Lepages Inc v. MN Mining Mfg Co

Smith, Cir.1986); States v. United (3d Cir.1986),

F.2d we conclude that affirming

inasmuch as we are judg-

ment of conviction and sentence we should

affirm the denying order bail pending ap-

peal.2 Certainly it strange would be

grant pending bail appeal precise at the

time the appeal See 18 U.S.C. failing. 3143(b)(B). We make our determination

with respect to bail without prejudice to seeking

Barnes bail from the district court

in the pending section 2255 proceeding.3

For the foregoing reasons we will affirm

the judgment of conviction and sentence 26, 2001,

entered December and the order

denying bail February entered 2002. INCORPORATED;

LEPAGE’S Le-

Page’s Management Company, L.L.C.,

Appellees/Cross-Appellants

v. (MINNESOTA AND MAN MINING COMPANY); Kroll

UFACTURING

Associates, Mining Inc. Minnesota Manufacturing Company, Appel Cross-Appellee.

lant/ 00-1368,

Nos. 00-1473.

United States Court of Appeals,

Third Circuit.

Argued July 2001.

Reargued En Banc Oct. 2002.

Filed March 2003. Arguably appeal appeal bail seek a writ of certiorari from the United disposition moot in view of Supreme our of the main States Court. satisfied, however, appeal. We are that this is opinion not so because our does not necessar- 3. We do not intend to imply that if Barnes ily terminate appellate pro- Barnes' direct grant seeks applica- bail court should his ceedings may Rather, question. petition as he rehearing tion. we do not reach Mather,

Barbara W. Jeremy Heep, Pep- per LLP, Hamilton PA, Philadelphia, Pe- Hearn, ter Hearn, P.C., Peter Philadel- PA, phia, Mark Ryan, W. Kerry Lynn Edwards, Falk, Donald M. Robert L. Bronston, Goldfine, David A.J. Mayer, Brown, Maw, Rowe DC, & Washington, Roy T. Englert, (Argued), Robbins, Jr. Russell, Englert, Untereiner, Orseck & DC, Washington, for Appellees/Cross-Ap- pellants.

M. Popofsky Laurence (Argued), Ste- phen Bomse, V. Alexander, Paul Marie L. Fiala, Heller McAuliffe, Ehrman White & CA, Francisco, San Harkins, Jr., John G. Harkins Cunningham, PA, Philadelphia, for Appellant/Cross-Appellee. Argued July 2001. SLOVITER, ALITO,

BEFORE: GREENBERG, Judges. Circuit Reargued En Banc Oct. BECKER,

BEFORE: Judge, Chief SLOVITER, SCIRICA, NYGAARD, ALITO, McKEE, AMBRO, FUENTES, GREENBERG, SMITH and Circuit Judges.

Filed March sold By manufacturer. COURT OF THE OPINION in the Unit- tape sales private 88% SLOVITER, Judge. Circuit States, but small represented ed SLOVITER, Judge, with whom Circuit tape market. portion McKee, Becker, Judge, Nygaard, Chief price to at a lower Private label sold Smith, Fuentes, Circuit Ambro, than brand- customer and the the retailer join: Judges, tape. ed Manufacturing Mining and Minnesota ac- patterns consumer Distribution (“3M”) from the District appeals Company of some for a shift accounted ceptance 14, 2000, de- entered March order Court’s private label tape to from branded sales for jury’s verdict clining to overturn office su- rapid growth of tape. With under Sec- against 3M its suit LePage’s in De- Office Staples and such as perstores, (“§ 2”). 3M Act tion of the Sherman merchandisers, as such mass pot, and the trial court’s objections to raises various Kmart, pat- distribution and Wal-Mart is a essentially position but decision label private and for second brand terns a can- plaintiff that one: contends legal it large retail- many of the changed as tape case monopolization § 2 in a not succeed names” to use their “brand monopo- ers wanted the conceded it unless shows trans- including stationery products, cost. Because sell product below list sold its conduct, private exclusionary also tape. 3M entered parent we conclude and bundled dealing early 1990s during as the exclusive such label business here, a verdict can sustain proven the name rebates its own second brand under sold and be- against monopolist § 2 a “Highland.” error, we we no other reversible cause find that, in to the response LePage’s claims affirm. will market, en- competitive of this growth related, anticompeti- in a gaged series I. restricting the availabil- aimed at tive acts BACKGROUND tape to FACTUAL ity lower-priced transparent 3M de- claims It consumers. also 3M, tape manufactures Scotch LePage’s prevented programs vised use, dominated United home and office in the company the other domestic market with transparent tape States Tuck, Inc., business, gaining Tesa early 90% until the market above share and that maintaining large volume sales mo- that it has a It has conceded 1990s. by stifling maintained its LePage’s,1 founded market. nopoly tape coor- private label growth variety prod- of office sold a has large distribu- aimed at dinating efforts and, to sell “sec- around decided ucts tape prices for Scotch keep tors to retail transparent private brand” and ond barely i.e., LePage’s claims high.2 under the retailer’s tape, tape sold and that it the time of trial surviving at than under the name of name rather at the material appears that at least times LePage's plaintiffs It in this action 1. The action, were no domestic other to this there Management LePage's Incorporated tape. transparent There manufacturers were, we can Company, Inasmuch as discern L.L.C. however, foreign but manufacturers interests, re-we no between their distinction play significant role in the they did not LePage’s. jointly fer to them not contend and 3M does market domestic n otherwise. large suffered operating losses from 1996 for judgment as matter law all through 1999. other respects and denied its motion for new trial. Le Page’s 3M, Inc. v. No. CIV. LePage’s brought antitrust this action A.97-3983, (E.D.Pa. 2000 WL 280350 asserting that 3M used its monopoly over Mar.14, 2000). The Court subsequently Scotch brand to gain competitive a judgment entered trebled advantage private damages label tape portion $68,486,697 to which interest was to be added. LePage’s United filed a cross through appeal States on use of 3M’s the District Court’s structure, judgment multi-tiered “bundled rebate” dismissing its attempted which offered higher rebates when custom- maintenance of monopoly purchased ers power in a claim. number product different lines. appeal, On panel of this court before alleges also that 3M offered to some of which this case was originally argued re- LePage’s customers large lump-sum cash versed the District judgment Court’s payments, promotional allowances and oth- § 2 claim by a divided vote. Le- er cash incentives to encourage them to Page’s 3M, Inc. v. Nos. and 00- 00-1368 enter into dealing exclusive arrangements 1473, (3d 2002 WL 46961 Cir. Jan. with 3M. 2002). This granted court LePage’s mo- LePage’s asserted claims for unlawful tion rehearing for en and, banc pursuant agreements in § restraint of trade 1 under practice, to its vacated the panel opinion. Act, of the Sherman monopolization and 3M, LePage’s Inc. v. Nos. and 00-1368 00- attempted monopolization § under 2 of the (3d 25, 2002) (order 1473 Cir. Feb. vacat- Act, Sherman and dealing exclusive under ing panel opinion). appeal The was then § 3 of Clayton Act. a After nine week orally argued before the court en banc. trial, jury returned its verdict for Le- Page’s on both its monopolization at- and II. tempted monopolization § claims under 2 Act, of the Sherman and assessed damages JURISDICTION AND STANDARD $22,828,899 on each. It found in 3M’s OF REVIEW favor on LePage’s § claims 1 of the The District Court jurisdiction had over § Sherman Act and 3 Clayton Act. this pursuant case §§ 28 U.S.C. 3M filed its motions judgment for as a 1337(a) and because LePage’s brought matter of trial, law and for a new arguing these claims under the Sherman and Clay- that its rebate and programs discount ton jurisdiction Acts. We have over this the other conduct of which LePage’s com- appeal pursuant § to 28 U.S.C. 1291. plained did not constitute basis for a valid antitrust claim as a We exercise plenary matter of review an law over or- that, any event, in der granting or charge denying court’s motion for judg- jury was insufficiently ment specific and Le- as matter law. v. Shade Great Page’s damages proof Co., Lakes speculative.3 Dredge & Dock 154 F.3d (3d Cir.1998). granted District Court When, here, motion as a defen- for judgment as a matter of motion, law on Le- dant makes such a a court should Page’s “attempted of monop- grant if, maintenance “only viewing the evidence oly power” claim but denied 3M’s motion the light most favorable to the nonmovant 3. 3M unsuccessfully had Page's moved for a judg- case and after the close entire ment aas matter of law at the close of Le- case. (2002). may private party A § 2 15 U.S.C. every fair advantage of it the giving provi- violation this damages for inference, is insuffi- sue there

and reasonable damages threefold recover jury reason- sion from which cient evidence Lube, and counsel fees. Lightning liability.” find ably could (3d F.3d Corp., 4 Inc. v. Witco sweeping lan- is this section Because Cir.1993). Thus, evidence review the we of its cover- suggesting the breadth guage, most favorable light in the appeal on the deci- Supreme Court look to age, we facts are theAs historical LePage’s. to be of the standard elucidation sions turns opinion and our sharp dispute, monopolization. alleging in cases used determinations, we review legal largely on v. States Grin- came in United Elucidation jury ver- underlying the law questions 86 S.Ct. 384 U.S. Corp., ned v. Bloom Consoli- plenary on a basis. dict (1966), de- where the L.Ed.2d (3d 911, 913 F.3d Corp., 41 Rail dated which company that a clared defendant Cir.1994). relevant monopoly power possesses 2§ in violation of found is limited will be jury’s of a verdict Our review willfully Act if the defendant evidence determining whether some the Sherman Id. at power. jury’s verdict. maintained acquired supports the record 570-71, 15 F.3d Snyder County, 86 S.Ct. 1698. v. See Swineford Cir.1994) (“A (3d jury verdict that the case, agreed parties In this record is unless the not be overturned will product market relevant of evi- quantum critically deficient of market is geographic relevant and the could have ration- dence from Moreover, to the States.4 the United verdict.”). reached its ally noted monopoly power, of we issue monopoly above, it possesses 3M concedes

