2

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 amazon.com. He can be contacted at 408-204-0129.

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

  1. Guy Nishida says:

    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.

    • Michael Dennis says:

      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.

Leave a Reply