OPINION
This appeal by Feesers, Inc. (“Feesers”), a food distributor, arises out of a Robinson-Patman Act claim for unlawful price discrimination, 15 U.S.C. § 13 (the “RPA”), against Michael Foods, Inc. (“Michaels”), a food manufacturer, and Sodexo, Inc. (“Sodexo”),
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a food service management company. Feesers claims that Sodexo was able to purchase egg and potato products from Michaels at a discounted price that was unavailable to Feesers. Following a bench trial, the District Court entered judgment for Feesers. We will vacate that judgment and instruct the District Court to enter judgment as a matter of law for Michaels and Sodexo. Feesers and Sodexo were not competing purchasers, and, therefore, Feesers cannot satisfy the competitive injury requirement of a prima facie ease of price discrimination under § 2(a) of the RPA.
2
In doing so, we
When reviewing a judgment entered after a bench trial, we exercise “plenary review over [the] [District [C]ourt’s conclusions of law” and its “choice and interpretation of legal precepts.”
Am. Soc’y for Testing & Materials v. Corrpro Cos.,
Michaels and Sodexo raise a host of issues in this appeal, but in light of this Court’s decision in
Toledo Mack Sales & Service, Inc. v. Mack Trucks, Inc.,
I.
The following facts were found by the District Court after a bench trial.
Feesers, Inc. v. Michael Foods, Inc.,
Structure of the Food Service Industry
The food service industry consists of a three-tier distribution system: manufacturers sell products to distributors, who resell those products to operators, including self-operators (“self-ops”) and food service management companies.
Id.
at 420-21. Self-ops are institutions that perform all dining services internally. Food service management companies perform institutions’ dining services for a fee,
id.,
and primarily target schools, hospitals, and nursing-homes. Sometimes operators negotiate with manufacturers for discounted
The Parties in this Appeal
Michaels is a manufacturer of egg and potato products that sells in bulk, nationwide. Id. It is the largest producer of liquid eggs in the United States. Id. Feesers is a regional distributor that distributes Michaels’s products, and others, to operators within a 200-mile radius of Harrisburg, Pennsylvania. Id. Sodexo is a multinational food service management company that serves institutions around the world. Id. Its services include planning menus, ordering food, preparing and serving meals, and overseeing labor issues. It is the largest private purchaser of food in the world. Id. Sodexo owns Entegra, a GPO. Id. at 427.
Michaels’s Pricing of Food Products
Michaels sells sixty percent of its products at deviated prices. Id. at 432. It has offered deviated pricing to self-ops since the mid-1990s and to food service management companies, like Sodexo, since at least 1999. “[0]n average from 2000 until 2004, Feesers paid $9.56, or 59% more than [Sodexo] for [Michaels’s] eleven top selling products.” Id. at 434. This pricing difference was described as “stunning” by Feesers’s expert witness. Id. The deviated pricing Sodexo received from Michaels was not institution-specific, so Sodexo could “use its low deviated price ... to win new accounts and to keep current customers.” Id. at 432.
Competition between Feesers and Sodexo
Feesers sells food to self-op institutions and food service management companies. 4 Id. at 421-22. Sodexo sells food in conjunction with its food service management services. Id. at 422. Institutional customers “regularly switch [between] self-op [and] management,” and at least three institutions have switched between Feesers and Sodexo. Id. 5 Both companies regularly seek self-op business. Id. Feesers tries to distribute for self-ops while Sodexo tries to convert self-ops to food service management.
When a self-op switches to Sodexo, it relies on Sodexo to handle all dining services functions, such as procurement and distribution of food.
Id.
Sodexo itself is not a distributor, but it decides which distributors its customers will use.
Id.
Thus, when an institution switches from self-op
Competition between Feesers and Sodexo occurred informally prior to the request for proposal (“RFP”) process ordinarily required by large institutions. 7 Id. at 428. To grow its client base, Sodexo identifies institutions that meet its client profile and then builds relationships with those institutions. Id. at 428-29. During informal contacts with a prospective institutional customer, Sodexo “gauges the institution’s interest in management and determines whether there are any particular problems to be solved.” Id. at 428. If the institution is interested in management, it will then put out a RFP and Sodexo will follow through in that process. Id. Aside from seeking new clients, Sodexo also touts its access to discounted foods to its existing customers that utilize it for preparation and ordering of food, but not for distribution. Id. at 429. This is done, in part, to encourage those customers to switch to Sodexo’s chosen distributor. Id. 8
Procedural History
On March 17, 2004, Feesers sought a declaratory judgment stating that (1) Michaels unlawfully discriminated in price under § 2(a) of the RPA by selling egg and potato products to Sodexo at significantly lower prices than it did to Feesers and (2) Sodexo violated § 2(f) of the RPA by knowingly inducing those discriminatory sales. 15 U.S.C. § 13(a) and (f). Feesers also sought permanent injunctive relief under § 16 of the Clayton Act. 15 U.S.C. § 26. On May 4, 2006, the District Court granted summary judgment for the defendants, concluding that Feesers had satisfied the first three elements of a prima facie case of price discrimination, but not the fourth element, competitive injury. “The District Court was concerned that [Sodexo] and Feesers [we]re not at the same ‘functional level’ and [we]re therefore not in ‘actual competition’ in the same market.”
