Duhaime's Law Dictionary


Competitive Injury Definition:

A price difference designed to harm competition.

Related Terms: Anti-trust

Water Craft v Mercury Marine was a Federal anti-trust law claim (U.S.C. Chapter 15). Justice Polozola described the term competitive injury in the context of the antitrust statute:

"The prohibited effect on competition element is usually defined by courts by directly quoting the language of the statute which says 'may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them.'

"This language focuses on two general effects under this portion of the Act: the effect on the general competitive market and the effect on the individual competitors or the disfavored purchaser.

"With respect to the effect on the general competitive market, the Act does not require that the discrimination in fact have harmed competition. Instead, the Act requires the plaintiff show there is a reasonable possibility that the price difference may harm competition. This reasonable possibility of harm is usually referred to as competitive injury.

"Once the plaintiff proves a discrimination in price, the burden then shifts to the defendant to negate competitive injury. Unless rebutted ... a showing of competitive injury as part of a prima facie case is sufficient to establish a claim under the Act."

In Feesers v Michael Foods Inc. and Sodexho Inc, Justice Rendell wrote:

"To establish the fourth element of its prima facie case against Michael Foods, Feesers was required to show that there is a reasonable possibility that [the] price difference may harm competition, i.e., competitive injury.

"In keeping with the (antitrust, 15 U.S.C.) act's prophylactic purpose, designed to prevent the occurrence of price discrimination rather than to provide a remedy for its effects, (the antitrust statute) does not require that the discrimination must in fact have harmed competition. Instead, a reasonable possibility of harm, often referred to as competitive injury, must be shown.

"Competitive injury is established prima facie by proof of a substantial price discrimination between competing purchasers over time.

"In order to establish a prima facie violation... Feesers does not need to prove that Michael Foods' price discrimination actually harmed competition, i.e., that the discriminatory pricing caused Feesers to lose customers..... Rather, Feesers need only prove that (a) it competed with Sodexho to sell food and (b) there was price discrimination over time by Michael Foods. This evidence gives rise to a rebuttable inference of competitive injury.... The inference, if it is found to exist, would then have to be rebutted by defendants' proof that the price differential was not the reason that Feesers lost sales or profits."

REFERENCES:

  • Feesers, Inc. v. Michael Foods, Inc., 498 F. 3d 206 (United States Court of Appeals, 2007)
  • Water Craft Management v. Mercury Marine, 361 F. Supp. 2d 518 (2004)

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