III. transparent in the States power United market, market share. with 90% tape — APPLICABLE MONOPOLIZATION fact, that the house- the evidence showed PRINCIPLES LEGAL tape of 3M’s Scotch-brand penetration hold provides: Act the Sherman Section need not Therefore we virtually 100%. monopolize, shall Every person who market issue of on the oft-contested dwell or or monopolize, combine attempt or Pitofsky, New See Robert power. Defini- per- person or any with conspire other Assault Relevant tions Market trade sons, any part monopolize Antitrust, 90 Colum. L.Rev. States, several among the or commerce (“In (1990) un- monopoly enforcement nations, shall be deemed foreign or with Act, the 2 of the Sherman der section and, on conviction felony, guilty of always whether is almost inquiry pivotal by fine not thereof, punished shall be mar- has substantial challenged party $10,000,000 corporation, if a exceeding market.”). in its relevant power ket $350,000, by or or, any person, other and our remaining issue The sole years, three exceeding imprisonment took is whether 3M appeal on this in the dis- focus punishments, both said or in manner power to maintain that steps of the court. cretion properly find jury could which the challenged dence originally Although 3M is the market geographic the relevant that as the States relevant of the United selection challenge that does not market, States and 3M held United District Court geographic appeal. definition on evi- market sufficient LePage's had that introduced § Argument, that violated 2 of the Sherman Act. A Sherman Act.. . ." Tr. of Oral monopolist willfully acquires 30, 2002, theory or maintains Oct. at 11. This was the monopoly power competes upon responded when it on some which 3M's counsel to all Aspen questions basis other than the merits. See from the court. When asked Skiing Aspen Highlands Skiing theory Co. v. whether its is that because no one Corp., cost, 472 U.S. 605 n. 105 S.Ct. contended that 3M sold below its that (1985). story," 86 L.Ed.2d is "the end of the its counsel re- sponded, exception "[w]ith of the in- LePage's argues willfully that consequential express contract, absolute- transpar maintained its ly." through exclusionary ent con duct, primarily by bundling necessary us, its rebates It is therefore entering expressly into contracts outset, accept to examine whether we must effectively required dealing virtually exclu legal theory Group, 3M's that after Brooke sively 3M, LePage's character monopolist no conduct who sells izes as de facto exclusive. 3M does not product above cost - no matter how ex- argue engage it did not in this con clusionary conduct - can constitute agrees duct. It it offered bundled monopolization § in violation 2 of the rebates and entered into some exclusive history interpre- Sherman Act. The dealing contracts, although argues tation 2 of the Sherman Act demon- expressly the few contracts strates lack foundation for 3M's may exclusive be considered as such. In premise. stead, argues conduct was Although may § 2 of the Sherman Act legal as a matter of law because it never judicial scholarly have received less priced below its cost.5 attention than several of the other more significant legal This is the most issue in frequently provisions, invoked antitrust argu this case because it underlies 3M's Supreme Court, in a series of deci- brief, "[a]bove-cost ment. In its 3M states sions, type has made clear of conduct pricing give cannot rise to an antitrust monopoliza- that will be held to constitute law, offense as a matter since it is the § tion in violation of very conduct that the antitrust laws wish begins promote making The modern era with the decision to in the interest of con by Judge Appellant's Learned Hand in United States sumers better off." Br. at 30. America, proposition v. Aluminum Co. of 148 F.2d 416 For this it relies on the Su (2d Cir.1945) ("Alcoa"). preme Group Because four Court's decision in Brooke Supreme Ltd. v. Brown & Williamson Tobacco members of the Court were dis qualified, Supreme required Corp., 209, 222, 2578, the Court was 509 U.S. 113 S.Ct. apply provision Expediting (1993). argument to the of the 125 L.Ed.2d It is an Act, 15, U.S.C., repeated frequently during Section 29 of Title its oral ar gument ed., currently certiI~y § before the en bane court. Counsel 28 U.S.C. to stated, big guy selling cost, judges "if the is above the case to the three most senior of statute, nothing the relevant circuit.6 Under the it has done which offends the pricing Judges Hand, Swan, 5. 3M states that its was above its costs Learned Thomas and calculated, LePage's Augustus however costs are Hand. has not contested 3M's assertion. judges 6. The three most senior of the circuit were, fortuitously, legendary panel every face and to opened, nity as “final was that court

the decision already capacity new newcomer a decision it to conclusive,” equating thus having organization, great into a geared Court. Supreme of the trade con- experience, advantage of Alcoa question, in the time At personnel. and the elite nections of aluminum producer sole domestic at 431. Id. the Government that monopoly had a thus Tobacco Co. later, on lia- opinion in American year One to disband. sought States, 66 S.Ct. princi- certain 328 U.S. enunciated v. United court bility, the (1946), today. Supreme fully applicable 90 L.Ed. ples that remain when decision not follow Alcoa it does endorsed is Court principle such One §a 2 vio- finding has monopoly verdict has upholding company may a crimi- brought “it government market because The lation. “monopolized” compa- various tobacco monopoly; against nal action have achieved not at 429. accounted it.” Id. 1931 and 1939 upon thrust that between have been nies may 68%, usually un- may “persons more than explained, at all times the court As 75%, of a nation’s domes- possession of the than themselves for more wittingly find is, Defendants were say: to automatically production. so cigarette tic monopoly, jury found put to an either after intended and fined having convicted without of the Sher- prevent §§ to 1 and 2 existing competition, they violated had end price had none to control arising conspiring when man Act competition expensive monopolists tobacco, less acquire existed; may become they of leaf they On need at 429-30. did of tobacco supplies accident.” force Justice rival manufacturers hand, quoted deprive then the court order other brands, prices, v. cigarette States United to control cheaper statement Cardozo’s 52 S.Ct. to treat Co., distributors cigarette 286 U.S. and to force & Swift (1932), carries favorably. that “size less rival 76 L.Ed. brands is not abuse that opportunity anitwith affirmed, finding of appeals The court is opportunity when the ignored to be by sufficient supported be the verdicts past.” been utilized have proved granted Supreme The evidence. Alcoa, at 430. 148 F.2d for certio- petitions companies’ the tobacco Alcoa, claims, seeking to to their determined The court rari ac- mar- “whether question the aluminum specific 90% of answer the controlled over necessary competitors for abuse. ket, its size had utilized tual exclusion § 2 at least monopolization had court, there been to the crime noting 784, 66 by others attempts” Id. at S.Ct. Act.” or two abortive “one Sherman neg- Alcoa question industry, Answering concluded 1125. to enter “[njeither all ative, and forestalled stated that anticipated Court “effectively holding the to exclude power and succeeded of exertion competition, proof existing Alcoa exclusion Finding Id. at of actual proof alone.” nor field to sustain essential 2, continued: is competitors the court potential §of violation under monopolization doubling charge keep it to compelled Nothing 810, S.Ct. 1125. 66 Act.” at Id. Sherman others before redoubling capacity and Furthermore, Court importantly, it never insists that field. It entered the opportunity this “weleome[d] explicitly can think but we competitors; excluded Judge from passages certain endorse” pro- than exclusion no more effective 813, 66 S.Ct. 1125. Id. opinion. Hand’s opportu- each new to embrace gressively

149 particular relevance, Of the American Thereafter, in United States v. Grinnell Tobacco Court endorsed Judge Hand’s un- Corp., 563, 384 1698, U.S. 86 S.Ct. 16 derstanding Act, of the Sherman namely (1966), L.Ed.2d 778 the Supreme Court that the Act contemplated the notion that reiterated that monopoly power alone is “ ‘unchallenged power economic deadens not necessarily unlawful. The Court sum- ” “ initiative’ and ‘that immunity from com- cases, marized its prior stating § 2 of petition narcotic, is a and rivalry is a stim- the Sherman Act required two elements: ” ulant, to industrial progress.’ “(1) (quot- Id. the possession of monopoly power in Alcoa, ing 427). 148 F.2d at It further (2) relevant market and the willful quoted Alcoa for the previously mentioned acquisition or maintenance of power propositions monopolies can be distinguished growth or develop- “thrust” upon entities rather than achieved ment as a consequence of a superior prod- specific § intent 2 uct, was not acumen, or historic accident.” “ required ‘for no monopolist monopolizes 570-71, 384 U.S. at 86 S.Ct. 1698. ” unconscious of what he is doing.’ Id. at Grinnell, the United States filed a 818-14, 66 Alcoa, S.Ct. 1125 (quoting 148 civil suit against several companies that 432). F.2d at offered central station protective services, such as fire and burglary protective de- 2 Section of the Sherman Act was next vices, alleging §§ violations of considered the Supreme Court in Lo- the Sherman Act. Referring to the two- rain Journal States, Co. v. United pronged 2,§ test under the Court found 143, U.S. (1951). 72 S.Ct. 96 L.Ed. 162 that both prongs had been satisfied. Not The United States had brought civil suit only did the companies have monopoly against publisher of the Lorain Jour- (87% power of the accredited central sta- nal, only business disseminating news tion business), service but they also largely and advertising Lorain, in the town of achieved this power through the aid of Ohio, alleging that it attempted to monopo- pricing practices, acquisitions of competi- lize in § violation of 2 of the Sherman Act tors, and noncompetition covenants, all of because it refused sell advertising to which were deemed to be “unlawful and persons that patronized small radio exclusionary practices.” Id. at station that was established a nearby S.Ct. 1698. community. Supreme Court held that although a trader has discretion as to the The Court’s later decision in Aspen Ski- parties with whom he will deal ing “[i]n the v. Aspen Highlands Co. Skiing Corp., any absence of purpose to create or main- 472 U.S. 105 S.Ct. 86 L.Ed.2d tain a monopoly,” id. 72 S.Ct. (1985), 181 467 pertinent even more to the (quoting Co., United Colgate States v. & case before us. In Aspen Skiing, a case 300, 307, U.S. 39 S.Ct. 63 L.Ed. that also reached the (1919)), the action of the Journal violation, Co., con- Ski the owner of three purposeful stituted a means of regaining major four skiing downhill facilities previous monopoly over the mass Colorado, dis- Aspen, discontinued prior semination of news advertising. practice of cooperating with the owner of Because this was attempt an monopolize to the fourth facility by issuing an inter- 2,§ violation of the Court approved the changeable 6-day pass that could used be entry of an injunction ordering the on any Journal of the four facilities. It replaced print to the advertisements of the custom- 3-area, pass with 6-day fea- ticket ers of the radio station. turing It mountains. offered 610, Id. at rival.” fourth with its smaller owner of the Highlands,

