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From Antitrust Law Daily, February 17, 2015

Golf retailer continues to drive price discrimination claims against Nike

By Greg Hammond, J.D.

Nike, Inc. was unable to outplay a golf retailer’s price discrimination claims under the Robinson-Patman Act and Oregon’s Anti-Price Discrimination Law. In denying most of Nike’s motion to dismiss, the federal district court in Beaumont, Texas determined that the golf retailer adequately alleged antitrust standing, contemporaneous sales, and injury to competition, and the retailer’s price discrimination claims were not barred under the relevant four-year statute of limitations (Games People Play, Inc. v. Nike, Inc., February 13, 2015, Crone, M.).

Background. Games People Play, Inc. (GPP) is a formidable player in the golf retail industry that has had a relationship with Nike since 1986. The two companies’ relationship soured in 2010, however, over a dispute concerning Nike’s Victory Red irons. GPP alleged that Nike refused to sell the Victory Red irons at a reduced price Nike allegedly offered a competitor, and GPP consequently purchased the irons from a different company at an undisclosed price. As a result of the dispute, Nike allegedly stopped making site visits, refused to answer GPP’s business questions, and reduced promotional offers that were purportedly made to GPP, in violation of the Robinson-Patman Act and Oregon’s Anti-Price Discrimination Law. GPP alleged four specific instances of alleged price discrimination.

Nike moved to dismiss GPP’s second amended complaint, arguing: (1) GPP lacks antitrust standing; (2) GPP’s claims are time-barred; (3) GPP’s section 2(a) claim does not allege contemporaneous sales and injury to competition; and (4) GPP’s section 2(d) and 2(e) claims are unavailing because a “refusal to sell” is not actionable as a matter of law.

Antitrust standing. In support of its motion to dismiss, Nike first argued that GPP failed to allege antitrust injury, and therefore did not have antitrust standing to bring its price discrimination claims. The court disagreed, finding that GPP sufficiently alleged that it suffered financial loss as a result of Nike selling the Victory Red irons to at least one other retailer at a lower price than that charged to its competitors. Because GPP alleged that its purported financial losses flowed from Nike’s conduct, GPP sufficiently alleged antitrust injury, and consequently established antitrust standing.

Statute of limitations. Under the Robinson-Patman Act, price discrimination claims must be brought within four-years of the purported injury that gave rise to the cause of action. GPP filed its initial complaint in May 2014, which was within the limitations period, and filed its amended complaint in October 2014, which was outside of the limitations period. Nike argued that the second amended complaint does not relate back to the original petition, because it is impossible to ascertain from the original complaint what “conduct, transaction, or occurrence” was being set out.

The court disagreed with Nike, concluding that GPP’s claims in its second amended complaint arose out of the “conduct, transaction, or occurrence” set forth in the retailer’s original petition. Specifically, GPP alleged that Nike sold the same products to other buyers at different prices in reasonably contemporaneous sales transactions in interstate commerce, and offered other buyers promotional allowances and services, while failing to provide those services and promotions proportionally to GPP. The court therefore determined that GPP’s claims in its second amended complaint were based on the same “nucleus of operative facts” and contained similar allegations of antitrust discrimination. GPP’s price discrimination claims consequently related back to the filing date of the original petition and were not time-barred.

Contemporaneous sales, competitive injury. In its third argument, Nike asserted that GPP failed to state a claim under the Robinson-Patman Act because: (1) GPP failed to adequately allege contemporaneous sales or injury to competition; and (2) GPP’s alleged injury was not significant or substantial and therefore failed to create an inference of competitive injury.

Conversely, GPP alleged that Nike’s sales of the Victory Red irons to GPP and its competitor were contemporaneous, as they both occurred in May 2010. In addition, GPP asserted that Nike’s discriminatory practices caused GPP to suffer damages in the form of lost profits and that the $152 price differential between the prices paid by GPP and its competitor for the Victory Red irons created an inference of competitive injury.

The court concluded that it needs to consider records regarding dates and volume of purchases and sales to determine whether the alleged price disparity constitutes a competitive injury as a matter of law. However, for purposes of a motion to dismiss, the court concluded that GPP adequately alleged contemporaneous sales and competitive injury.

Refusal to sell. GPP also alleged that Nike’s conduct violated sections 2(d) and 2(e) of the Robinson-Patman Act, because they involved Nike’s impermissible refusals to sell. Nike moved to dismiss these claims, arguing that allegations involving only a “refusal to sell” are not actionable as a matter of law under the Robinson-Patman Act. The court agreed, finding that, although GPP described Nike’s conduct with regard to certain products as “promotional opportunities,” the second amended complaint illustrated that the incidents—at their core—were refusals to sell. GPP consequently failed to state a claim under section 2(d) and 2(e) of the Robinson-Patman Act, and the claims were therefore dismissed with prejudice.

The case number is 1:14-CV-321.

Attorneys: Robert Christopher Bell (Berg Feldman Johnson Bell, LLP) for Games People Play, Inc. David Steven Coale (Lynn Tillotson Pinker & Cox, LLP) for Nike, Inc.

Companies: Games People Play, Inc.; Nike, Inc.

MainStory: TopStory Antitrust TexasNews

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