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Feesers Wins Price Discrimination Suit vs. Michael Foods, Sodexo

The court enjoined Michael Foods Inc., an egg and potato supplier, from discriminating as to price against Feesers Inc., a family-owned broadline distributor, and enjoined food management company Sodexho from continuing to receive or induce such price discrimination.

This decision represents the culmination of over five years of litigation for Harrisburg-based Feesers, which brought the lawsuit in the hope of leveling the playing field between broadline food distributors and food management companies and group purchasing organizations (GPOs).

In a news release on the decision, Lester S. Miller Jr., Feesers' chairman said, "We are very happy with this result. I decided to bring this case when I saw competition being destroyed in the industry that had provided me with a living for almost 60 years. Big food management companies and GPOs like Sodexho were getting unbelievable pricing discounts from suppliers like Michael Foods. The same discounts were not available to independent distributors like Feesers, and many of them were being driven out of business."

Feesers filed its complaint against Michael Foods and Sodexho on March 17, 2004, alleging price discrimination in violation of the Robinson-Patman Act. A three-week bench trial took place in early 2008 before Judge Sylvia Rambo in the federal district court in Harrisburg, which resulted in the April 27, 2009 decision.

At trial, Michael Foods and Sodexho argued that Feesers and Sodexho were not in "actual competition" for purposes of the Robinson-Patman Act because Sodexho provides food management services to its customers, whereas Feesers is a food distributor. The court found, however, that both Feesers and Sodexho procure and distribute food for the same institutional customers and, thus, are in actual competition for the same food dollar.

Although the injunctions issued by the district court are binding only as to Michael Foods and Sodexho, it is now clear that price discrimination by food suppliers against distributors such as Feesers and in favor of large-volume food management companies and GPOs such as Sodexho will not be tolerated by the courts.

Feesers' ceo John Tighe said, "Although this is obviously a big victory for Feesers, it is also a victory for the entire industry and will go a long way to restoring a competitive playing field in food distribution. We at Feesers have grown our business by obtaining the best possible prices for our customers. This decision will allow us to continue to do so."

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