plaintiff, Journal, 342 (quoting ticket Lorain of the 4-area S.Ct. facility, reinstatement (citation a fixed omit- accept at 72 S.Ct. 181 U.S. only Highlands ted)). that was consid- of the revenue percentage average historical Highlands’ erably below passage In a about the con significant took additional usage. Ski Co. based on monopolization vio duct that constitutes extremely difficult for that made actions that when §of the Court stated lation its own multiarea to market Highlands rather than an monopolization issue is and joint offering, replace to package of intent attempt monopolize, to “evidence of the market declined Highlands’ share question whether merely relevant to from associated along with its revenues fairly character challenged conduct is jury The found Ski skiing services. ‘exclusionary’ ‘anticompeti- ized as award- monopoly power and possessed Co. — in the trial court’s tive’ to use the words money judg- a substantial Highlands ed — or to use a ‘predatory,’ instructions damages. The court of as treble ment at that scholars seem to favor.” Id. word affirmed, holding there was suffi- appeals continued, 2847. The Court 105 S.Ct. to demon- cient in Ski Co.’s actions basis used, agree there is label is “[w]hichever power. an abuse of its strate proposition monopo on the that ‘no ment Court, argued Supreme In the Ski Co. unconscious of what he is monopolizes list has ” monopoly power a firm with “that even Alcoa, doing.’ (quoting 148 F.2d joint marketing duty engage no 432). § 2 cannot competitor, that a violation of Image v. Tech- In Eastman Kodak Co. of substan- without evidence be established Servs., Inc., nical U.S. S.Ct. conduct, that none of exclusionary tial 265(1992), indepen- 119 L.Ed.2d as exclu- its activities can be characterized (“ISO’s”) that organizations dent service Skiing, 472 sionary.” Aspen U.S. copying micrographic serviced Kodak The Court Supreme 105 S.Ct. 2847. an antitrust action equipment brought legal proposition, but re- agreed with policies sought Kodak for its against in Lorain opinion ferred to earlier availability parts to limit the of Kodak that monopolist’s Journal where it held They policies Kodak’s were alleged ISO’s. unqualified. to deal was not right refuse §§ 1 and 2 of the unlawful under both 600-01, re-

Id. at 2847. After S.Ct. Act. Supreme Sherman Court consid- circumstances, viewing all the it affirmed provisions ered the issues under the two in a unani- judgment Highlands 2,§ separately. analysis In its It had opinion. mous held Court first held that Kodak’s control reject business ample basis to Ski Co.’s' nearly parts 100% of the market and 80% justification noted that Co. defense and Ski to 95% of the service was sufficient any efficiency justification failed to offer (an support monopoly power a claim of Id. at pattern whatever for its of conduct. here). issue that is conceded As to the stated, 608, 105 2847. The Court S.Ct. adopted parts Kodak issue whether “[although of conduct pattern Ski Co.’s of a scheme of relentless, policies part service ‘bold, may not have been as mo- acquisition or maintenance of in willful actions predator/ publisher’s as the stated that there Journal, nopoly power, the record in this case Lorain evidence that Kodak “took exclusion- comfortably an inference that the supports ary parts monopoly action to maintain its to dis- monopolist made deliberate effort parts strength- doing and used its control over courage its customers from en monopoly share the Kodak service judgment as a matter of law because there 483, market.” Id. at 112 S.Ct. 2072. was no of injury evidence to competition. Thus, Kodak escape could liability under 243, Id. at 113 S.Ct. 2578. The Court also § 2 only if it could explain its actions on held that the evidence did not show that reasons, basis valid business an Brown & Williamson's alleged scheme issue as to which there were ques- factual likely “was to result in oligopolistic price tions which made the grant district court’s coordination and sustained supracompeti- summary judgment for Kodak inappro- tive pricing in generic segment of the priate. Id. national cigarette market. this, Without

This extensive review of the Supreme & Brown Williamson had no reasonable § 2 Court’s decisions is set forth to pro prospect recouping its predatory losses vide background under which we must and could not inflict the injury to competi evaluate 3M’s contention that it was enti tion the antitrust prohibit.” laws Id.7 tled judgment as a matter of law on the 3M, Unlike Brown & Williamson was basis of the decision in Group Brooke Ltd. part of an oligopoly, six v. manufacturers Brown & Williamson Tobacco Corp., prices whose cigarettes “increased U.S. S.Ct. 125 L.Ed.2d lockstep” and (1993), who “reaped a decision benefits of was primarily prices concerned above a competitive with the Act, Robinson-Patman level.” at § 2 not Sherman S.Ct. Act. In 2578. Brooke Brown & Williamson Group, Liggett, a cigarette had 12% of the oligopolistic manufacturer market. Its responsible for the develop “innovative conduct and pricing were at all times nec- generic ment” of cigarettes, claimed that essarily constrained by presence Williamson, Brown & which introduced its competitors could, who did, react to its own generic line of cigarettes, prices “cut by conduct undertaking similar price cuts generic on cigarettes below cost and of or pricing behavior.8 fered discriminatory volume rebates Assuming arguendo that Brooke Group wholesalers to Liggett force to raise its should be read for the proposition that a own generic cigarette prices and introduce company’s pricing action is legal if its oligopoly pricing in the economy segment prices are not costs, below its [of nothing cigarette national market].” the decision suggests that Group, Brooke discussion of U.S. 113 S.Ct. applicable 2578. It issue is filed a to a monopolist Robinson-Patman action the basis of allegations. these unconstrained market power. Brown & More- over, Williamson’s deep price LePage’s, discounts or unlike plaintiff re bates were concededly discriminatory, Group, Brooke not does a predatory make cost justified, and resulted in pricing substantial claim. is monopolist; 3M a a mo- loss it. The Supreme majority nopolist is not free to take certain actions held that the defendant was entitled to (or company in a competitive even " contrast, 7. the District Court here tape.' noted Page's, Scotch Le 2000 WL " that 3M had conceded that (quoting 30). ‘could *7 later Defendant's Mem. at recoup profits it has forsaken on Scotch Group opinions, The Brooke both for private tape by selling label more dissent, majority and the respons- discuss the higher priced Scotch ... if there would es members of the oligopoly to the intro- be competition no private others cigarettes. duction discounted Id. at 239- tape segment when 3M abandoned that 2578; 247-48, 113 S.Ct. id. at 113 S.Ct. part of the to sell higher-priced (Stevens, J., dissenting). engages exclusionary predatory oligopolistic) may take, in or because justifica monopo- conduct without a valid business there is no market constraint on a See, e.g., Aspen Skiing, tion. list's behavior. 601-04,

472 U.s. at 105 S.Ct. 2847. Iv. Nothing any Supreme opinions Court's in the decade since the MONOPOLIZATION - Group suggested Brooke decision that the EXCLUSIONARY opinion Supreme overturned decades of CONDUCT precedent monopo that evaluated a liability by examining § list's under 2 A. exclusionary, i.e., predatory, conduct. Illustrative Gases Group only Brooke has been cited four Supreme Court, turning LePage's times three times Before to consider al- in cases that were not even antitrust cases legation engaged exclusionary that 3M propositions patently inapplicable anticompetitive conduct and the evi- here.9 In the antitrust case of the produced, type dence it we consider the four, Corp. Discon, Inc., NYNEX v. 525 encompasses. § conduct 2 128, 137, 493, U.S. 119 S.Ct. 142 L.Ed.2d appeals As one court of has stated: (1998), 510 the Court considered whether "`Anticompetitive conduct' can come in too per applicable group boycotts se rule many forms, dependent different and is too § 1 of the Sherman Act should be upon context, any court or commenta- applied single buyer "where a favors one tor ever to have enumerated all the variet- another, improper seller over albeit for an Sys., ies." Caribbean Broad. Ltd. v. Cable 133, Holding reason." Id. at 119 S.Ct. 493. PLC, 1080, & Wireless 148 F.3d 1087 applies, that the rule of reason the Court (D.C.Cir.1998) (reversing part the dis- quoted Group proposition Brooke for the complaint trict court's dismissal of pure "{e]ven an act of malice one holding that radio station's claim that de- competitor against another does misrepresentations fendants made to ad- not, more, without state a claim under the government vertisers and the in order to 137, federal anti-trust laws." Id. at protect § stated 2 Sherman (quoting Group, S.Ct. 493 Brooke 509 U.S. claim). Act 225, 2578). opinion 113 S.Ct. does Numerous cases hold that the enforce discuss, adopt, proposi much less legal monopoly provided by monopolist § ment of the tion that a does not violate Thus, nothing patent procured through may unless it sells below cost. fraud violate Supreme Equip., § that the Court has written since 2. Walker Process Inc. v. Food Corp., 172, 174, Group Mach. & Chem. 382 U.S. Brooke dilutes the Court's consis (1965); holdings monopolist 86 S.Ct. 15 L.Ed.2d 247 see tent that a will be Ave, found to violate 2 of the Sherman Act if also Medtronic Inc. v. Boston Scien- partial concurrence/par- Group Alloyd Justice Souter in his 9. Brooks is cited in Gustafsonv. Co., 561, 570, dissent, discussing 513 U.S. 115 S.Ct. tial the term "reason- (1995), statutory probability;" Weisgram Marley L.Ed.2d 1 for the construc- able and in v. tionrule that identicalwords usedin different Co., 440, 454, 528 U.S. 120 S.Ct. parts (2000), of the same act are intendedto have the L.Ed.2d 958 cussing weight in connection with dis- meaning; Greene, same U.S. in Strickler v. given expert opin- to be an 300 n. 119 S.Ct. ion. (1999), case, by L.Ed.2d286 a federalhabeas Corp., 98-478-SLR, No. CIV. A. 2001 vertisements discouraging public patron- tific (D.Del. Mar.30, 2001) WL 652016 (paten- age of charters). travel group tee could § 2 have violated by bringing A recent decision United States infringement on patent procured action by Court of Appeals for the Sixth Circuit, fraud). Predatory pricing by a monopolist Co., Conwood L.P. v. U.S. Co., Tobacco can provide § basis 2 liability. See (6th 290 F.3d Cir.2002), 768 cert. de Philips U.S. Corp. v. Corp., Windmere 861 —nied, -, U.S. 123 S.Ct. (Fed.Cir.1988) F.2d 695 (reversing district (2003), L.Ed.2d 850 presents good illus court’s directed verdict and ordering new tration of type of exclusionary conduct § trial on claims due to evidence that that will support §a 2 violation. That company had 90% of rotary electric shaver court upheld the jury’s to plaintiff award market, existence of substantial entry bar million, Conwood of $350 which trebled riers, and company had drastically reduced t billion, agains $1.05 United States prices to eliminate potential competitors). (“USTC”) Tobacco Company because of A monopolist’s denial to competitors of USTC’s monopolization. USTC was the access its “essential” goods, services or sole manufacturer of moist snuff until the resources has § been held violate 2. See 1970’swhen Conwood, Swisher, and Swed Otter Tail States, Power Co. v. United Match, 410 ish other moist snuff manufactur U.S. 93 S.Ct. ers, 35 L.Ed.2d 359 entered the moist snuff market. Not (1973) (finding § 2 violation where monop unexpectedly, 100% USTC’s market share utility olist company refused to sell whole declined and it took the action that formed sale to municipalities and refused to basis of trans complaint Conwood’s against fer competitors’ power lines); over USTC alleging, alia, inter see unlawful mo also Wirtz, nopolization Fishman v. § Estate violation F.2d of 2 of the Sher (7th Cir.1986) man Act. (finding corporation lia § ble for refusing to lease Chicago The evidence that the district court and Stadium to plaintiff, potential buyer of the court appeals held proved that the Chicago team, Bulls basketball after USTC systematically tried to exclude com- determining Stadium to be essential to petition from the moist snuff market in- professional area). basketball in Chicago (1) cluded the following: USTC removed An arbitrary refusal by to deal a monopo and destroyed or discarded racks that dis- may list § constitute a 2 violation. See played moist products snuff in the stores Byars v. City Co., Inc., News Bluff while placing Conwood products in USTC (6th Cir.1979) F.2d 843 (remanding case to racks an attempt bury Conwood’s district court for fact-finding to determine products; (2) trained “operatives to whether defendant possessed monopoly take advantage of inattentive store clerks power and unlawfully refused to deal in with various ‘ruses’ such as obtaining nom- 2).§ violation of Even unfair tortious inal permission to reorganize or neaten the conduct unrelated to a monopolist’s pricing moist snuff section” in an effort to destroy policies has been held to violate 2. See (3) racks; Conwood misused position Int’l Travel Arrangers, Inc. v. Western category manager (manages product Airlines, Inc., (8th Cir.1980) 623 F.2d 1255 groups and business units and customizes (upholding treble damages antitrust award them on a basis) store store by provid- against airline with monopoly power ing after misleading information to retailers finding sufficient evidence that airline an effort to dupe them into carrying USTC placed false, deceptive, and misleading ad- and to discontinue carrying Con- purchases their or reduce (4) exclu- inate into entered products;

