Small Store Loses Fight Over Clorox Bulk Deals
By JACK BOUBOUSHIAN
CHICAGO (CN) — Clorox’s decision to sell large packages of its products exclusively to Costco and Sam’s Club does not violate antitrust law, the Seventh Circuit ruled.
“Does size matter? Not always, as this case illustrates,” the Seventh Circuit’s 13-page opinion begins.
Woodman’s Food Market sued Clorox Co. in 2014 for its decision to stop selling the small grocery chain large packages of Clorox products. Woodman’s has 15 stores in Wisconsin and Illinois.
Clorox told Woodman’s it would be placed in a different distribution channel and would no longer be able to buy the large packages, which now are available only at warehouse stores such as Costco and Sam’s Club.
In addition to its cleaners, Clorox makes Glad plastic bags, Fresh Step cat litter, K.C. Masterpiece barbecue sauce, Hidden Valley salad dressing, and Kingsford charcoal.
Woodman’s claims Clorox violated federal laws against price discrimination, making it impossible for Woodman’s to offer customers large packages with a low per-unit price.
A district court judge denied Clorox’s motion to dismiss and the company appealed to the Seventh Circuit, which reversed in favor of Clorox on Friday.
Judge Diane Wood’s opinion leaned heavily on the arguments presented by the Federal Trade Commission in its amicus brief.
“The commission’s position is a logical one: if the convenience of a large pack were a promotional ‘service or facility’ simply because the size made it more attractive to customers, then nearly all product attributes would be ‘services or facilities,'” Wood wrote for a three-judge panel. “Such an interpretation of section 13(e) [of the Robinson-Patman Act] would wipe out the seller’s discretion to choose which products to sell to whom.” (Emphasis in original.)
Recent U.S. Supreme Court precedent dealing with antitrust matters also favors a narrow reading of the Robinson-Patman Act, the opinion states.
“This leaves Woodman’s without a leg to stand on,” Wood said.