Judges: Carla J. Stovall, Attorney General of Kansas
Filed Date: 8/20/1998
Status: Precedential
Modified Date: 7/5/2016
The Honorable Janis K. Lee State Senator, 36th District R.R. 1, Box 145 Kensington, Kansas 66951
Dear Senator Lee:
You inquire whether the scenario you present constitutes a violation of K.S.A.
"(b) It is a violation of this act for a farm equipment manufacturer: . . . (3) to discriminate in the prices charged for farm equipment of like grade and quality sold by the farm equipment manufacturer to similarly situated farm equipment dealers, except nothing herein 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 farm equipment is sold or delivered, by the farm equipment manufacturer."
The statute, found in the Kansas Agricultural Equipment Dealership Act,1 was intended to create a state equivalent2 of the Robinson-Patman Act,3 a principal federal statute directed at price discrimination.4 The purpose of the prohibition of price discrimination is to insure that purchasers from a single supplier will not be injured by that supplier's discriminatory practices.5
In order to constitute a violation of K.S.A.
You have indicated that the rebates or allowances provided to dealers who comply with the program are higher than those provided to dealers who have not complied with the certification program, resulting in different prices to similarly situated dealers. The difference in allowances paid means that certified dealers pay less per item than other dealers who were not certified because they were not found to comply with the program. However, the price differences are not discriminatory if the program which determines whether a dealer becomes certified and gets a greater allowance is available to all the dealers equally.8 Thus, the ability to obtain certification (and get the allowances) by becoming a certified dealer depends on the determination by the manufacturer's inspectors that all of the manufacturer's standards are met. In order for the program to be equally available, inspectors applying the standards must do so fairly. If unequal subjective assessments of compliance are utilized, the program is not equally available and would be in violation of the Act. In short, the price difference among the dealers amounts to price discrimination which lessens competition only if the certification program was not available to all competing dealers on a reasonably equivalent basis, even if some chose not to make the commitment necessary to obtain the certification. If the program is not available to all dealers on reasonably equivalent terms, the program violates the statutory provision because it lessens or limits competition by the use of a discriminatory practice. The question of "availability" is, however, a factual issue9 involving a determination that the lower price (or certification in our case) is functionally, and not merely theoretically, available to the competing dealers.10
In conclusion it is our opinion that a manufacturer's certification program which results in different prices for farm equipment of like grade and quality sold to dealers similarly situated violates K.S.A.
Very truly yours,
CARLA J. STOVALL Attorney General of Kansas
Guen Easley Assistant Attorney General
CJS:JLM:GE:jm
comcoa-inc-a-kansas-corporation-and-southwest-utilities-inc-an , 931 F.2d 655 ( 1991 )
Tri-Valley Packing Association, a Corporation v. Federal ... , 329 F.2d 694 ( 1964 )
Federal Trade Commission v. Morton Salt Co. , 68 S. Ct. 822 ( 1948 )
Federal Trade Commission v. Sun Oil Co. , 83 S. Ct. 358 ( 1963 )
Rod Baxter Imports, Inc. v. Saab-Scania of America, Inc. , 489 F. Supp. 245 ( 1980 )