wood competing than Rather LePage’s. in an effort retailers agreements sive discounts offering at 783. volume products. rivals’ exclude cost reflect sav- and often concededly legal — — did 3Mlike USTC appeal, On offered dis- programs 3M’s rebate ings, power it had challenge that conditioned customers to certain counts moist was product the relevant agreed 3M’s diverse six of spanning purchases na- was geographic and the snuff covered lines The product product lines. Instead, USTC at 782-83. tionwide. Care Health were: program the rebate by es- failed to had that Conwood contended Products, Home Im- Products, Home Care acquired was power that USTC’s tablish Stationery Products Products, provement rath- exclusionary practices by maintained Retail Auto tape), (including practices legitimate by its than er App. Sealed Products, Time. Leisure and 783. Both Id. at product. superior the re- bundling to addition appeals 2979. In of at the court court and district set programs rebate finding bates, 3M’s of both argument, rejected USTC’s rates growth to target for customer-specific evidence sufficient was there of mo- size the rebate by line. The of maintenance USTC product willful each find exclusionary of lines by engaging product power to the number nopoly linked Sher- § 2 of the met, in violation the num- practices targets were in which 788. buyer Act. Id. deter- man met targets ber on all receive it the rebate would mined compe- meet the to Similarly, sought 3M to failed customer If a purchases. by exclu- threatened LePage’s tition product, one any for target meet of rebate consisted conduct that sionary the rebate it to lose cause would failure arrange- dealing and exclusive programs a substantial created any the line. This across LePage’s designed to drive ments to meet transpar- each customer competitor incentive viable other maxim- product lines all targets across market. ent tape its rebates. ize B. considerable, not rebates were The Rebates Bundled Br. at Appellant’s 3M states. as “modest” Kmart, had con- example, For conduct LePage’s considering business, re- LePage’s verdict, 10% of we stituted ultimate jury’s that led App. $926,287 Sealed it evidence ceived jury had before that the note con more exclusionary received 1996 Wal-Mart and in panoply full dealing received million, exclusive Club duct, Sam’s including both than $1.5 $482,001. rebates and the bundled Target received arrangements $666,620, and viewed have been reasonably as significant as which could Just App. at 2773. Sealed arrange dealing effectuating exclusive in- powerful as received is amounts they way in which pur- because ments to customers they provided centive were structured. than rather 3M chase rebate the maximum forego not to order Execu- denominated Through program have been penalty offered. (“EGF”) thereafter Fund Growth tive Club, $450,000 for $264,000 Sam’s (“PGF”), of- Fund Partnership Growth $310,000for Amer- $200,000to Kmart, and customers major many of fered Stores. ican them elim- to induce rebates substantial deny 3M does not that it offered these Depending on the number of programs although gives different rea- aggregated and the customer’s sons for the discounts to each customer. purchases each, relative an even argues they Instead it were no more equally may efficient rival find it impos- than procompetitive exclusive lawful dis- compensate sible to for lost discounts on And, programs. count as it responds to products that it produce. does not LePage’s allegations, each of it returns to Id. at 83-84. premise its central “that it is not unlawful prices to lower one’s long they so re- The principal anticompetitive effect of main Appellant’s above cost.” Br. at 36 bundled rebates as offered 3M is that (citing Brooke Group, 509 U.S. at when offered by monopolist they may 2578). S.Ct. portions foreclose of the market a po- However, one of the leading treatises tential competitor who does not manufac- discussing anticompetitive the inherent ef an equally ture group diverse of products rebates, fect of if they bundled even and who therefore cannot make compa- cost, priced above great power. “[cephalosporins] Just as nopoly Kef- conjoin of Kefzol with purchases their virtually every gener- carried in ... [were] Keflex, “leading sellers.” Lilly’s SmithKline, lin and country,” in hospital al SmithKline, at 1061. As we 575 F.2d in this case 575 F.2d at the evidence stated, eligibility for the 3% “[although tape indispens- shows that Scotch-brand of purchase on the bonus rebate was based any able to retailer Lilly’s of any three specified quantities market. reality in it meant cephalosporins, 2§of of the Sherman Act analysis Our Kefzol and the purchases combined here where in is instructive SmithKline sellers, Id. Keflin and Keflex.” leading Speaking comparable. facts are § 2 violation was gravamen Lilly’s The Aldisert, we said: through Judge on which it Lilly product linked a subject to Lilly’s cephalosporins With on which competition

faced with from other price competition no serious it Id. at 1065. competition. faced no sellers, entering with barriers rebate was The effect of 3% bundled substantial, pros- and with the Lilly products magnified volume extremely un- competition of new pects sold, that “in to offer a rebate of so order certain, a factual we are confronted with Lilly’s, amount as the same net dollar Lilly has the awesome complex which purchasers of An- had to offer SmithKline it monopolist. Although a en- power of hospitals cef rebates of some 16% legal monopolist joyed the status of size, volume average larger and 35% to it in the manufacture engaged when was hospitals.” Lilly’s at 1062. rebate prod- original patented and sale of combining Kefzol with Keflin structure ucts, it changed when insti- that status price true Keflex Kefzol from “insulat[ed] program]. rebate [bundled tuted its Ancef.” competitor] competition [its to associate plan was goal The Id. at 1065. practices with Lilly’s legal monopolistic directly affected illegal activity an

LePage’s private-label and second-tier demand of Kefzol are, price, supply, Kefzol and Ancef were tapes ing Ancef. Were not for the [bundled contracts with large customers. 3M program], rebate the price, supply, and acknowledges only expressly exclusive demand of Kefzol and Ancef would have dealing contracts with Venture and Pami- been determined the economic laws da which conditioned discounts on exclusiv- competitive ity. of a [Lilly’s market. bun- It minimizes these they because rep- dled rebate program] blatantly revised resent a small portion of the market. However, Lilly those economic laws and made LePage’s claims that 3M made § transgressor under 2 of payments the Sherman to many the larger customers Act. designed were to achieve sole-source supplier status. Id. at 1065. The effect of 3M’s rebates were even argues jury because the powerfully magnified more than those in found for it on LePage’s § claims under SmithKline because 3M’s required rebates § Sherman Act Clayton 3 of the purchases bridging product extensive Act, payments these should not be relevant eases, magnified lines. some these re- § 2 analysis. The law is to the particular bates to a customer were as contrary.10 though Even exclusivity ar much as half of LePage’s prior entire rangements analyzed § often sales to that customer. For example, Le- such exclusionary may conduct also be an sales to Page’s Sam’s Club 1993 totaled element in Healthcare, claim. U.S. $1,078,484, while 3M’s 1996 rebate to Healthsource, Inc., Inc. v. 986 F.2d $666,620. Sam’s Club was Similarly, Le- (1st Cir.1993) (observing that exclusivi 1992 sales Page’s to Kmart were ty may “play also ... role as an element $2,482,756; 3M’s 1997 rebate Kmart in attempted or monopolization”). actual $926,287. could reasonably 3M also as exclusive dealing disclaims that 3M used its find trans- any arrangement that contained no ex- parent tape, backed its considerable press exclusivity requirement. again Once catalog products, of squeeze to out Le- the law contrary. is to the No less an 3M’s conduct Page’s. at least as anti- was authority than the States Supreme United competitive as the which this conduct court Court has Tampa so stated. In Elec. Co. § violated 2 in held SmithKline. Co., 320, 327, v. Nashville Coal 365 U.S. 81 (1961), S.Ct. 5 L.Ed.2d 580 a case C. § dealt with Clayton 3 of the Act rather Dealing

