Robinson-Patman Act: Is the ‘Dormant’ Era Making a Comeback?

California Court Shuts Down “5-Hour Energy” RPA Claims…Again

On May 28, the California federal court issued another order in the long-running “5-Hour Energy” case, agreeing that Costco received better promotional deals (about 14.7 cents per bottle) than the wholesaler plaintiffs (who got between 0.5 and 9.4 cents), but concluded that lost promotion payments were not enough for the wholesaler plaintiffs to prevail under the RPA. The court found the wholesaler plaintiffs did not show the kind of competitive harm the law requires — failing to prove that Costco’s promotional deals enabled it to cut prices and win sales from the wholesalers or forced the wholesalers to sell at a loss. The related California Unfair Competition Law claim was also dismissed for the same reasons.

FTC Drops Its Own PepsiCo RPA Case

A week earlier, on May 22, new FTC Chairman Andrew N. Ferguson announced that the FTC is dropping its RPA case against PepsiCo. This announcement came a week after the chairman testified about the FTC’s enforcement priorities, and the RPA was not one of them. The chairman’s statement on the Pepsi lawsuit, joined by Commissioner Melissa Holyoak, stated that the prior FTC leadership filed the case with “no evidence of disparate treatment” and called it “purely political.” Ferguson noted that while the RPA is still important, the FTC will not pursue cases without solid proof and a real chance of success. This ends the biggest government-led RPA case in years and signals that the FTC is hitting pause on aggressive RPA enforcement for now.

Next Steps for Manufacturers and Retailers

Importantly, do not be fooled into thinking RPA cases are off the table. Private litigation has continued to be filed on a consistent basis for decades. They have been few in number and difficult to overcome motions to dismiss, which continues to be good news for potential defendants. But when they do progress, they can be wrenching and expensive. So, consider prudent, proactive measures:

1. Review your advertising, display, and rebate deals to confirm they can be explained as “proportionally equal”— ideally using simple formulas that apply to everyone in the same customer group.

2. Document your pricing plan and customer discount decisions, ideally in a central repository and with the advice of antitrust counsel.

3. Coordinate your legal, sales, and finance teams so they all understand your discount and rebate policies and decisions. Clear guidelines help avoid mistakes that can attract unwanted attention.

ArentFox Schiff’s Antitrust & Competition team regularly advise manufacturers, distributors, and retailers on strategies for antitrust compliance that align with their business goals.