Indian Coffee Company, a coffee roaster in Pittsburgh, Pennsylvania, sold its Breakfast Cheer coffee in the Pittsburgh area, where it had an 18 percent market share, and in Cleveland, Ohio, where it had a significant, but smaller, market share. Late in 1971, Folger Coffee Company, then the leading seller of branded coffee west of the Mississippi, entered the Pittsburgh market for the first time. In its effort to gain market share in Pittsburgh, Folger granted retailers high promotional allowances in the form of coupons. Retail customers could use these coupons to obtain price cuts. Redeeming retailers could use the coupons as credits against invoices from Folger.
For a time, Indian tried to retain its market share by matching Folger's price concessions, but because Indian operated in only two areas, it could not subsidize such sales with profits from other areas. Indian, which finally was forced out of business in 1974, later filed a Robinson-Patman suit against Folger.
At trial, Indian introduced evidence that Folger's Pittsburgh promotional allowances were far higher than its allowances in other geographic areas, and that Folger's Pittsburgh prices were below green (unroasted) coffee cost, below material and manufacturing costs, below total cost, and below marginal cost or average variable cost. Was the trial court's directed verdict in favor of Folger proper?