38 N.Y.2d 460 (1976)

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The Donnelly Act, New York’s antitrust law, does not prohibit unilateral price discrimination by a company unless it involves an agreement, arrangement, or commitment with another party to restrain trade.

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Summary

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The State of New York sued Mobil Oil, alleging it engaged in price discrimination by offering discriminatory rebates to some dealers but not others, thus restraining trade. The New York Court of Appeals held that Mobil’s actions did not violate the Donnelly Act. The court reasoned that the Donnelly Act, modeled after the Sherman Antitrust Act, requires a contract, agreement, arrangement, or combination to restrain trade. Unilateral price discrimination, without such an agreement, does not fall within the Act’s prohibitions.

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Facts

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Mobil Oil Corporation was accused of establishing a uniform tank wagon price for gasoline in each terminal area but then granting substantial discriminatory rebates (