must also "make some
showing of actual injury attributable to something the antitrust laws were
designed to prevent.  Perkins v. Standard Oil Co., 395 U. S. 642, 648
(1969) (plaintiff `must, of course, be able to show a causal connection
between the price discrimination in violation of the Act and the injury
suffered')."  J. Truett Payne v. Chrysler Motors Corp., 451 U. S., at 562.
At the same time, however, we reaffirmed our "traditional rule excusing
antitrust plaintiffs from an unduly rigorous standard of proving antitrust
injury."  Id., at 565.  See also Zenith Radio Corp. v. Hazeltine Research,
Inc., 395 U. S. 100, 123-124 (1969); Bigelow v. RKO Radio Pictures, Inc.,
327 U. S. 251, 264-265 (1946). {31}  Moreover, as we have noted, Texaco did
not object to the instructions to the jury on the damages issue.  A
possible flaw in the jury's calculation of the amount of damages would not
be an appropriate basis for granting Texaco's motion for a judgment
notwithstanding the verdict.

    The judgment is affirmed.

It is so ordered.








------------------------------------------------------------------------------
1
    The independent retailers' share includes not only the market share for
the 12 respondents, who operated a total of 13 stations, but also the share
of some independent Texaco retailers who are not parties to this action.
Texaco had 27 independent dealers in the Spokane market in 1970, and 19 in
1975.  App. 22, 487-488.

2
    "Q. Did you have any conversations with Texaco during this period of
time encouraging you to, Dompier Oil Company to change its emphasis and to
move into the retail business?  A.  Yes, we did.

"Q. Would you tell the jury about that?  [A.]  Well, at various times
Texaco encouraged us to begin supplying retail service stations.  In the
early Seventies they did that, and then as time went on, they encouraged us
to own the stations that we were supplying; in other words, to try to
control our own retail business.  And beginning about 1974, we did purchase
a station in '74 and some more in '75 and we began operating those as
company operations with salaried company employees." App. 116-117.

3
    "Q. That would have been a rate, that if you had hired a common carrier
to haul the product for you, you would have paid them to haul it?  A.
That's right.

"Q. And do you understand, to your understanding does that common carrier
rate have a built-in-profit?  A.  I am sure it does.

"Q. Did you find it to be an advantage to you to be hauling your own
product?  A.  Yes."  Id., at 126.

4
    At trial one of Texaco's defenses was based on its obligation to comply
with certain federal regulations during periods of shortage.  In one of its
communications to the Federal Government, a Texaco vice president wrote, in
part:

    "We believe that the dramatic shift in gasoline sales from the
independent retailer classes of purchaser to the independent distributor
classes of purchaser can be explained almost entirely by the magnitude of
the distributor discount and the hauling allowance."  App. 413.

5
    Texaco had argued that its pricing practices were mandated by federal
regulations and that its sales in the Spokane market were not "in commerce"
within the meaning of the Act.

6
    Section 2(a) of the Act provides, in part:

"That nothing herein contained shall prevent differentials which make only
due allowance for differences in the cost of manufacture, sale, or delivery
resulting from the differing methods or quantities in which such
commodities are to such purchasers sold or delivered."

7
    Section 2(b) of the Act provides, in part:

"Provided, however, That nothing herein contained shall prevent a seller
rebutting the prima-facie case thus made by showing that his lower price or
the furnishing of services or facilities to any purchaser or purchasers was
made in good faith to meet an equally low price of a competitor, or the
services or facilities furnished by a competitor."

8
    The award to each particular respondent of course differed.  The awards
represented an average of $5,486.59 per year for each of the respondents.

