How Antitrust Laws Affect Your Credit Functions, by Michael C. Dennis

Penalties for violations of applicable federal or state antitrust laws can include fines, imprisonment, and liability for up to triple damages. How do antitrust laws affect day-to-day credit decision making and business activities? To what extent is pricing and payment terms subject to U.S. antitrust laws? Is it a violation of one or more antitrust laws to offer Customer A payment terms of Net 30 days and a direct competitor of Company A payment terms of Net 60 day? Are cash discounts an element of price? In other words, if we offer a 2% early payment discount to Company A, must we offer that same discount to its competitors?

It’s time to do a self quiz. I think the answer to one or more of these questions may surprise you. Did they? As always, I welcome your feedback.

Michael C. Dennis is the author of the Encyclopedia of Credit, a free, fast, internet resource for credit and collection professionals. He is a frequent instructor at CMA-sponsored educational events. His most recent book, “Happy Customers, Faster Cash,” is available at He can be contacted at 408-204-0129.

2 Replies to “How Antitrust Laws Affect Your Credit Functions, by Michael C. Dennis”

  1. Michael,

    I believe all your examples fall under the Robinson-Patman Act and are elements of pricing. Unjustified discriminatory practices utilizing any of your examples could violate the Act if competing customers are similarly situated.

    We have used RPA as a justification to NOT grant a customer’s request for enhanced terms. It’s a “we would if we could” situation but it is against the law and not a reflection of their standing with us. In that regard we’re not the bad guys. It’s the government interfering. If it is a competitive situation, we ask that they complete a letter confirming a competitor supplier’s offer that they expect us to meet. if they cannot produce such a confirming offer or attest that they do have one, that is all the more reason to suspect they had a bluff called.

    It appears you will be covering much ground at Creditscape. Good luck.

    1. Guy.

      I really have to admire the creativity of this particular approach to a difficult problem… “We would if we could” …if only those pesky federal laws didn’t get in the way.

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