By John DiPisa, Founder and CEO, Bid Desk Analytics –
Bidder Beware: What You Need to Know About the Robinson-Patman Act
If you’re a manufacturer with an established dealer network, you likely get competing dealers requesting quotes in response to the same state, local government or education RFPs. While it may be tempting to offer preferential pricing to a favored dealer, doing so could risk putting you in violation of the Robinson-Patman Act.
According to the American Bar Association (ABA), The Robinson-Patman Act (RPA) was enacted by Congress in 1936 and prohibits certain forms of price discrimination in sales transactions. More specifically, a violation of the act “occurs when a seller sells two of the same or similar products at different prices to different buyers with a brief period of time and those sales cause injury to competition.”
It is important to note that in the RPA, price refers to net price, and includes all compensation paid. The seller may not throw in additional goods or services unless it does so for all buyers. And while, according to the Federal Trade Commission, proof of a violation of RPA often involves complex legal questions, manufactures should be aware that Injured parties or the US government may bring legal action under the Act.
The good news is that it is simple for manufacturers to comply with the Robinson-Patman Act. Here are the top three things manufacturers need to know:
- When asked to quote prices for a specific bid, you must offer the same price quote to every dealer that is bidding their product
- It is not necessary to broadcast the price to every dealer that bids
- It is important to record the quoted price, so that each dealer asking for a price on the same bid receives the same price
The other good news is that it is often not necessary to bid your lowest price. In fact, by doing so, you are often leaving money on the table.
At Bid Desk Analytics, we use data – raw, normalized, actionable, integrated and predictive – focused on the 800 locations that purchase 80% of the volume of tax-supported contract business so you can bid strategically and profitably. Check out the videos on our website to learn more and visit our blog regularly for valuable tips and insights.
For more information or to request a brief demo of the Bid Desk Data Feed, simply contact us.
