Wal Mart takes a hit

John R. Hall

FEDERAL JUDGE UPHOLDS COMPETITOR'S CLAIM THAT WAL-MART BUYS GOODYEAR TIRES AT UNLAWFULLY LOW PRICES

For Immediate Release

Miami, Florida - A David and Goliath court battle between Wal-Mart and a small tire wholesaler in Pompano Beach, Florida, has resulted in a major setback for Wal-Mart.

United States District Judge Kenneth A. Marra ruled that the plaintiff, Tires Incorporated of Broward, had adequately stated various antitrust and state claims when describing how Wal-Mart, Sears and other competitors of the plaintiff buy tires from Goodyear.

The plaintiff is a small Goodyear distributor with a single store, in business at the same location for 18 years.

The plaintiff claims it is losing sales to these competitors to whom Goodyear sells its tires at substantially lower per-unit prices.

In one instance, the plaintiff found that the same tire it was buying from Goodyear at $17.95 per tire was available from Sam's Club (owned by Wal-Mart) at the retail price of $5.95 (under the Wal-Mart brand name "Douglas").

The plaintiff bought 3 dozen from Sam's Club, at the $5.95 retail price.

The lawsuit is important because it alleges that the private-brand buying practices of Wal-Mart and Sam's Club violate the Robinson-Patman Act.

The Act requires Goodyear to sell tires of like grade and quality to competitors at the same per-unit price, except for any actual savings involved with volume purchases.

The plaintiff alleged that the extra low price to Wal-Mart was far greater than any savings resulting from the large-scale purchases, and that in fact Goodyear is selling to Wal-Mart and Sam's Club below Goodyear's own direct costs.

The plaintiff is seeking an injunction prohibiting Goodyear from selling any of its tires to Wal-Mart, Sam's Club, Sears and other competitors at such low prices unless these same prices for tires of the same grade and quality are offered to the plaintiff.

Judge Marra is giving the parties a trial date for the case.