Exclusive § 2 Act, than of the Sherman the Court prong The second of LePage’s which, took cognizance of arrangements exclusionary claim of exclusive, 3M was conduct albeit not expressly effectively in entering actions into exclusive deal- foreclosed the competitors.11 business of 10. jury's finding against LePage's aff'd, on its at (imposing § 575 1056 2 F.2d dealing § exclusive claim under 1 of the Sher- liability Sherman Act exclusionary for con § Clayton man Act and 3 of the duct, Act does not rejecting dealing after an exclusive preclude application of evidence of 3M's Act). § Clayton claim under 3 of the dealing support LePage's § exclusive to 2 See, Labs., 11. If the dissent’s e.g., citation to FTC v. Motion claim. Barr 98, Inc. v. Abbott Labs., Co., (3d Advertising Cir.1992) Picture 344 978 F.2d Serv. U.S. 110-12 73 (1953), (considering suggests § 2 S.Ct. 97 L.Ed. of the 426 that a Sherman Act claims rejecting year dealing after claims one exclusive based on the same evi- contract should be § dence under per legal § Act Sherman and considered as se that is Act); SmithKline, Clayton F.Supp. of supported by reading not a of the decision. one of As laws. the antitrust der evidence powerful introduced

LePage’s states: leading treatises jury believe to led the have that could discounts Kmart, quantity imposed Staples, unilaterally to discounts rebates of rivals opportunities Buyers foreclose the can Office Club, National Sam’s dis- its best can obtain dealer them a to induce when designed were “UDI” with exclusively dealing only by of exclusion count to the to 3M business award dis- example, For firm. cus- the dominant former Many of LePage’s. lengthy over cumulated be might Le- counts to meet even refused tomers year, time, calendar as a such periods for buyer A representatives. sales Page’s result. economies no obvious when which largest customer Kmart, LePage’s business, told Hoven- 10% & Herbert E. Phillip for Areeda accounted 3A (2d ¶ 768b2, about you at 148 talk can’t LePage’s: “I Law kamp, Antitrust years” three Hoven- Ed.2002); the next 11 Herbert also see ¶ 1807a, makes.” at 115-16 anything 3M me Law bring Antitrust kamp, “don’t a 302-03, may Kmart switched foreclose (1998) 964. discounts (quantity App. market). Dis- million $1 portion 3M’s offer following substantial could have jury exclusivity on reward conditioned “growth” counts be its' sole that 3M the defendant require “when “problematic” understood man- was offered to force Staples Similarly, position in a firm supplier. dominant all-or-nothing Le- gave an bonus rebate to make 1% an ufacturers extra LePage’s, argues (citing n. 7 3M. Page’s choice.” (E.D.Pa.1997)). to retain enough try hard did WL 734005 years, but there for 20 Kmart, its customer for the District Appeals The Court any In contrary.12 to the evidence fore- the evidence on relied Columbia pay- of 3M’s effect event, purpose reaching decision of markets closure were retailers issues to the ments v. in United States liability Microsoft verdict, rejected 3M’s which, by its (D.C.Cir.2001). In 34, 69 F.3d Corp., arguments. concluded case, appeals court of operat- in the Microsoft, monopolist through ex- of markets

The foreclosure market, rivals foreclosed system ing un- concern is of dealing contracts clusive testimony trial, LePage’s presented At case, appealed had FTC Kowieski, vice former senior holding that ex- James of Circuit the Fifth decision sales, LePage's methods who described unfair president are not contracts clusive reversed, its bid. Supreme rejection following competition. The Kmart’s efforts the exclu- pre- decision that FTC’s supporting desperate sales LePage's a second made (a producer respondent of the App. contracts president, sive by its attended sentation pic- advertising motion distributor compa- our (“I very was critical felt competition and tures), unreasonably restrain failure, Mr. so I insured ny's success respondent was monopoly. It tend the meet- president, attended Baggett, our Les du- of a contracts argued exclusive who me.”), LePage’svainly offered where ing with necessary for the year a in excess ration concessions, App. at 959 price additional distributors. of the business conduct savings, bene- ("We through cost went Supreme rejected argument was This some, again, price fits, up came with and we did not decision Supreme Court's The Court. special concessions, of a programs and some arrangements dealing exclusive suggest that mean, because, we as far as I year, buy once (which re- by monopolist into entered concerned, leg.”). our last were on we were not), together with that case spondent in action, § 2 violate exclusionary did not other Act. the Sherman browser market from a per- “substantial exclusively with the dominant market play- centage of the available opportunities er, 3M, to avoid being severely penalized browser distribution” through the use of financially for failing to meet their quota in exclusive contracts key distributors. a single product line. Only by dealing Id. at 70-71. Microsoft kept usage of its exclusively with 3M in as many product competitor’s browser below “the critical lines as possible could customers enjoy the level necessary for [its pose rival] to substantial discounts. Accordingly, real threat to Microsoft’s monopoly.” Id. jury could reasonably find that 3M’s exclu- at 71. The opinion does not Microsoft sionary conduct § violated specify what percentage of the browser — market Microsoft locked up merely V. that, in one of the two primary distribu- tion browsers, channels for Microsoft had ANTICOMPETITIVE EFFECT exclusive arrangements with most of the top distributors. Id. at 70-71. Signifi- It has been LePage’s position in cantly, the court pursuing § observed that 2 claim that 3M’s Microsoft exclusion Microsoft’s exclusionary conduct ary violated “tactics foreclosed the competitive pro § 2 “even though the contracts cess foreclose preventing rivals from competing less than the roughly (or 40% or 50% maintain) share to gain a presence in the usually required in order to establish a market.” Appellee’s Br. at 45-46. When § 1 violation.” Id. at 70. a monopolist’s actions are designed pre vent one or more new or potential competi

One noted antitrust scholar has written: tors from gaming a foothold the market We might thus interpret the Microsoft by exclusionary, i.e. predatory, conduct, its holding as follows: Conduct inten- success in that goal is injurious to tionally, significantly, and without busi- potential competitor but also to compe justification ness excludes a potential tition in general. It has been recognized, competitor (even from outlets though albeit a somewhat context, different not in market), the relevant where ac- even the foreclosure of significant “one cess to those outlets is a necessary competitor” from the may lead to though not sufficient condition to waging higher prices and reduced output. Roland a challenge to a monopolist and fear of Indus., Mach. Co. v. Inc., Dresser 749 F.2d the challenge prompts conduct, (7th Cir.1984). “anticompetitive.” Fox, Eleanor M. What Is Harm to Compe- The court treated exclusion- Microsoft tition? Exclusionary Practices and Anti- ary conduct by monopolist likely more competitive Effect, 70 Antitrust L.J. to be anticompetitive ordinary than (2002). exclusionary conduct. inquiry in Mi- LePage’s produced evidence that was whether the monopolist’s con- crosoft foreclosure caused by exclusive duct dealing excluded a competitor (Netscape) practices was magnified by 3M’s from discount the essential facilities that per- practices, as some of 3M’s rebates were mit toit achieve the efficiencies of scale “all-or-nothing” discounts, leading custom- necessary to threaten the monopoly. 253 ers to maximize their discounts dealing F.3d at 70-71.13 In Microsoft, the court of 13. In one of the two distribution Microsoft, channels 253 at F.3d 70-71. In the seminal browsers, available for had case, Microsoft locked Terminal Railroad an association of rail- up high almost all the volume operators distributors. up road locked cheapest the route maximum rebate for the qualify had Microsoft that determined appeals the record programs, un- the to links EGF/PGF enough distribution

foreclosed pri- diverted that most customers a via- Netscape shows survival the dermine sug- 3M’s 3M at to label business at 71. vate competitor. ble PX23, 74-75; at28 Tr. Vol. gestion. could case, jury in this Similarly, the newer Similarly, under 32, 34, 715. exclusion- 3M’s that reasonably found have 3M set program, Mix rebate Brand key off LePage’s from cut ary conduct pro- tape sales for rebates higher it to necessary permit to pipelines retail tape label from private a shift duced only after It profitably.14 compete PX at 79. Tr. Vol. tape. branded 3M the market entry into at 534906. programs. rebates the bundled introduced eliminating com- successful If were 3M ev- Furthermore, introduced Plaintiff pri- LePage’s second-tier from petition programs rebate customized idence of mo- exercise could tape, 3M vate-label distributors similarly caused Tuck as Tesa unchallenged, power nopoly Page’s Le purchasing forego from in market. longer nowas SM’s on rebates to obtain wished they trial record Court, recognizing Specifically, products. The District Kmart a re- offered that 3M bundled unique establishes presents “this case Market had an rebate and growth found customized program bate In order effect,” Page’s, payment. Funds Development Le anti-competitive target and motion million sales *5, 3M’s denied reach $15 at WL (“JMOL”), rebate, howev- million of law qualify $1 as matter judgment consumer er, to increase Kmart had stating: million. by $5.5 stationary purchases that Scotch introduced evidence Plaintiff this achieved substantially Kmart 3M’s and that product, ais Page’s and Le dropping “growth” by distrib- caused programs rebate bundled manufacturer, private another entirely, or Page’s displace Le utors at PX 121 at 3M PX 51 Tesa. cases, pur- reduce drastically in some customized a Likewise, pro- at 156838. Tr. Vol. Page’s. Le chases from for an provided Staples that with gram Under 105-106; Vol. 27 30. tape on Scotch 1% bonus rebate extra growth overall 3M set programs, rebate given to Page’s “if Le In sales product lines. for unrelated targets Finally, 3M at 3M 149794. PX 98 3M.” view, tar- set these distributors’ on Scotch discount a similar provided the dis- manner which in a gets forced on “based Stores to Venture tape any drop non-Scotch to either tributor private dropping of Venture contingency rebate. the maximum or lose products, Thus, 450738. at 3M PX 712 Thus, label.” in order 24 at 3M 48136. PX market, super- transparent river, railroad Mississippi the sole across the provide Wal-Mart like Kmart stores States v. United crossing St. Louis. bridge manufacturer-they sup- any facility to crucial Ass’n, S.Ct. 224 U.S. R.R. Terminal the concomitant high sales ply volume (1912). Supreme L.Ed. 810 By costs. substantially distribution reduced agree- defendant's Court determined monopoly power in wielding its bridge to other access to provide toment lines, 3M product array of vast § 1 discriminatory violated terms railroads bridge critical foreclosed Sherman Act. of provide, name- superstores to consumers supply lines. high cheap, volume ly, 1999). reasonably could have conclud- 1996 through Demand for Le- ed 3M’s customers were forced to Page’s tape, especially private-label forego purchasing Page’s private Le la- tape, decreased significantly following tape bel order to obtain the rebates introduction of 3M’s rebates. Although tape. Scotch 3M claims that customers participating in added). programs its rebate (emphasis purchase continued to tape LePage’s, from the evidence does In opinion, the same the District Court support this contention. Many distribu- that “[LePage’s] found substan- introduced dropped LePage’s tors entirely. tial evidence ef- anticompetitive programs fects 3M’s rebate caused Le Prior to the introduction of 3M’s rebate Page’s losses.” Id. at *7. jury was The program, LePage’s sales had been sky- capable of calculating from the evidence rocketing. Its sales to Staples increased amount rebate a customer 3M by 440% from 1990 to 1993. Following if it quota lose failed to meet 3M’s introduction of 3M’s program rebate sales in even one of the products. bundled bundled its private-label tape with its oth- The that LePage’s discount would have er products, private-label 3M’s tape sales provide had to to match the discounts of- increased 478% from 1992 to 1997.15 Le- by fered 3M through its bundled rebates Page’s in turn lost a proportional amount can be measured gave discounts It key sales. lost large volume custom- For example, LePage’s points offered. ers, Kmart, such as Staples, American out that in 1993 Sam’s Club would have Drugstores, Max, Office and Sam’s Club. $264,900, stood to lose Sealed App. customers, Other large Wal-Mart, like $450,000 and Kmart for failure to meet one drastically purchases. cut back their growth targets in a product 3M’s single result, As a LePage’s manufacturing Moreover, line. App. at 1110. Sealed process became less efficient and profit effect of 3M’s rebates on LePage’s earn- margins declined. In transparent tape ings, LePage’s had attempted to match manufacturing, large volume customers discounts, 3M’s can be com- calculated are essential to achieving efficiencies of paring the discount that LePage’s would “ concedes, scale. As ‘large customers have been required provide. That were extremely important to [LePage’s], would represent amount the impact of to everyone.’ ... Large ... per- volumes rebates on ability bundled LePage’s runs,’ ‘long mitted making the manufactur- to compete, and that is what is relevant ing process more economical predicta- § 2 of the Sherman Act. ble.” Appellant Br. at (quoting trial impact of 3M’s discounts appar- was testimony Baggett, of Les LePage’s for- ent the chart by LePage’s from introduced CEO) (citation omitted). president mer showing LePage’s earnings per- as a There centage plummeted comparable sales effect on to below zero- Le- Page’s to negative 10%-during pro- transparent 3M’s rebate share mar- 7037; gram. App. at ket. agreed upon see also In the App. relevant market (documenting LePage’s States, healthy operating transparent tape in the United from 1990 to rapidly income declin- dropped market share 35% ing income from operating 1993 to 1992 to In 1997. net sales large operating losses suffered from constituted 14.44% of the total private-label $5,464,222. 3M's sales were sales had increased Sealed $1,142,000. By private-label tape App. at 489.