Feesers, Inc.,
Feesers appealed and this Court reversed.
9
We held that the District Court
On remand, after a bench trial, the District Court entered judgment for Feesers and enjoined Michaels from engaging in unlawful price discrimination. Michaels then suspended all sales to Feesers. In response, Feesers sought an order of contempt and a permanent injunction forbidding Michaels from refusing to deal with Feesers. On May 26, 2009, the District Court held Michaels in contempt and enjoined it from refusing to “sell its products to Feesers on the same terms as they are sold to [Sodexo], so long as Feesers otherwise meets its standards as a customer.” Michaels and Sodexo now appeal the District Court’s judgment and the permanent injunction.
II.
“ ‘Competitive injury’ [under § 2(a) of the RPA] is established ... by proof of ‘a substantial price discrimination between
competing purchasers over
time.’ ”
Feesers, Inc.,
To determine whether Feesers competed with Sodexo to sell food, “the relevant question is whether [the] two companies ‘[we]re in economic reality acting on the same distribution level.’ ”
Id.
at 214 (quoting
Stelwagon Mfg. Co. v. Tarmac Roofing Sys., Inc.,
A.
In application, the competing purchaser requirement will vary based on the
In practice, the rule, like other restrictions on the reach of the RPA, prevents the unprincipled application of the statute. Indeed, because the RPA often has “anti-competitive” effects that “promote rather than ... prevent monopolistic pricing practices,” Small Business and the Robinson-Patman Act: Hearings before the Special Subcommittee on Small Business and the Robinsom-Patman Act of the House Select Committee on Small Business, 91st Cong. 146-47 (1969) (testimony of Richard A. Posner), the Supreme Court, in seeking to construe the statute consistently with the broader policies of the antitrust laws, has repeatedly limited its reach by:
• Expanding the means through which RPA defendants can attack the “competition” element of a prima facie case of price discrimination, Texaco v. Hasbrouck,496 U.S. 543 , 561,110 S.Ct. 2535 ,110 L.Ed.2d 492 (1990) (“A supplier need not satisfy the rigorous requirements of the cost justification defense in order to prove that a particular functional discount is reasonable and accordingly did not cause any substantial lessening of competition between a wholesaler’s customers and the supplier’s direct customers.”) (footnote omitted);
• Focusing the competition inquiry on “interbrand competition,” Volvo Trucks,546 U.S. at 180 ,126 S.Ct. 860 ;
• Explaining that the RPA does not “ban all price differences charged to different purchasers of commodities of like grade and quality,” id. at 176,126 S.Ct. 860 (quoting Brooke Group Ltd.,509 U.S. at 220 ,113 S.Ct. 2578 );
• “[R]esist[ing] interpretation^] [of the RPA] geared more to the protection of existing competitors than to the stimulation of competition,” Volvo Trucks,546 U.S. at 181 ,126 S.Ct. 860 (emphasis omitted); and,
• “[R]ecogni[zing] [that] the right of a seller to meet a lower competitive price in good faith may be the primary means of reconciling the [RPA] with the more general purposes of the antitrust laws,” Great Atl. & Pac. Tea Co. v. FTC,440 U.S. 69 , 82 n. 16,99 S.Ct. 925 ,59 L.Ed.2d 153 (1979) (interpreting RPA to provide robust meeting competition defense). 12
This Court has dutifully followed the Supreme Court’s lead by narrowly construing
While the competing purchaser requirement has its roots in
FTC v. Morton Salt,
In
Volvo Trucks,
the Supreme Court rejected an inference of competitive injury where the plaintiff, Reeder-Simco (“Reed-er”), could not show that it was a competing purchaser.
Volvo Trucks,
The specific question presented in the case was whether “a manufacturer offering its dealers different wholesale prices may be held liable for price discriminations proscribed by Robinson-Patman, absent a showing that the manufacturer discriminated between dealers contemporaneously competing to resell to the same retail customer.”