9
    "While there is a serious question as to whether Dompier was entitled
to a `functional discount' on the gas it resold at retail, compare Mueller
Co., 60 F. T. C. 120 (1962), aff'd, 323 F. 2d 44 (7th Cir. 1963), cert.
denied, 377 U. S. 923 . . . (1964) (entitlement to functional discount
based on resale level) with Doubleday and Co., 52 F. T. C. 169 (1955)
(entitlement to functional discount based on level of purchase), the court
assumes, arguendo, that the mere fact that Dompier retailed the gas does
not preclude a `functional discount."'  634 F. Supp. 34, 37, n. 4 (ED Wash.
1985) (emphasis in original).

10
    "Secondly, the functional discounts negatively affected competition
because they were, in part, reflected in the favored purchasers' (or their
customers') retail prices.  In other words, the discount was not consumed
or absorbed at the level of the favored buyers; rather, the amount of the
discount (or a significant portion) appeared in the favored purchasers'
retail price, or in the favored purchasers' price to their customers and in
their customers' retail prices.  Under such circumstances, the otherwise
innocuous nature and presumed legality of functional discounts is rebutted,
for it is universally recognized that a functional discount remains legal
only to the extent it acts as compensation for the functions performed by
the favored buyer.  See 3 Kintner & Bauer, Federal Antitrust Law 309-10
(1983); Rill, Availability and Functional Discounts Justifying
Discriminatory Pricing, 53 Antitrust L. J. 929, 939-41 (1985).  The
discount must `be reasonably related to the expenses assumed by the
[favored] buyer' and the discount `should not exceed the cost of . . . the
function [the favored buyer] actually performs . . . '  Doubleday and
Company, 52 F. T. C. at 209, cited in Boise Cascade Corp., Docket No. 9133,
slip op. at 117 (Feb. 14, 1984) (initial decision).  If the discount
exceeds such costs, it cannot be justified as a functional discount,
particularly where, as here, the excess has a negative effect on
competition.
    "In this case Texaco made no serious attempt to quantitatively justify
its functional discounts.  While a precise accounting of the value of the
performed functions is not mandated, merely identifying some of the
functions is not sufficient.  There is no substantial evidence to support
Texaco's position that the discounts were justified."  634 F. Supp., at 38
(footnote omitted).

11
    In their brief filed as amici curiae, the United States and the Federal
Trade Commission suggest the following definition of "functional discount,"
which is adequate for our discussion: "A functional discount is one given
to a purchaser based on its role in the supplier's distributive system,
reflecting, at least in a generalized sense, the services performed by the
purchaser for the supplier."  Brief for United States et al. as Amici
Curiae 10 (filed Aug. 3, 1989).

12
    The legislative history indicates that earlier drafts of the Act did
include such a proviso.  See, e. g., Shniderman, "The Tyranny of Labels", A
Study of Functional Discounts Under the Robinson-Patman Act, 60 Harv. L.
Rev. 571, 583-586, and nn. 40-57 (1947).  The deletion of this exception
for functional discounts has ambiguous significance.  It may be, as one
commentator has suggested, that the circumstances of the Act's passage
"must have conveyed to the congressional mind the realization that the
judiciary and the FTC would view what had occurred as a narrowing of the
gates through which the functional classification plan of a seller had to
pass to come within the law."  Id., at 588.  In any event, the deletion in
no way detracts from the blunt direction of the statutory text, which
indicates that any price discrimination substantially lessening competition
will expose the discriminator to liability, regardless of whether the
discriminator attempts to characterize the pricing scheme as a functional
discount.

13
    See n. 6, supra.

14
    Texaco has not contested here the proposition that branded gas and
unbranded gas are of like grade and quality.  See FTC v. Borden Co., 383 U.
S. 637, 645-646 (1966) ("the economic factors inherent in brand names and
national advertising should not be considered in the jurisdictional inquiry
under the statutory `like grade and quality' test").

15
    It has proven useful in Robinson-Patman Act cases to distinguish among
"the probable impact of the [price] discrimination on competitors of the
seller (primary-line injury), on the favored and disfavored buyers
(second-line injury), or on the customers of either of them (third-line
injury)."  See 3 E. Kintner & J. Bauer, Federal Antitrust Law 20.9 p. 127
(1983).