162 The as whole. a considered are activities had 1997, sales LePage’s By market. tape exclusive of 3M’s effect anticompetitive Final- App. at Sealed to 9.35%. fallen explicit or whether arrangements, dealing was forced 1997, LePage’s of in March ly, the from inferred, separated cannot be That same plants. of its two to close one 3M’s bun- rebates. transparent its bundled of domestic effect other only the year, pro- Inc., rebate Tuck, via its bowed manufacturer, dling of its Tesa tape effect exclusionary en- the tape business reinforced grams the out of con- Had 3M programs. States. those United tirely the have even- it could program with its tinued im- not exclusionary conduct 3M’s market. the out of LePage’s tually forced but compete, to ability peded itself,' is the anti- inquiry a sine The relevant competition it harmed also exclusionary 3M’s effect competitive violation. 2 non for qua the Su As together. competi- considered practices evidence powerful presented Co. Ore Cont'l actions. recognized by 3M’s Court harmed preme itself tion Corp., 370 Carbon & this in recognized Union Carbide v. District The 777 1404, L.Ed.2d 82 S.Ct. it said: U.S. when opinion, monop the look to (1962), courts must infer that reasonably could The rather as whole taken conduct olist’s of the elimination lower planned 3M’s in isolation. aspect considering each than well tape, as label private priced “ one like the stated, ‘in a case The Court brand, would Highland priced lower violations], § 2 § 1 and [alleging us before higher selection consumer channel look jury was to of the duty higher and lead brand priced Scotch at the indi merely picture whole Indeed, con- Defendant 3M. profits for ” (citation omit in it.’ figures vidual recoup the later that “3M could cedes Cal. v. S. ted). Anaheim City See also tape Scotch forsaken on has profits it (9th Cir. Co., F.2d Edison by selling more tape label private to focus 1992) (“[I]t proper not be would ... there priced Scotch higher accused of an acts individual specific by others competition no would be their refusing to consider monopolist while when tape segment private ... We deal combined overall effect market part abandoned ‘syner called has what been ing with tape.” Scotch only higher-priced sell the ele mixture effect’ of the gistic *7. 2000 WL Page’s, Le court, added). ments.”) This (emphasis ef anticompetitive considering when because plan such could effectuate conduct Advo, fect of defendant’s Inc. entry. See ease of was no there increase Act, to the has looked Sherman Inc., F.3d Newspapers, Phila. v. share, effects defendant’s Cir.1995) that ease (3d (commenting market, benefits on the foreclosure preda monopolist’s prevent entry defendant, ex and the and the customers succeeding); see from scheme tory pricing they were felt customers tent to which Kau E. & Thomas Snyder A. also Edward manu other dealing with precluded Laws: Antitrust Misuses per, Barr, at 110-11. F.2d facturers. L.Rev. Plaintiff, 90 Mich. Competitor entry” to (1991) (finding “barriers strength- conduct of 3M’s The effect necessary conditions two one of destroying be position ening monopoly conduct, being the other exclusionary in second-tier by LePage’s competition power”). “market various when apparent is most 163 The District Court found that there was of the payment rebates after the end of the signifi- “substantial evidence at' trial that year discouraged passing the rebate on to entry cant prevent competitors barriers the ultimate App. customers. at 2092. entering tape from the ... market in the The District observed, Court thus “the Thus, United States. this case presents a record amply reflects that 3M’s rebate in which monopolist situation remains programs did not benefit the ultimate con- unchecked in Page’s, the market.” Le sumer.” Le Page’s, 280350, 2000 WL at 280350, 2000 In WL at *7. the time period here, issue at there never been a com- has As the foregoing review the evidence petitor genuinely challenged has clear, makes there was sufficient evidence

monopoly and it significant never lost a jury for the to conclude the long-term tape foreign account to a com- effects of 3M’s conduct were anticompeti- petitor. tive. We must therefore uphold its verdict

There was evidence from which liability unless 3M has shown adequate could have determined that 3M intended to justification business practices. its market, force from the and then severely

cease or curtail private- its own VI. and second-tier lines. For ex- BUSINESS REASONS ample, by begun had to offer JUSTIFICATION incentives to some customers increase purchases higher priced It Scotch- remains to consider whether tapes brand over own defendant’s second-tier actions were carried out for reasons,” The Supreme brand. “valid has made business recog justification clear intent is relevant nized proving See, for monopolizing. monopolization, Kodak, Aspen e.g., Skiing, at Eastman U.S. 504 U.S. at However, 105 S.Ct. attempt to S.Ct. monop- a defendant’s asser olize, Journal, Lorain tion 154-55, at it acted in U.S. furtherance of its 72 S.Ct. 181. economic interests does constitute the type of justification an is raising 3M’s interest prices is well- acceptable" defense to 2 monopolization. documented In record. internal Paraphrasing corporate one executive’s memoranda into introduced evidence publicized statement, well whatever is LePage’s, 3M executives boasted that the good for 3M necessarily permissible is not large retailers like Office Max and Staples § 2 Act. Sherman As one had no choice but to adhere to 3M’s de- court appeals has explained: (“Either mands. See Sealed at 2585 App. In general, justification a business they [price] take the ... increase or we valid if it directly relates or indirectly to ”); hold .... orders see also App. Sealed at the enhancement of consumer welfare. (3M’s objected directive when Staples Thus, pursuit of efficiency quality price increase was will “orders be held if might control competitive be legitimate 1/1/98”). pricing up is not to date on Le- ..., reasons while the desire to maintain Page’s expert price testified that or thwart share Scotch-brand increased since entry competitors would not. after 3M program. instituted its rebate App. at 3246-47. opinion, the Dis- Data Corp. Sys. Sup- Gen. v. Grumman trict Court deposition (1st cited the testimony port Corp., 36 F.3d Cir. 1994) a 3M employee acknowledging Kodak, (citing Eastman U.S. stemming did, savings that, pies or Skiing, 472 2072; Aspen