Id.
at 169,
The timing of the competition between the dealers and the nature of the market were critical to the Supreme Court’s reasoning. At the initial stage of competition in the bid market, where dealers were competing to win the right to submit a bid to a customer, “competition [wa]s not affected by differential pricing [because] a dealer in the competitive bidding process approaeh[ed] Volvo for a price concession ... only after it ha[d] been selected by a retail customer to submit a bid.”
Id.
at 178-79,
The Supreme Court was also unimpressed with Reeder’s evidence purporting to show competitive injury. Reeder produced three types of evidence to support its allegations.
13
The two types of evidence relevant to the instant case were Reeder’s “comparisons of [discounts] [it] received for four successful bids against
non-Volvo
dealers, with larger [discounts] other successful Volvo dealers received for
different sales
on which [it] did not bid (purchase-to-purchase comparisons),”
Volvo Trucks,
The Supreme Court also signaled that it was uninterested in permitting innovative applications of the RPA and would resist “interpretation[s] geared more to the protection of existing
competitors
than to the stimulation of
competition.” Id.
at 181,
This Court used similar reasoning in
Toledo Mack.
In affirming the district court’s grant of summary judgment for the defendant, Mack, on the RPA claim, this Court explained that the timing of competition and the nature of the market are critical factors to consider when determining whether the plaintiff can show that it was a competing purchaser of a favored purchaser. We concluded that because the competition between Mack dealers occurred during the bidding process, and not at the time of the actual sale, Toledo could not satisfy the competing purchaser requirement or the two purchaser requirement:
Because no sale takes place until a customer accepts a dealer’s bid, the amount of sales assistance Mack is willing to provide to a particular dealer is part of an offer by Mack to sell, not a sale. Regardless of any competition between the dealers during the bidding process, only a dealer whose bid is accepted by a customer will actually buy a truck from Mack. Therefore, only one sale, not two, actually results.
Id. at 228.
Toledo, unlike the plaintiff in Volvo Trucks, did not offer evidence of head-to-head competition between it and other Mack dealers. Id. at 215. But it did provide expert testimony regarding “the average amounts of sales assistance Mack offered to Toledo as compared with the average amount of sales assistance Mack offered to other [Mack] dealers,” i.e., evidence showing that Mack consistently favored other dealers as compared to Toledo. Id. That evidence was rejected by this Court as irrelevant because even if the “amount of sales assistance Mack offer[ed] to each dealer ... determine^] whether a customer cho[se] to accept a bid from one Mack dealer or another, Mack does not sell a truck to the dealer until the customer actually selects a dealer’s bid.” Id. at 228. Thus, only one sale, not two, resulted from the competition. Id. This was true in part because the sale was divorced from the competition and Toledo could not show that it was a competing purchaser vis-a-vis other Mack dealers. See id.
Finally, the
Toledo Mack
Court noted that, like
Volvo Trucks,
“the alleged price discrimination d[id] not implicate the original purpose of the RPA because ‘the allegedly favored purchasers [we]re dealers with little resemblance to large independent department stores or chain operations.’ ”
Id.
at 227 (quoting
Volvo Trucks,
B.
While this Court’s conclusion in
Toledo Mack
undoubtedly turned on the fact that “one sale, not two, actually resulted],”
Toledo Mack,
In
Toledo Mack
we held that because the competition among dealers for prospective customer business occurred before the purchase of the truck to be sold to the customer by the winning dealer, the relevant market for the sale to the customer was already limited to one at the time the manufacturer sold the dealer the truck.
See Toledo Mack,
In
M.C. Mfg.,
two companies, Universal and H/R, manufactured lifting plugs for sales to the government.
M.C. Mfg.,
Similar reasoning was also invoked in
Volvo Trucks,
Accordingly, we reject the argument that
Toledo Mack
was a simple application of the two purchaser requirement. Implicit in the
Toledo Mack
Court’s holding was the conclusion that Toledo could not show it was a competing purchaser of other Mack truck dealers. In other words, the two purchaser requirement could not be satisfied because the relevant market of competition was limited to one dealer, one customer, and one truck manufacturer at the time of the sale of the truck, i.e., there were no competing purchasers.
Toledo Mack,
C.
Applying the teachings of
Volvo Trucks
and
Toledo Mack
to the instant case, it is clear that Feesers never experienced a competitive injury from Sodexo’s purchases and sales of Michaels’s products because Feesers and Sodexo were not competing purchasers.