16
    "In the Committte's view, imposing on any dual supplier a legal
responsibility for the resale policies and prices of his independent
distributors contradicts basic antitrust policies.  Resale-price fixing is
incompatible with the tenets of a free and competitive economy.  What is
more, the arrangements necessary for policing, detecting, and reporting
price cuttters may be illegal even apart from the resale-price agreement
itself.  And even short of such arrangements, a conscious adherence in a
supplier's sales to retail customers to the price quotations by independent
competing distributors is hardly feasible as a matter of business
operation, or safe as a matter of law."  Report of the Attorney General's
National Committee to Study the Antitrust Laws 206-207 (1955) (footnores
omitted).

17
    "In our view, to relate discounts or prices solely to the purchaser's
resale activities without recognition of his buying functions thwarts
competition and efficiency in marketing.  It compels affirmative
discrimination against a substantial class of distributors, and hence
serves as a penalty on integration.  If a businessman actually fulfills the
wholesale function by relieving his suppliers of risk, storage,
transportation, administration, etc., his performance, his capital
investment, and the saving to his suppliers, are unaffected by whether he
also performs the retailing function, or any number of other functions.  A
legal rule disqualifying him from discounts recognizing wholesaling
functions actually performed compels him to render these functions free of
charge."  Id., at 207.

18
    In theory, a supplier could try to defend a functional discount by
invoking the Act's cost justification defense, but the burden of proof with
respect to the defense is upon the supplier, and interposing the defense
"has proven difficult, expensive, and often unsuccessful."  3 E. Kintner &
J. Bauer, Federal Antitrust Law, 23.19, pp. 366-367 (1983).  Moreover, to
establish the defense a "seller must show that the price reductions given
did not exceed the actual cost savings," id., 23.10, p. 345, and this
requirement of exactitude is ill-suited to the defense of discounts set by
reference to legitimate, but less precisely measured, market factors.  Cf.
Calvani, Functional Discounts Under the Robinson-Patman Act, 17 B. C. Ind.
& Com. L. Rev. 543, 546, n. 16 (1976) (distinguishing functional discounts
from cost-justified price differences); Report of the Attorney General's
National Commmittee on the Antitrust Laws, at 171 ("the cost defense has
proved largely illusory in practice").
    Discounters will therefore likely find it more useful to defend against
claims under the Act by negating the causation element in the case against
them: a legitimate functional discount will not cause any substantial
lessening of competition.  The concept of substantiality permits the
causation inquiry to accommodate a notion of economic reasonableness with
respect to the pass-through effects of functional discounts, and so
provides a latitude denied by the cost-justification defense.  Cf.
Shniderman, 60 Harv. L. Rev., at 603-604 (substantiality defense in
functional discount cases).  We thus find ourselves in substantial
agreement with the view that:

"Conceived as a vehicle for allowing differential pricing to reward
distributive efficiencies among customers operating at the same level, the
cost justification defense focuses on narrowly defined savings to the
seller derived from the different method or quantities in which goods are
sold or delivered to different buyers. . . .  Moreover, the burden of proof
as to the cost justification defense is on the seller charged with
violating the Act, whereas the burden of proof remains with the enforcement
agency or plaintiff in circumstances involving functional discounts since
functional pricing negates the probability of competitive injury, an
element of a prima facie case of violation."  Rill, Availability and
Functional Discounts Justifying Discriminatory Pricing, 53 Antitrust L. J.
929, 935 (1985) (footnotes omitted).

19
    Texaco continues the argument by summoning a parade of horribles whose
march Texaco believes is at issue in this case: according to Texaco, the
Court of Appeals' rule "would multiply distribution costs, rigidify and
increase consumer prices, encourage resale price maintenance in violation
of the Sherman Act, . . . , and jeopardize the businesses of wholesalers."
Brief for Petitioner 14.

