The Federal Trade Commission secured changes to a partnership agreement between T-shirt manufacturer Gildan Activewear SRL and major wholesale T-shirt distributor S&S Holdings LLC that will protect small businesses and consumers from unfair and discriminatory pricing practices. This resolution also furthers the FTC’s efforts to enforce the Robinson-Patman Act (RPA) in cases where price discrimination harms consumers.
The FTC opened an investigation into Gildan and S&S after becoming aware that S&S’s contract with Gildan prohibited Gildan from offering certain pricing and discounts given to S&S to S&S’s competitors.
The FTC investigated Gildan for potential violations of Section 2(a) of the RPA, which prohibits sellers from engaging in certain price discrimination. The FTC also investigated whether S&S violated Section 2(f) of the RPA, which prohibits knowingly inducing or receiving prohibited price discrimination.
In response to the FTC’s investigation, Gildan and S&S modified their agreement, which now provides: “Nothing in this Agreement restricts or restrains Gildan’s discretion to set prices or offer partnership support to any other North American wholesale distributor.”
Given the changes Gildan and S&S have implemented, the FTC has now closed its investigation. The FTC posted a public letter from Gildan confirming that Gildan and S&S have amended the relevant contract.
“Congress has prohibited unfair and discriminatory pricing practices that favor big businesses and box out small businesses, which are the engine of the American economy,” said FTC Bureau of Competition Director Daniel Guarnera. “We will not hesitate to enforce the law when a large, powerful firm insulates itself from competition by forcing sellers to give worse prices to the firm’s competitors. Such pricing policies are bad for consumers and distort competition by making it harder for small firms to compete on the merits of their products and services. We will not tolerate conduct that unfairly alters competition.”
This matter builds on the RPA settlement entered last week with Southern Glazer’s Wine and Spirits, the largest U.S. distributor of wine and spirits. The Southern Glazer’s settlement was the first RPA case resolved by a federal enforcement agency in over 20 years.
Under the RPA, it is generally illegal for sellers to engage in price discrimination that harms competition by charging higher prices to disfavored retailers that purchase similar goods. RPA enforcement seeks to ensure that businesses of all sizes compete on a level playing field with equivalent access to discounts and rebates. Robust competition between businesses of all sizes is beneficial to consumers as it offers shoppers more choice and the ability to access lower prices across all retailers, regardless of their size.
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