Price discrimination occurs when a seller charges competing buyers different prices for the same product. Price discrimination is common and generally legal, particularly when the costs associated with selling to downstream companies differ. However, price discriminations can violate antitrust law when they provide an advantage for businesses that does not relate to their efficiency.
Price discrimination can come in several forms. Sellers may offer lower prices to some competitors and not others, offer rebates or promotions to some customers and not others, or reduce prices in certain geographic areas.
Laws Prohibiting Illegal Price Discrimination
Anticompetitive price discrimination schemes violate federal antitrust law, notably the Robinson-Patman Act, and are prohibited by state antitrust law, including the California Unfair Practices Act.