20
    See also, e. g., In re Whiting, 26 F. T. C. 312, 316, 3 (1938)
(functional classification of customers involved unlawful price
discrimination because of functional overlap); In re Standard Oil Co., 41
F. T. C. 263 (1945), modified and aff'd, 173 F. 2d 210, 217 (CA7 1949)
("The petitioner should be liable if it sells to a wholesaler it knows or
ought to have known . . . is using or intends to use [the wholesaler's]
price advantage to undersell the petitioner in its prices made to its
retailers"), rev'd and remanded on other grounds, 340 U. S. 231 (1951).
    In the Standard Oil case, the FTC itself on remand dropped the part of
its order prohibiting Standard Oil from giving functional discounts.  See
C. Edwards, Price Discrimination Law 309 (1959).  The FTC's pre- remand
theory in the Standard Oil case has of course been the subject of harsh
criticism.  See, e. g., Report of the Attorney General's National Committee
to Study the Antitrust Laws, at 206.  Much, if not all, of this criticism
rests upon the view that, under the FTC's Standard Oil ruling, a "supplier
is charged with legal responsibility for the middlemen's pricing tactics,
and hence must control their resale prices lest they undercut him to the
unlawful detriment of his directly purchasing retailers.  Alternatively,
the seller may forego his operational freedom by matching his quotations to
retailers with theirs."  Ibid.  Nothing in our opinion today should be read
to condone or approve such a result.

21
    See also In re Mueller Co., 60 F. T. C. 120, 127-128 (1962) (refusing
to make allowance for functional discounts in any way that would "add a
defense to a prima facie violation of Section 2(a) which is not included in
either Section 2(a) or Section 2(b)"), aff'd, 323 F. 2d 44 (CA7 1963),
cert. denied, 377 U. S. 923 (1964).  The FTC in Mueller expressly disavowed
dicta from Doubleday suggesting that functional discounts are per se legal
if justified by the buyer's costs.  Mueller held that the discounts were
controlled instead by the reasoning propounded in General Foods, which
refers to the value of the services to the supplier giving the discount.
60 F. T. C., at 127-128.
    We need not address the relative merits of Mueller and Doubleday in
order to resolve the case before us.  We do, however, reject the
requirement of exactitude which might be inferred from Doubleday's dictum
that a functional discount offered to a buyer "should not exceed the cost
of that part of the function he actually performs on that part of the goods
for which he performs it."  52 F. T. C., at 209.  As already noted, a
causation defense in a functional discount case does not demand the
rigorous accounting associated with a cost justification defense.

22
    The Government's position in this case does not contradict this course
of decision.  The Government's amicus brief on Texaco's behalf criticizes
the Court of Appeals opinion on the thoery that it "would require a
supplier to show that a functional discount is justified by the
wholesaler's costs," and that it imposed "liability for downstream
competitive effects of legitimate functional discounts."  Brief for United
States et al. as Amici Curiae 16, 6 (filed Aug. 3, 1989).  Cf. Boise
Cascade Corp. v. FTC, 837 F. 2d 1127, 1141-1143 (267 U. S. App. D. C. 124,
1988) (summarizing debate about relevance of buyer's costs to defense of
functional discounts).  If the Court of Appeals were indeed to have
endorsed either of these rules, it would have departed perceptibly from the
mainstream of the FTC's reading of the Act.  We need not decide whether the
Government's interpretation of the Court of Appeals opinion is correct, for
we affirm its judgment for reasons that do not entail the principles
criticized by the Government.  Indeed, the Government itself opposed the
petition for certiorari in this case on the ground that "we do not think
that this case on its facts presents the broad issue that petitioner
discusses (whether a supplier must show that its discounts to wholesalers
relative to retailers are cost based)."  Brief for United States as Amicus
Curiae 12 (filed May 16, 1989).

