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SMALL RETAILERS CAN WIN PREDATORY PRICING LAWSUITS AGAINST LARGE CORPORATIONS

This article was originally published in The Tan Sheet

Executive Summary

SMALL RETAILERS CAN WIN PREDATORY PRICING LAWSUITS AGAINST LARGE CORPORATIONS if they "check [their] state laws, find a good attorney and do exactly what I have done," NARD member and Conway, Ark. American Drugs owner Dwayne Goode told the NARD annual convention on Oct. 24. Goode and a group of independent retailers on Oct. 11 were awarded about $ 300,000 in damages in Arkansas state court in a case against Wal-Mart ("The Tan Sheet" Oct. 18, p. 1). Goode described how he collected pricing information from different Wal-Mart stores in Arkansas and related his findings that the corporation advertised below-cost prices in cities against competition but charged higher prices in small towns, where income was lower but no competition existed. Wal-Mart has announced it will appeal the case to the state's supreme court. Goode's attorney Matthew Adlong cautioned that only 23 states have similar anti-predatory pricing statutes and that plaintiffs there must show a defendant's intent to destroy competition. "All the statutes seem to deal with the same basic elements," Adlong said: "Selling or advertising products below cost with the intent to damage competitors or destroy competition." Proving intent in the Wal-Mart case was tricky because the plaintiffs "didn't have what I'd call a 'smoking-gun' memo," Adlong noted. Case law in each state indicates "what will allow the courts to infer or presume intent," he said. The statutes generally allow for "loss-leaders to draw traffic" and below-cost sales of seasonal items, close-out goods, bankruptcy sale items, salvaged or spoiled goods and below-cost sales of products to meet legal competition, Adlong pointed out. Intent was shown in the Wal-Mart case by the "habitual" pattern of substantial below-cost sales only in areas where the corporation faced competition. "We actually proved our case with Wal-Mart's own written policies and the testimony of [CEO] David Glass," he said. "They hung themselves." The attorney pointed out that plaintiffs need only to show the facts and the intent, not damages. "In other words, you don't have to wait to go out of business before you" sue, Adlong said. Regarding collection of the pricing data used in the case, Adlong said Goode "did all the work."

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