Aerotec International, Inc. v. Honeywell International, Inc.
2016 U.S. App. LEXIS 16571
9th Cir.2016Background
- Honeywell is a dominant APU (auxiliary power unit) manufacturer; Aerotec is a small independent APU MRO (maintenance/repair/overhaul) servicer with ~1% market share.
- Honeywell sells OEM parts, operates affiliate MROs under long-term agreements with discounts/priority, and sells parts to independents on spot terms at higher prices; PMA substitutes are limited.
- Aerotec won major airline contracts (e.g., Saudia, Air India) after 2006 but then faced delays and allocation disadvantages during a 2007–2009 parts shortage, harming its performance and causing contract losses.
- Aerotec sued under Sherman Act §§1–2 and the Robinson‑Patman Act alleging tying, exclusive dealing, refusal-to-deal/essential-facilities, bundled discounts/price-squeeze, and price discrimination; district court granted summary judgment for Honeywell.
- Ninth Circuit affirmed, holding Aerotec failed to produce evidence of the requisite contractual conditions, foreclosure, below-cost pricing, refusal to deal, or comparable transactions for Robinson‑Patman relief.
Issues
| Issue | Plaintiff's Argument (Aerotec) | Defendant's Argument (Honeywell) | Held |
|---|---|---|---|
| §1 Tying | Honeywell’s parts-supply delays, pricing and withholding of data create a "de facto" tie forcing airlines to use Honeywell repair services | Honeywell sells parts to airlines without requiring services; no explicit or implied condition linking parts sales to repair purchases | No tie: no evidence airlines were presented with sales conditioned on using Honeywell services; anecdotal supply issues cannot substitute for a tying condition |
| §1 Exclusive Dealing | Long-term contracts, discounts and allocation priority foreclose independent servicers | Contracts lack exclusivity terms; discounts and contract terms vary and aren’t shown to foreclose competition | Summary judgment: Aerotec failed to identify specific exclusive terms or sufficient foreclosure evidence |
| §2 Refusal-to-deal / Essential Facility | Control of parts is an essential input and Honeywell’s conduct functionally denies access to independents | No outright refusal; independents (including Aerotec) can obtain OEM, PMA, and aftermarket parts; courts avoid imposing a duty to deal | No §2 liability: access exists and Aerotec offers no Aspen‑level “sacrificing short‑term profits” evidence to show unlawful refusal |
| Bundled discounts / Price discrimination (Robinson‑Patman) | Honeywell’s bundles and tiered pricing squeeze independents and affiliates get more favorable prices | Bundling reflects vertical integration and lower costs; challenged bids were not shown to be below cost; affiliate contracts are not reasonably comparable to spot sales | Dismissed: no proof of below‑cost predatory bundling; Robinson‑Patman fails because transactions are not reasonably comparable and discounts are tied to different contract terms |
Key Cases Cited
- Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (antitrust protects competition, not individual competitors)
- Cascade Health Sols. v. PeaceHealth, 515 F.3d 883 (framework for tying and bundled‑discount/coercion analysis)
- Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451 (tying where parts sales conditioned on service restrictions)
- Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (reluctance to impose duty to deal; limits on essential‑facilities claims)
- Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (predatory pricing requires proof prices below an appropriate measure of cost and dangerous probability of recoupment)
- Pacific Bell Tel. Co. v. linkLine Commc'ns, Inc., 555 U.S. 438 (rejection of standalone price‑squeeze claims)
- Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320 (test for foreclosure in exclusive‑dealing analysis)
- ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254 (de facto exclusive‑dealing analysis looks to contract terms and real‑world effects)
- United States v. Dentsply Int’l, Inc., 399 F.3d 181 (series of conditional sales can produce effective exclusivity)