23
    The seller may be willing to accept any division of the price
difference so long as some significant part is passed on to the
distributor's customers.  Although respondents here did not need to show
any benefit to Texaco from the price discrimination scheme in order to
establish a violation of the Act, one possibility is indicated by the brief
filed amicus curiae by the Service Station Dealers of America (SSDA), an
organization representing both stations supplied by independent jobbers and
stations supplied directly by sellers.  See Brief for SSDA as Amicus Curiae
1-2.  SSDA suggests that an indirect price discount to competitors may be
used to force directly supplied franchisees out of the market, and so to
circumvent federal restrictions upon the termination of franchise
agreements.  See 92 Stat. 324-332, 15 U. S. C. 2801-2806.
    One would expect that, absent a safe harbor rule making functional
discounts a useful means to engage in otherwise unlawful price
discrimination, excessive functional discounts of the sort in evidence here
would be rare.  As the Government correctly observes, "[t]his case appears
to reflect rather anomalous behavior on the part of the supplier."  Brief
for United States et al. as Amici Curiae 17, n. 15 (filed Aug. 3, 1989).
See also Brief for United States as Amicus Curiae 15 (filed May 16, 1989)
("market forces should tend to discourage a supplier from offering
independent wholesalers discounts that would allow them to undercut the
supplier's own retail customers").

24
    Much of Perkins's case parallels that of respondents.  "There was
evidence that Signal received a lower price from Standard than did Perkins,
that this price advantage was passed on, at least in part, to Regal, and
that Regal was thereby able to undercut Perkins' price on gasoline.
Furthermore there was evidence that Perkins repeatedly complained to
Standard officials that the discriminatory price advantage given Signal was
being passed down to Regal and evidence that Standard officials were aware
that Perkins' business was in danger of being destroyed by Standard's
discriminatory practices.  This evidence is sufficient to sustain the
jury's award of damages under the Robinson-Patman Act."  395 U. S., at
649.

25
    We added: "Here Standard discriminated in price between Perkins and
Signal, and there was evidence from which the jury could conclude that
Perkins was harmed competitively when Signal's price advantage was passed
on to Perkins' retail competitor Regal.  These facts are sufficient to give
rise to recoverable damages under the Robinson-Patman Act."  395 U. S., at
648.

26
    In fact, the principle applied in Perkins, that we will not construe
the Robinson-Patman Act in a way that "would allow price discriminators to
avoid the sanctions of the Act by the simple expedient of adding an
additional link to the distribution chain," 395 U. S., at 647, seems
capable of governing this case as well.  It might be possible to view
Perkins as standing for a narrower proposition, either because Signal
apparently exercised majority control over the intermediary, Western Hyway,
and its retailer, Regal, see id., at 651 (Marshall, J., concurring in part
and dissenting in part), or because Standard did not assert that its price
to Signal reflected a "functional discount."  However, as the Perkins
dissent pointed out, ibid., the Perkins majority did not put any such
limits on the principle it declared.