483, 112 S.Ct. approaches shipment joint 2847). 608-11, 105 S.Ct. U.S. to custom- returned 3M of dollars millions monopolist that a assumed be It can rebates. in bundled ers and interests economic its to further seeks exclusionary in engages it so when does evidence is There considerable exclusionary Thus, example, for conduct. private-label entered that 3M record by “a method defined been has practice See, Sealed e.g., “kill it.” only to market of its part a trades a firm ... which in (statement by executive 3M at 809 App. temporarily, at least profits, don’t want that “I memorandum internal it un- share, making by larger to successful be products 3M private with compete to sellers for other profitable business, distribu- its supply in the office Law: Posner, Antitrust A. Richard it.” users”). That our tion consumers/end (1976). Once Perspective Economic An Act § 2 of the Sherman what precisely is excluding by its goal achieves monopolist main- that covering conduct by prohibits increase then it can competitors, potential monopo- Maintaining a a monopoly. tains point at to the product its price reason business type valid not ly is This profit. it will maximize which exclusionary conduct. excuse will that price than the higher invariably is price was defense justification business That market. competitive in a determined rejected the it jury, and to the presented monop- why reasons principal one is view reflects verdict jury’s The claim. laws. the antitrust violates olization conduct, exclusionary that 3M’s eco- its own to benefit acted that 3M fact compete to LePage’s it difficult made to over- a reason hardly is interests nomic business merits, legitimate had no on § 2 it that violated finding jury’s turn justification. Act. the Sherman “per- the burden bears The defendant VII. its conduct jury that suading] purpose.” by any normal justified DAMAGES 608, 105 S.Ct. at U.S. Skiing, 472 Aspen argument an alternative to As custom- to its 3M alludes Although 3M claims liability, on to JMOL entitled is sin- invoices single have to desire ers’ due new trial entitled it is its bundled defense in shipments gle sustaining Le- in error Court’s District or evi- testimony no rebates, 3M cites rea- two gives It award. Page’s damages appendix volume dence damage that the First, it contends sons. effi- economic any actual support Musika, Le- Terry theory proffered invoices single having and/or ciencies im- was based expert, Page’s damages unlikely highly It shipments. single have been should assumptions and proper tape along shipped Second, argues Musi- excluded.16 improve- or home products auto retail the dam- disaggregate theory failed ka’s as Sta- such customers ment trustee, as an ex- bankruptcy court-appointed expert challenge Musika's does 16. 3M agencies, includ- Nonetheless, government pert for various he we note qualifications. finance, and Securities Department is a of Justice degree public ing a master's holds firm, Commission, expert accounting an major and as partner Exchange former cases, including President five anti- trial was complex at the time witness consulting Further- firm. a business CEO of more, cases. trust as a frequently has served Musika ages based on lawful versus unlawful con- profit margin ed by looking duct 3M. actual profit margin for each year and adjusting it to declining show prices and review the District Court’s de We LePage’s consequential decreasing effi- cision to admit or exclude expert testimony ciency due to decreasing sales. Based on for abuse of discretion. Kumho Tire Co. adjustments, those LePage’s profit margin Carmichael, 137, 152, v. 526 U.S. 119 S.Ct. every year decreased during damages (1999). 143 L.Ed.2d 238 Further period. Musika concluded that but for more, we review de novo dam conduct, 3M’s unlawful LePage’s would ages evidence to determine whether as a have earned an extra million dollars. $36 matter of law it can support jury’s verdict. Stelwagon Mfg. Co. v. Tarmac Importantly, 3M does not chal Inc., (3d Roofing Sys., 63 F.3d lenge Musika’s approach basic to calculat Cir.1995). ing damages, conceding that “an expert

To determine the amount profits Le- may construct a reasonable offense-free Page’s lost between 1993 and 2000 due to world as a yardstick what, for measuring violations, 3M’s antitrust Musika con- hypothetically, would have happened ‘but structed a “lost market share” model. Ap- for’ the defendant’s unlawful activities.” pellant’s Br. at 72. Musika first calculated Appellant’s Reply Br. at 37(citing Calla the total United transparent States A.E.V., Inc., han v. 182 F.3d 254-58 sales during damages period, using (3d Cir.1999); Rossi v. Standard Roofing, actual financial data from 1992 to 1997 and Inc., (3d Cir.1998)). 156 F.3d 484-87 projecting total sales from 1998 to 2000. Instead, 3M’s judgment motion for as a Next, he determined how those sales matter of law attacked underly- Musika’s would be divided between branded and ing assumptions, primary assumption private-label parts market, of the project- being that 3M did not want to succeed in ing 1% shift each year from branded to the private-label segment as it did not private-label tape 1%, In arriving sales. want to harm its high-margin sales of Musika considered the growth actual Scotch brand. rejected The District Court sales, private-label tape growth actual objections 3M’s to LePage’s damages (i.e. private-label rate of all not claims, stating that “the ... record dem- just tape), growth large rate of cus- onstrates that Mr. assumptions Musika’s tomers, and projections. 3M’s internal were grounded in the past performances of determining After seg- the size of both Scotch, Highland and Le Page’s tapes, as market, ments of the Musika estimated well as 3M’s own internal projections for market, share of the predicting growth.” future Page’s, Le 2000 WL that LePage’s would have retained its 3.5% 280350, at *8. share of the branded-label segment and its

88% private-label share of the segment. credibility of LePage’s and opined He that LePage’s share of the 3M’s experts jury over- was for the to deter all market for tape would have mine. Inter Med. Supplies, Ltd. v. EBI increased Inc., from 14.44% in 1992 (3d to 21.2% in Sys., Med. 181 F.3d 462-63 Cir.1999). 2000 but for 3M’s unlawful conduct. Fi- Musika extensively cross- nally, Musika subtracted LePage’s actual examined and 3M presented testimony projected sales from his sales to determine damages expert its own predict who LePage’s lost sales due to 3M’s unlawful ed more conservative losses to LePage’s. conduct. He end, calculated project- In the jury found Musika to be jury failed no evidence find the We as to disappointment 3M’s credible. instructions. follow these reasonably to consti- not credibility does finding of

jury’s the District of discretion abuse an tute reasons, will we foregoing For the testimony. allowing Musika’s to Le- award damages jury’s disturb Page’s. im Musika argues next damages, disaggregate failed properly VIII. no mecha jury providing thereby from 3M’s damages arising discern nism INSTRUCTIONS JURY from dam facts or other conduct lawful conduct. unlawful should argues arising from 3M also ages imper alleg 3M, resulted this trial because According a new awarded be In the speculation instructions. jury guesswork missible edly improper law, in jury. of misstatement part absence for abuse dis reviewed structions & Aluminum v. Kaiser Bonjorno In Electric Westinghouse Bhaya v. cretion. (3d Cir. F.2d Corp., 752 Chem. Cir.1990). (3d 184, 191 922 F.2d Corp., con “[i]n that stated 1984), court this the provided Court District the Because free of world hypothetical a structing instructions, method meticulous jury with activities, exclusionary defendants’ law in area this explaining ically in latitude calcu some given plaintiffs we lay persons, understandable manner theory is as their damages, long so lating its discre not abuse it did that conclude jury Id. Once wholly speculative.” not tion. activity caused unlawful that the found has instructing the Court, be damages may injury, The District the antitrust Le- act I, encompassed of what proof strict Count jury without on determined of damages as the maintenance long unlawful injury, as of Page’s caused claim guesswork. explained: or speculation on monopoly power are not based that noted court Bonjomo The at 813. Id. mainte- unlawful case I this Count im difficult, if not extremely be monopoly power. nance a fixed attribute segregate possible, injured it was alleges that LePage’s act as any one damages amount monopolization 3M’s unlawful by in itself one act any that not theory was for invisible States United acts taken unlawful, all that but was and office home tape for 2 violation. §a showed together use. actions, taken as Similarly, 3M’s monopoliza- their claim on To win 2,§ thus to violate whole, were found each tion, prove must LePage’s speaks that 3M disaggregation making the preponderance aby following elements not unnecessary, impossible. to be the evidence. jury event, to see how fail we any power monopoly First, had that 3M guesswork. or speculation engaged market. relevant jury charged clearly Court District maintained willfully Secondly, “You 3M: not caused losses disregard or exclu- through predatory power damages based calculate may not sionary conduct.... not may You or guessing.... speculation in- LePage’s thirdly, And injuries or losses damages for award because property or in its business jured at 5689. App. factors.” by other caused of 3M’s restrictive or exclusionary con- maintenance of monopoly power, that’s an LePage’s duct. element has to prove. App. at 5668. App. at 5663-64. prove To that 3M acted willfully, Le- complains the District Court Page’s prove must either that 3M en- provide failed to guidance that would in- gaged in predatory or exclusionary acts jury struct the distinguish how to between practices, or objective the conscious predation unlawful and lawful conduct. of furthering the dominance of 3M in the However, in explaining mainte- market, relevant this was the claim, nance of the District necessary direct consequence of 3M’s told the in order to find for conduct or arrangement. LePage’s, it pre- would have to find App. at 5668. ponderance of the evidence that 3M will- I’m now giving you what con-

fully maintained its monopoly power tentions are as to what 3M did or did through exclusionary or predatory con- do, that constituted predatory or App. duct. at 5663. then It summarized exclusionary one, conduct. Number those 3M’s actions that LePage’s con- program, rebate EGF, such as the tended were unlawfully exclusionary or fund, growth PGF, executive or the predatory, including program, 3M’s rebate fund, partnership growth and the brand fund, market development mix program. two, efforts Number 3M’s mar- control, reduce private-label development or eliminate ket fund called the MDS in some of tape, testimony, and its price efforts to raise the pay- other ments to pay consumers customers tape. Scotch Thereaf- conditioned cus- ter, tomers achieving judge goals certain sales or provided jury with the growth Third, targets. 3M’s following factors to efforts to determine whether control, reduce, or or eliminate private 3M’s conduct was exclusionary either or Four, tape. to efforts switch predatory: competitors, “its effect on its customers to expensive 3M’s more LePage’s, consumers, such as its impact on Five, branded tape, and 3M’s efforts to and whether it competition, has impaired price raise the pay consumers for Scotch in an unnecessarily way.” restrictive App. tape. LePage’s claims that all of these at 5670. things just that I’ve gone through was portions Relevant of the charge were as predatory or exclusionary conduct. follows: Now, 3M denies every in respect these actions were predatory or exclu- The law directs against itself not con- sionary. 3M contends that these actions duct competitive, which is severely even were, fact, in pro-competitive. so, but against rather conduct which App. at 5668-69. destroy tends to itself. competition Exclusionary conduct predatory App. at 5655. comprehends, most, conduct at the be- prove must willfully that 3M one, havior that only, not to impair tends power maintained monopoly by predato- opportunities rivals, also, of its but ry conduct, exclusionary or rather than two, number either does not further by supplying services, better or competition merits, on the or in does so by exercising or superior business judg- unnecessarily an way. If 3M restrictive ment, just by or chance. So willful has been to exclude rivals on attempting nor- of part is you duct efficiency, than other basis some extraor- or even process competitive mal preda- as the behavior may characterize must [3M] success. dinary commercial tory. very has made conduct represent at App. 5670. competitors impossible or difficult a com- find that However, may not you competition. in fair engage monopoly maintained willfully petent, at 5671. App. has maintained company if power, the exercise followed through closely solely District Court power, industry, instructing in or skill when foresight sample instructions superior ABA exclusionary technological or economic predatory jury or because size, or be- distin- instructions efficiencies, conduct, including because or con- and anti- procompetitive customer changes between guishing cause of ABA, Sample because simply See conduct. preferences, competitive sumer impos- is Cases that it limited Antitrust Civil so Instructions Jury Furthermore, Ed.). product, (1999 efficiently produce C-21 sible C-20 supply ver- enough large modified plan aby instructions were except jury Skiing, which Aspen demand. given those the whole sion of objectiona- not find Court did Supreme at App. 5670-71. 2847. 596-97, S.Ct. 472 U.S. ble. unlawfully to Count respect Now with pos- Court mere District power, that the monopoly maintaining 3M contends lawfully the decision account power, into monopoly to take obligated session crafting the antitrust when Group not violate does Brooke acquired, explained, have As we laws. instructions. predatory claims Group involved Brooke App. alleged never a claim pricing, been there has whether determining the District It follows 3M. against power, exercise an unlawful have, should indeed need not company a mind that in bear you must claims jury as to have, the instructed simply because unlawfully acted has not case. in at issue the ordinary competitive in engaged it has following ques- effec- the given been an jury was that have The behavior en- if it I: competition were tions on Count tive means monopoly a firm without by in gaged prov- has LePage’s (1) find that you Do large a it is simply because evidence, or power, of the en, by preponderance a very efficient one. a and company is invisible market the relevant use and office for home at 5672. App. States? in United the if the further noted court trial The prov- LePage’s has (2) find that you Do be insufficient found the evidence jury evidence, of the en, by preponderance elements, to find it had any of the prove monopoly maintained unlawfully care- It was LePage’s. against 3M and the instructions as defined power competi- intense business ful to note I?; [and] for Count ex- predatory not considered tion LePage’s has (2.1) find that explaining: clusionary, you Do and with of fact matter aas proven, result practices acts or The un- certainty, that degree of fair must monopoly power maintenance of power monopoly maintenance con- lawful than something other represent injured LePage’s property business or destroy threatened compe- as defined in these tition.” instructions? at U.S. 72 S.Ct. 181. App. jury 6528. The “yes” answered to We need not consider the correctness questions. each three It awarded the District Court’s ruling on the attempt- more than million LePage’s before tre- $22 monopolization ed claim because we uphold bling. its decision on the monopolization claim. jury The returned the same amount of gave

