Legal Definitions - primary-line injury

A primary-line injury refers to a specific type of anti-competitive behavior under U.S. antitrust law, particularly the Robinson-Patman Act. It occurs when a seller engages in predatory pricing practices, meaning they intentionally charge prices that are below their own costs, with the strategic goal of eliminating or severely harming their direct competitors in the market.

The core idea behind a primary-line injury claim is that a dominant company is using its financial power to sell products or services at a loss, not to benefit consumers in the long run, but to drive rivals out of business. Once competition is reduced or eliminated, the predatory seller can then raise prices without fear of competition, ultimately harming consumers.

Here are some examples illustrating a primary-line injury:

• Example 1: Supermarket Chain vs. Local Grocer

  Imagine a large national supermarket chain opening a new store in a small town where a beloved, long-standing independent grocery store has operated for decades. To quickly dominate the market, the national chain begins selling essential items like milk, bread, and eggs at prices significantly below its own cost to acquire and distribute them. This aggressive pricing is not sustainable for the chain in the long term, but its intention is to force the local independent grocer, which cannot afford to match such losses, out of business. Once the local store closes, the national chain plans to raise its prices back to profitable levels.

  How this illustrates primary-line injury: The national supermarket chain is the discriminating seller. Its below-cost pricing is aimed directly at eliminating its immediate competitor, the local independent grocer. This action harms competition among sellers (the "primary line") by attempting to remove a rival from the market.

• Example 2: Software Giant vs. Startup Competitor

  Consider a dominant software company that holds a significant share of the market for a particular business application. A new, innovative startup emerges with a competing application that offers similar features at a slightly lower price. In response, the dominant software company immediately drops the price of its own application to an extremely low level, far below its development and support costs, for all new customers in the regions where the startup is gaining traction. This move is not financially viable for the dominant company over time, but it is designed to prevent the startup from acquiring enough customers to become a viable, long-term competitor.

  How this illustrates primary-line injury: The dominant software company is the seller engaging in predatory pricing. Its below-cost pricing strategy is specifically targeted at hindering or eliminating its direct competitor, the startup. The injury occurs in the "primary line" of competition between the sellers themselves.

• Example 3: Airline Route Domination

  A major airline operates a highly profitable route between two cities. A smaller, budget airline decides to enter this route, offering tickets at a competitive price. In response, the major airline dramatically slashes its ticket prices on that specific route to levels that are clearly below its operational costs for those flights, while maintaining higher prices on other routes. The major airline also increases its flight frequency on that route, creating an oversupply of seats at unsustainably low prices. The goal is to make it impossible for the smaller airline to operate profitably on that route, forcing it to withdraw, after which the major airline intends to restore its higher fares.

  How this illustrates primary-line injury: The major airline is the seller using predatory pricing. By offering tickets below its costs, it directly targets its competitor, the smaller budget airline, with the intent to drive it off the route. This action constitutes an injury to competition among the airlines themselves, which are direct competitors in the "primary line."