October 07, 2008
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Antitrust case involving truck sales has implications for school bus prices


Although Volvo Trucks North America Inc. v. Reeder-Simco GMC Inc., Docket No. 04-905, a case currently under review by the U.S. Supreme Court, does not involve a legal issue that directly affects public schools, the antitrust case involving heavy-truck sales has implications for the prices school districts pay for buses. Reeder-Simco, a Volvo truck dealership in Ft. Smith, Arkansas, filed suit against Volvo, alleging that the manufacturer unfairly favored other dealers by giving them bigger discounts, or price concessions, than it gave to Reeder-Simco, in violation of the Robinson-Patman Act, a federal antitrust law. The U.S. Court of Appeals for the Eighth Circuit upheld the federal district court's judgment for Reeder-Simco and award of triple damages. In their Supreme Court friend of the court brief, the National Association of State Directors of Pupil Transportation Services (NASDPTS) argued that upholding the Eighth Circuit's decision would discourage school bus manufacturers from giving discounts to help their dealers win competitions for sales to districts. Charles Gauthier, NASDPTS's executive director, argues that school bus manufacturers such as Volvo, in helping one of its dealers win a school district contract, typically offer a price concession that may reduce the manufacturer's profits but enlarge its market share. He contends that manufacturers will abandon such selective discounting if they have to "[look] over [their] shoulder" at the antitrust law because they are not providing the same concession to all their dealers. During oral arguments, Justice Breyer indicated that Volvo's actions might bring the case within the reach of the Robinson-Patman Act because the "continuous" relationship between Volvo and its dealers, as seller and buyers, and the fact that customers typically shop around among dealers might constitute a form of sales competition within the meaning of the antitrust statute.

Education Week
By Andrew Trotter
[Link to full story]

[Editor's Note: To view the Eighth Circuit's opinion, access the designated link below. In addition, the Cornell Legal Information Institute (LII) in its oral argument preview section summarizes NASDPTS's amicus brief as arguing in part "that if companies are no longer permitted to grant price differentials, companies may need to raise prices and turn that cost over to their customers," which could adversely affect school districts' ability to get the best price for buses.]
[Eighth Circuit opinion in Volvo Trucks]
[LII oral argument preview]