See Volvo Trucks,
At all events, assuming Feesers and Sodexo engaged in head-to-head competition, and the discounts granted by Michaels to the two companies determined from which company an institution would purchase Michaels’s products, the competing purchaser requirement would still not be satisfied because Michaels does not make a sale until the institution chooses a particular distributor or food service management company and then begins purchasing Michaels’s products through that company.
See Toledo Mack,
While the timing of the competition and the nature of the market compel us to conclude that Feesers and Sodexo were not competing purchasers, it is also relevant that the evidence produced by Feesers was the same type of average discount evidence produced in
Toledo Mack.
16
Compare Toledo Mack,
In addition, the Supreme Court’s directive to narrowly construe the RPA to address the basic purposes of the statute further informs our conclusion that Feesers was not a competing purchaser of Sodexo.
Volvo Trucks,
First, in many respects, Sodexo and Feesers do not compete. Sodexo prepares and sells meals and handles all dining service functions for its customers. Feesers only distributes food. Competing retail stores, in contrast, generally compete to sell fungible goods to the same group of customers. Second, Sodexo operates in a bid market with other food service management companies, and competes with Feesers only in a preliminary stage where a prospective customer is deciding whether to self-operate or hire a food service management company. Retail stores compete over prospective customers every time a customer decides to purchase a product, and those purchases are not made in a bid market. Third, Sodexo competes for customers with Feesers prior to purchasing food from Michaels. Retail stores generally purchase products from manufacturers and then compete with other retailers based on pricing.
In sum, because any competition between Feesers and Sodexo occurred at the time an institution was deciding whether to self-operate or hire a food service management company, and any resulting sale of Michaels’s products would have to occur after that competition, Feesers cannot show that it was a competing purchaser of Sodexo. The evidence produced by Feesers only further confirms the futility of its RPA claims, because such evidence — evidence showing consistent favoring of another purchaser over the plaintiff over time by a manufacturer in a bid market— was rejected in Toledo Mack. Such evidence cannot support an inference of competitive injury in a bid market. Finally, the Supreme Court’s instructions to narrowly construe the RPA also compel us to reject Feesers’s RPA claims.
III.
The District Court, after thoughtful consideration of the Volvo Trucks and Toledo Mack decisions, determined that those decisions were not controlling for three reasons: (1) Volvo Trucks involved only formal competition whereas the instant case involves formal and informal competition; (2) application of Toledo Mack to the instant case would misconstrue that decision’s holding by imposing a new requirement under the RPA, divorced from the statutory text, that the manufacturer’s sale of the commodity to two different sellers occur prior to the competition for the resale of those goods; and (3) a logical reading of Toledo Mack limits that decision’s applicability to custom-manufactured goods. We reject each of these reasons in turn.
The District Court reasoned that because “[flood service management companies, distributors, and GPOs all compete formally and informally for the sale of food to institutions,” the instant case was distinguishable from
Volvo Trucks,
which it believed involved only a formal bidding process.
Feesers, Inc.,
The District Court’s second reason, that construing
Toledo Mack
to apply to the instant case would require imposing a new requirement under the RPA that the sale of the commodity by the manufacturer to two different sellers occur prior to the competition for resale of those goods, is a misunderstanding of the competing purchaser requirement.
17
The rule the District Court describes is not new — it is simply the product of the competing purchaser requirement, which considers the relevant market, a bid market, and the timing of the competition, before the sale to the manufacturer. The
M.C. Mfg.
Court explained that there is a “competitive purchaser” requirement inherent in the “two purchaser” and “competitive injury” elements.
M.C. Mfg.,
Third, the District Court reasoned that a logical reading of
Toledo Mack
limited that decision’s applicability to custom-manufactured goods. This conclusion is refuted by the
Toledo Mack
Court’s reliance on the
M.C. Mfg.
decision,
Toledo Mack,
IV.
Having determined that Feesers and Sodexo were not competitors, three outstanding issues remain. First, whether this Court’s holding is barred by the law of the case. Second, how this Court’s holding will affect the existing permanent injunction ordered by the District Court. Third, the effect of concluding that Feesers cannot prove a § 2(a) claim against Michaels on the § 2(f) claim against Sodexo. We discuss each of the issues in turn.
A.
The “law of the case ... doctrine posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.”
Arizona v. California,
First, this Court’s prior opinion did not hold as Feesers now claims. This Court reversed the District Court’s summary judgment for the defendants explaining that the District Court used the wrong standard in concluding that Feesers and Sodexo were not in actual competition.
