Question

Question:12. Between 1972 and 1981 , Texaco sold gasoline to independent Texaco retailers at "retail tank wagon prices" but granted substantial discounts to distributors Gull and Dompier. Gull resold the gas under its own name. Dompier resold the gas under the Texaco brand name to retail stations and entered the retailmarket directly. Since neither Gull nor Dompier had significant storage facilities, both distributors picked up gas directly from the Texaco plant and delivered it to their retail outlets. As a result, the sales volume increased substantially at the retail stations purchasing gas from these distributors, while independent Texaco retailers suffered a corresponding sales decline. In 1976, independent Texaco retailers filed suit against Texaco. In 1990, the Supreme Court of the United States found that Texaco had indeed violated antitrust law. Which law do you think Texaco was found guilty of violating?

Short answer

Answer:

Texaco was found guilty of violating the Robinson-Patman Act (1936) which makes price discrimination illegal if it is designed to lessen competition or create a monopoly.

Step-by-step solution

Robinson-Patman Act (1936)

“The Robinson-Patman Actis a law in the U.S. that prohibits price discrimination and other anticompetitive practices.” It is designed to protect the interests of small retail shops by fixing a minimum price for retail items.

The laws violated

Independent gas stations claimed that the price discrimination that the gas giant TX used to engage in by providing significant discounts to large distributors was to blame for the drop in sales when they sued the company on those grounds. Price discrimination is prohibited unless it results from differences in cost or quality, hence the, TX was judged to have broken the law.

The Clayton Act of and its amendment, the Robinson-Patman Act of ,1936 are the laws that are most likely to be broken.