In a recent development that’s sparked a distinct interest in U.S. price discrimination law, the Ninth Circuit has revived a part of a price discrimination claim. The claim was made by wholesalers of the best-selling drink, 5-Hour Energy, against its manufacturer. The case unfolded as the manufacturer made more favourable promotional provisions available to a large merchandiser. At the same time, the court upheld a defense jury verdict on what’s been described as “functional” discounts. Dechert LLP highlighted this case.
The development in question could be seen as part of a resurgence in interest in and focus on U.S. price discrimination. This comes at a time when increasing emphasis has been laid on it by regulators, including the Federal Trade Commission (FTC). Industry insiders could consider this a significant signal warranting the need for legal practitioners to increase their vigilance around this area of law.
One key area of focus within the case was the functional discount defense, which allows manufacturers to provide differential pricing to wholesalers for function played such as promotional activities or holding inventory. This is an important area to monitor for corporations dealing with a large network of wholesalers as this defense holds potential implications for their pricing strategies.
The FTC’s recent interest in price discrimination goes in line with this verdict and the increasing scrutiny on pricing strategies notably in the context of an increasingly competitive marketplace. It is, therefore, important for legal professionals advising corporations to stay updated with such developments in the regulatory landscape. This would not only ensure compliance but also advise corporations for better risk management and contingency planning.
This case offers valuable insights for both legal professionals and corporations as they navigate the challenges of pricing in today’s competitive landscape. It highlights the need to vigilantly monitor and react to continuous changes in regulatory scrutiny, and the inherent need for a robust compliance and risk management strategy to mitigate potential consequences.