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Can I charge different prices to different customers without violating discrimination laws in Utah? What are the requirements?

Different Prices for Different Customers in Utah

According to UTCO 13-5-3, it is unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchasers involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the state and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them. However, differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the different methods or quantities in which such commodities are to such purchasers sold or delivered are allowed. Additionally, persons engaged in selling goods, wares, or merchandise in commerce are allowed to select their own customers in bona fide transactions and not in restraint of trade. Price changes from time to time in response to changing conditions affecting the market for or the marketability of the goods concerned, including actual or imminent deterioration of perishable goods, obsolescence of seasonal goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned are also allowed [1.1].

Therefore, charging different prices to different customers may be allowed if the differentials make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the different methods or quantities in which such commodities are to such purchasers sold or delivered. However, it is important to ensure that such differential pricing does not discriminate in a way that may substantially lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them.

It is important to note that the burden of proof to show justification for any discrimination in price or services or facilities furnished or in payment for services or facilities to be rendered is upon the person charged with a violation of this section [1.1].

Additionally, UTCO 76-10-3002 states that every person engaged in the production, manufacture, or distribution of any commodity in general use who intentionally for the purpose of destroying the competition of any regular, established dealer in such commodity, or to prevent the competition of any person who in good faith intends and attempts to become a dealer, discriminates between different sections, communities, or cities of this state by selling the commodity at a lower rate in one section, community, or city, or any portion thereof, than the person charges for the commodity in another section, community, or city, after equalizing the distance from the point of production, manufacture, or distribution and freight rates therefrom, is guilty of unfair discrimination [2.1].

Furthermore, UTCO 54-8b-2.3 allows telecommunications corporations to price any public telecommunications services it is authorized to offer, or any new public telecommunications service, by means of a price list or competitive contract. Prices, terms, and conditions offered under price lists or competitive contracts that are different from tariff prices, terms, and conditions for the same services are not considered discriminatory under Section 54-3-8 and Subsection 54-8b-3.3(2) [3.1].

Finally, UTCO 13-5-12 exempts certain sales from the provisions of this chapter, including sales made in good faith to meet the legal prices of a competitor as herein defined selling the same article, product or commodity in the same locality or trade area, and by manufacturers, producers, brokers or wholesale distributors meeting in good faith prices established by interstate competition regardless of cost; provided, such prices are available to all persons buying on like terms and conditions in the same locality and vicinity [1.2].

In summary, charging different prices to different customers may be allowed if the differentials make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the different methods or quantities in which such commodities are to such purchasers sold or delivered. However, it is important to ensure that such differential pricing does not discriminate in a way that may substantially lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them. Additionally, certain sales are exempt from the provisions of this chapter [1.1][2.1][3.1][1.2].

Source(s):
Jurisdiction

Utah