Independent Video Services

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
K'ASMINGTON. D.C. 20580
January 1 7 , 	1990
Bonnie B. 	Larson
Marketing Manager
Independent Video Services
Nult Plaza, Suite 160
401 East 10th Avenue
Eugene, Oregon 	97401
Dear Ms. Larson:
This is in response to your letter of Septe 	r 28, 	1989,
requesting an advisory opinion regarding t b pricing structure
for educational video progrants that Independent Video Services
(PVS) intends to produce and distribute. 	Pour letter was
referred to me because I direct the office within the
CommissionQsBureau of Competition %hat is responsible for
investigating possible restraints on competition in health care
service markets.
In a telephone conversation on November 21, 1989, with Judy
Moreland of this office, I understand that the distinction
between Commission and staff advisory opinions was explained to
you. 	At that time, you indicated that IVSisneeds would be
served by a staff advisory opinion.
Based on your letter and additional information given to us
by telephone, I understand that IVS produces educational video
programs and distributes then to schools, libraries, and
professionals. 	IVS is planning a new video that will be marketed
primarily to physicians and health institutions. 	The videos
would be purchased for use by the buyer and not for resale.
Because of differences in marketing costs, IVS intends to charge
institutional buyers a higher price than will be charged to
physicians.
The Roblnson-Patman Act generally prohibits a seller in
interstate commerce from discriminating in price between
purchasers of goods, where the effect of the discrimination may
be substantially to lessen competition among those buyers or
their customers. 	However, a seller may charge different prices
to buyers in competition with one another to the extent that the
price differential reflects differences in the cost of
manufacture, sale or delivery of such goods to such buyers. 	The
Act also permits sellers to offer lower prices to customers to
meet a competitor's price.

0 Bonnie B. 	Larson -- Page 2
Based on the infomation p u have given us, it does not
appear that IVS- 	proposed sales of videos is likely to violate
the Robinson-Patman Act, hcause it does not appear that such
sales are likely to cause any injury to competition. 	In the
first place, many of the institutional buyers who will be charged
the higher price appear not to be in competition with the
individual physicians who will receive the more favorable price,
Sales at different prices to buyers who do not compete with one
another, and who do not resell to customers who compete with one
another, do not run afoul of the Robinson-Patman Act.
Second, even to the extent that some inslAtu%ions, such as
hospitals, may cc)mpe%e with individual p%ryeicians, it does not
appear likely that charging a higher peiee 	to Lhe 	institutions
will cause the injury Lo competition Lhat is a necessaq element
of a violation of the Robinson-Patman A c t . 	The videos will be
purchased for use by the buyer, not for resale. 	Therefore, the
higher price charged to some buyers will not affect competition
in any resale market. 	In the market for health ease services,
where competition between pwsicians and hospitals may exist to a
limited extent, there does not appear to be any reasonable
probability that having to pay a higher price for educational
videos will hpair the ability of the hospitals to compete with
physicians. 	The videos are rplatively inexpensive, and it is nota anticipated that any institution would purchase them in large
quantities. 	As a result, the price difference would not be
likely to have a substantial effect on competition between
hospitals and physicians.
This opinion is that of staff of the Bureau of Competition
only. 	Under the Comissionls Rules of Practice 	1.3(c), the
Commission is not bound by this advice and reserves the right to
rescind it at a later time and take such action as the public
interest may require. 	This office retains the right to
reconsider the questions involved and, with notice to the
requesting party, to rescind or revoke its opinion if
implementation of the proposed progragl results in substantial
anticompetitive effects, if the progrm is used for improper
purposes, or if it would be in the public interest to do so,
Sincerely, 	/
Assistant Director