Feesers, Inc.,
Second, our present review of this case is conducted with the benefit of a full record established at trial. That record was not available to this Court when we decided Feesers’s appeal from summary judgment. We now know that Feesers cannot show that it and Sodexo were competing purchasers based on the timing of their competition and the nature of the market — issues that were never discussed in the prior opinion, presumably, because a complete record had not been established. Finally, even if this Court had previously held otherwise, our holding in this case would be a permissible reevaluation of precedent in light of intervening authority,
Toledo Mack. See Institutional Investors Group v. Avaya,
B.
The permanent injunction issued by the District Court states: “[Michaels] is enjoined from refusing to sell its products to Feesers on the same terms as they are sold to Sode[x]o, so long as Feesers otherwise meets its standards as a customer.” This injunction was issued under Section 16 of the Clayton Act (1) as a remedy for contempt and (2) to prevent future competitive injury to Feesers. Because we are reversing the District Court’s judgment as a matter of law, neither of its reasons for the injunction survive. An injunction issued based on civil contempt cannot stand where the underlying order on which it is based is invalid.
See Universal Athletic Sales Co. v. Salkeld,
C.
Feesers’s claim against Sodexo arises under § 2(f) of the RPA. That provision states: “It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or
V.
Feesers cannot show that it and Sodexo were competing purchasers, and therefore, cannot show that it suffered competitive injury under the Robinson-Patman Act. Accordingly, we will reverse the District Court’s judgment for Feesers and instruct the District Court to enter judgment as a matter of law for Michaels and Sodexo.
Notes
. Sodexho, Inc. changed its name to Sodexo, Inc. during the course of this litigation. We will refer to the company by its new name.
. Section 2(a) of the RPA, in relevant part, states that:
It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competitionwith any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered^].... And provided further, That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade: And provided further, That nothing herein contained shall prevent price changes from time to time where in response to changing conditions affecting the market for or the marketability of the goods concerned, such as but not limited to actual or imminent deterioration of perishable goods, obsolescence of seasonal goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned.
15 U.S.C. § 13(a).
. Three of the four requirements of a § 2(a) Robinson-Patman claim have already been established by Feesers and are not contested in this appeal.
Feesers, Inc.,
. The District Court found that Feesers sold only to self-op institutions,
Feesers, Inc.,
. The Jewish Home of Greater Harrisburg and St. Mary’s Catholic School both switched from Feesers to Sodexo.
Feesers, Inc.,
. We regard this inferred fact as highly questionable, but the finding does not rise to the level of clear error. In our view, assuming that Sodexo replaced Feesers with another distributor, Feesers's competitor would be the other distributor, not Sodexo.
. Food service management companies compete with each other through a formal RFP process to win institutions’ business.
Feesers, Inc.,
. The District Court also identified other evidence showing competition between Feesers and Sodexo, including Sodexo's SEC filings,
Feesers, Inc.,
. We reversed in a 2-1 decision. The dissent concluded that Sodexo and Feesers were not in actual competition because they ”d[id] not sell the same products.”
Feesers, Inc.,
. The prior decision is explained in Section IV(A), infra.
. Because Feesers cannot satisfy the first element required to show competitive injury, we need not discuss whether it experienced price discrimination over time.
.
Accord Falls City Indus.,
. The first type, evidence of head-to-head comparisons between Reeder and other Volvo dealers, is not relevant in the instant case. Reeder's evidence showed only "two instances over [a] five year course” where it bid against other Volvo dealers, so called head-to-head comparisons: One instance where it and another Volvo dealer received the same discount and Reeder lost to the other dealer because the customer had previously bought from the other dealer, and one instance where it and the opposing Volvo dealer received matching discounts from Volvo and neither won the bid.
Volvo Trueles,
. Notably, in this case, Feesers produced evidence showing that Michaels consistently favored Sodexo.
Feesers, Inc.,
.
See M.C. Mfg.,
. The discount schemes in
Volvo Trueles
and
Toledo Mack
were largely indistinguishable from the deviated pricing system used in the food manufacturer industry.
See Toledo Mack,
. That being said, the District Court’s desire to avoid misapplying our precedent in this complicated area of law is commendable. Indeed, this is not the first time the RPA has flummoxed the federal courts, nor, barring a repeal of the law, will it be the last.
Compare, e.g., Van Dyk Research Corp. v. Xerox Corp.,
. Notably, we do not hold that the sales of products by the manufacturer to two purchasers must always occur prior to the competition between the two purchasers. Our holding is limited to bid markets that closely resemble the markets in this case, Volvo Trucks, and Toledo Mack.
. For example, in a proposal to the Beth Sholom House of Eastern Virginia, Sodexo urged the institution to utilize its food procurement program to "take full advantage of [Sodexo's] kosher vendors."
Feesers, Inc.,