27
    See, e. g., Celnicker & Seaman, Functional Discounts, Trade Discounts,
Economic Price Discrimination and the Robinson-Patman Act, 1989 Utah L.
Rev. 813, 857 (1989) (concluding that "[t]rade discounts often are
manifestations of economic price discrimination. . . .  If a trade discount
violates the normal competitive disadvantage criteria used under the Act,
no special devices should be employed to protect it"); Rill, 53 Antitrust
L. J., at 940-941 ("Although it is entirely appropriate for the FTC and the
courts to insist that some substantial services be performed in order for a
buyer to earn a functional discount, a requirement of precise mathematical
equivalency makes no sense"); 3 E. Kintner & J. Bauer, Federal Antitrust
Law 318-320, and n. 305 (1983) ("Functional discounts . . . are usually
deemed lawful," but this usual rule is subject to exception in cases,
"arising in unusual circumstances," when the seller's "discrimination
caused" the tertiary line injury); Calvani, 17 B. C. Ind. & Com. L. Rev.,
at 549, and n. 26 (1976) (discounts to wholesalers are generally held not
to injure competition, but this rule is subject to qualifications, and
"[p]erhaps the most important caveat focuses on the situation where the
seller sells to both resellers and the consumers and the resellers pass on
to consumers all or part of the wholesaling functional discount"); C.
Edwards, Price Discrimination Law 312-313 (1959) ("It is not surprising
that from time to time the Commission has been unable to avoid finding
injurious discrimination between direct and indirect customers nor to avoid
corrective orders that sought to define the gap between prices at
successive levels of distribution"); Kelley, Functional Discounts Under the
Robinson-Patman Act, 40 Cal. L. Rev. 526, 556 (1952) (concluding that the
"characterization of a price differential between two purchasers as a
functional or trade discount accords it no cloak of immunity from the
prohibitions of the Robinson-Patman Act"); Shniderman, 60 Harv. L. Rev., at
599-600 (Commission's approach to functional discounts "may have been
influenced by the possibility of subtle price discriminating techniques
through the employment of wholesalers receiving more than ample discount
differentials").
    Professor Edwards, among others, describes the status of functional
discounts under the Robinson-Patman Act with clear dissatisfaction.  He
complains that "The failure of the Congress to cope with the problem . . .
has left the Commission an impossible job in this type of case."  Price
Discrimination Law, at 313.  He adds that the Commission's "occasional
proceedings" have been attributed to the "Commission's wrong-headedness."
Id., at 312.  Professor Edwards's observations about the merits of the
statute and about prosecutorial discretion are obviously irrelevant to our
own inquiry.  Unlike scholarly commentators, we have a duty to be faithful
to congressional intent when interpreting statutes, and are not free to
consider whether, or how, the statute should be rewritten.

28
    "In practice, the competitive effects requirement permits a supplier to
quote different prices between different distributor classes, so long as
those who are higher up (nearer the supplier) on the distribution ladder
pay less than those who are further down (nearer the consumer)."  F. Rowe,
Price Discrimination Under the Robinson-Patman Act 174 (1962) (footnote
omitted); see also id., at 178.

29
    Rowe, writing prior to this Court's Perkins decision, describes the
exception, which he identifies with the Standard Oil cases, as "of dubious
validity today."  Id., at 196.  Rowe's analysis is flawed because he
assumes that seller liability for tertiary line implications of wholesaler
discounts must follow the logic of the Standard Oil complaint, and likewise
assumes that this logic exposes to liability any seller who fails to
monitor the resale prices of its wholesaler.  Id., at 204.  Indeed, Rowe's
own discussion suggests one defect in his argument: legitimate wholesaler
discounts will usually be insulated from liability by an absence of
evidence on the causation issue.  Id., at 203-204.  In any event, nothing
in our opinion today endorses a theory of liability under the
Robinson-Patman Act for functional discounts so broad as the theory Rowe
draws from Standard Oil.

30
    The parties do not raise, and we therefore need not address, the
question whether the inference of injury to competition might also be
negated by evidence that disfavored buyers could make purchases at a
reasonable discount from favored buyers.

31
    In J. Truett Payne, 451 U. S., at 565-566, we quoted with approval the
following passage:

    "[D]amage issues in these cases are rarely susceptible of the kind of
concrete, detailed proof of injury which is available in other contexts.
The Court has repeatedly held that in the absence of more precise proof,
the factfinder may `conclude as a matter of just and reasonable inference
from the proof of defendants' wrongful acts and their tendency to injure
plaintiffs' business, and from the evidence of the decline in prices,
profits and values, not shown to be attributable to other causes, that
defendants' wrongful acts had caused damage to the plaintiffs.'  Bigelow v.
RKO Pictures, Inc., [327 U. S.], at 264.  See also Eastman Kodak Co. v.
Southern Photo Materials Co., 273 U. S. 359, 377-379 (1927); Story
Parchment Co. v. Paterson Parchment Paper Co., 282 U. S. 555, 561-566
(1931)."  Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U. S., at
123-124.