Price Discrimination. The customers of Sodexho, Inc.,and Feesers, Inc., are institutional food service facilities such as school, hospital, and nursing home cafeterias. Feesers is a distributor that buys unprepared food from suppliers for resale to customers who run their own cafeterias. Sodexho is a food service management company that buys unprepared food from suppliers,prepares the food,and sells the meals to the facilities,which it also operates, under contracts with its clients.Sodexho uses a distributor, such as Sysco Corp., to buy the food from a supplier,such as Michael Foods,Inc. Sysco pays Michael’slist price and sells the food to Sodexho at a lower price— which Sodexho has negotiated with Michael—plus an agreed mark-up. Sysco invoices Michael for the difference. Sodexho resells the food to its facilities at its cost, plus a “procurement fee.” In sum, Michael charges Sysco less for food resold to Sodexho than it charges Feesers for the same products,and thus Sodexho’s customers pay less than Feesers’s customers for these products. Feesers filed a suit in a federal district court against Michael and others, alleging price discrimination. To establish its claim, what does Feesers have to show? What might be the most difficult element to prove? How should the court rule
Price Discrimination. The customers of Sodexho, Inc.,and Feesers, Inc., are institutional food service facilities such as school, hospital, and nursing home cafeterias. Feesers is a distributor that buys unprepared food from suppliers for resale to customers who run their own cafeterias. Sodexho is a food service management company that buys unprepared food from suppliers,prepares the food,and sells the meals to the facilities,which it also operates, under contracts with its clients.Sodexho uses a distributor, such as Sysco Corp., to buy the food from a supplier,such as Michael Foods,Inc. Sysco pays Michael’slist price and sells the food to Sodexho at a lower price— which Sodexho has negotiated with Michael—plus an agreed mark-up. Sysco invoices Michael for the difference. Sodexho resells the food to its facilities at its cost, plus a “procurement fee.” In sum, Michael charges Sysco less for food resold to Sodexho than it charges Feesers for the same products,and thus Sodexho’s customers pay less than Feesers’s customers for these products. Feesers filed a suit in a federal district court against Michael and others, alleging price discrimination. To establish its claim, what does Feesers have to show? What might be the most difficult element to prove? How should the court rule