The District Court jury thor- damages on both claims and LePage’s con- ough, charge § clear as to the 2 claim. cedes that under those circumstances dis- instructions, Based on its sound jury cussion of attempted monopolization is decided that LePage’s had met its eviden- unnecessary. tiary as to its 2 claim. Nothing burden jury charge constitutes reversible X. error. CONCLUSION

IX. Section provision of the antitrust designed APPEAL laws CROSS to curb the excesses of mo- nopolists near-monopolists, is the ATTEMPTED MONOPOLIZATION equivalent in our sphere economic of the guarantees free LePage’s unhampered elec- appeals cross from the District tions in political sphere. Just as de- granting judgment Court’s order as a mat- mocracy can thrive only political ter of law to free 3M on claim that system forces, unhindered illegally outside so attempted to maintain its mo- also can capitalism market survive nopoly. overturning jury’s verdict those with power claim, kept on this the District “ check. That is goal Court stated that ‘an antitrust attempted mainte- ” laws. nance of monopoly power’ “inherently illogical.” Page’s, Le 2000 WL heard the evidence and the *2. parties, contentions of the accepting some and rejecting others. There was ample

LePage’s argues that the courts and evidence 3M used its market power repeatedly commentators have found that over transparent tape, backed its con- can be guilty defendants of both monopoli- catalog siderable of products, to entrench zation attempted monopolization its to monopoly the detriment of LePage’s, claims arising out of the same conduct. serious competitor, in See, violation of Co., Am. e.g., Tobacco 328 U.S. § 2 of the Sherman Act. We find re- no 1125 (affirming judgment S.Ct. that de- versible error. Accordingly, we will affirm guilty fendants were of monopolization and the judgment of the District Court. monopolization); Kintner, attempted Earl (1980). § Federal Antitrust 13.1 Law n.5 GREENBERG, Judge, Circuit Journal, It in emphasizes that Lorain the dissenting. Supreme § upheld 2 attempted judgment monopolization against respectfully de- I dissent as I would reverse newspaper, holding fendant single “a the district order denying court’s the mo- newspaper, already enjoying a substantial tion judgment for as a matter of law on the area, in monopoly ‘attempt violates the monopolization claim but affirm on Le- monopolize’ to clause of Page’s’s when it uses cross-appeal from the motion pro- rebate on 3M’s case centers This of law matter as a judgment 3M a

granting 1993, involved in that, beginning grams of maintenance attempted on the or “bundled” “package” of by 3M majority offers recognize IWhile claim. from ranging items various for discounts background factual describes opinion to products audio/vi- leisure care and home set also will case, I nevertheless of this Customers stationery products. and sual I believe as background forth in addi- by purchasing, rebates earn could facts leads of the exposition specific more prod- of variety tape, transparent tion to case should LePage’s’s ato conclusion division, such stationery by 3M's sold ucts judg- for a motion 3M’s survived not have products. packaging and stifling by tained con- six 3M from the purchases tomer’s coordinating ef- by tape label private involved divisions product keep sumer to large distributors aimed at forts meeting the A customer program. Le- EGF high. tape for Scotch prices retail earned divisions or more in three target time of at the surviving barely was Page’s 0.2-1.25% between rebate of volume losses large operating suffered trial and total sales. through 1999. from 1996 Beginning in 3M undertook to end Mart told LePage’s that it was going to program the EGF test and institute a re- switch to a tape program from 3M. Le- program bate called Partnership Growth Page’s’s president then visited Wal-Mart (“PGF”) Fund for the same six 3M con- following which changed plans sumer divisions. Under this LePage’s retained as supplier. After- program, 3M growth wards, established uniform Wal-Mart designed a test compar- targets applicable to all participants. Cus- ing LePage’s’s brand against a 3M Scotch tomers who purchases increased their utility tape to determine who would win from at least two divisions $1.00 Wal-Mart’s “second tier” tape business. increased their total by at purchases least LePage’s added more inches (approximate- previous 12% over the year qualified more) ly 20% to its rolls of tape and won rebate, ranged from 0.5% to continued, however, test. 3M to sell 2%, depending on number of divisions Scotch tapes Wal-Mart, brand to and Le- (between divisions) two to five which Page’s saw its sales to Wal-Mart decline purchases customer increased its and to $2,000,000 approximately annually the total purchases. volume of the time of trial. LePage’s claims that Wal-Mart cut back on its tape purchases In 1996 and price 3M offered in- qualify to for 3M’s bundled rebate of called centives Brand Mix Rebates to two $1,468,835in 1995. customers, tape Depot Office Staples, purchases increase of Scotch brand Kmart tapes. imposed purchase a minimum tape level for set at the level of Office Kmart accounted for 10% of LePage’s’s Depot’s and Staples’s purchases previ- annual tape sales when lost its year ous with “growth” factored in. To business to 3M in Kmart asked its rebate, obtain a higher these two custom- suppliers, 3M, including provide a single ers could increase their percentage of bid on its private entire label tape business purchases Scotch relative certain lower- for the following year. LePage’s’s presi- priced orders. believed, however, dent that Kmart was “too lazy to make a change,” and that it

The evidence at trial focused on the put “never their eggs in one basket” parties’ dealings with a limited number of by giving all its to 3M. customers and demonstrated that Le- offered the price same it had offered the Page’s problems were attributed to a num- year previous but also offered a volume factors, ber of merely 3M’s rebate rebate. 3M offered a price lower and won programs. Thus, I describe this evidence the bid. Kmart asked rebates and at length. development”

“market part funds as Wal-Mart private tape label bid process. 3M offered $200,000 for promotional activities and a Before bought private Wal-Mart $300,000 volume pur- rebate Kmart tape only but, label from LePage’s in Au- $10,000,000 chased Stationery Di- gust decided buy private label vision products. tape from 3M as In well. response, Le- Page’s lowered prices and increased its LePage’s claims that 3M offered Kmart sales to In $1,000,000 Wal-Mart. Wal-Mart to eliminate LePage’s and Tesa stopped buying private tape but suppliers of- and to make 3M its sole LePage’s’s fered branded supplier. as its “sec- LePage’s points to a 3M docu- ond 1998, however, tier” offering. Wal- outlining ment 3M’s goal for Kmart of its award Staples’s to connection with some purchases in 3M $15,000,000 exceed 3M. to tape business re- would second-tier Kmart being

the reward quar- first two in each $75,000 ceive quarters two last in the Max $100,000 and

ters Office re- would and activities promotional for. Office between dispute a In after if the rebate a volume $650,000 as ceive accepted Max LePage’s, Office and Max sales If the $15,000,000. exceeded sales not beat did but matched offer that 3M’s rebate less, decrease would 3M were objected to LePage’s LePage’s’s price. for $400,000 rebate a e.g., accordingly, LePage’s price matching whatever 3M’s that, claims LePage’s $13,000,000 sales. “clout” to 3M’s offered, objected also and to elimi- matter, had Kmart practical as a suppli- its required Max payment. Office to reach Tesa and LePage’s nate help advertise to payments make ers to for qualify to in order required 3M growth name, LePage’s had and Max the Office that, despite asserts LePage’s the rebate. years payment “clout” this paid .label busi- private regain to efforts its it pay to it refused 1998 when to previous it told buyer Kmart, Kmart one from ness Max. Office with dispute because about LePage’s to not talk he could Max Office buyer for Nevertheless, years. three next tape products its busi- give to its decision testified that pricing to its related not to 3M was ness Staples to the con- but rather program rebate LePage’s customer been had Staples service. sistency of its 1990 to From years. for several Staples to sales increased LePage’s Walgreens $1,954,000. $357,000to from 440%, growing reducing sup- considered Staples In label private purchased had Walgreens and 3M LePage’s and asked pliers until LePage’s from from as- LePage’s in 1994. best offers their Tai- import to it decided when offer, good if 3M did make sumed ac- officer chief executive LePage’s’s wan. make a to a chance have LePage’s lose the did not LePage’s knowledged make LePage’s did proposal. better activities. due to 3M’s account the account. offer, and 3M won its lowest with Staples went back When Stores American that the decision told it was price, a new private sales LePage’s’s Until claims that had been made. exceeded Stores tape to American label rebate 1% bonus an extra offered According to Le- $1,000,000 annually. Le- eliminated Staples Scotch Stores American after Page’s, month (a rebate “growth” supplier aas Page’s maximize try it would decided converting all of bymet only could be tape business to rebate, it shifted PGF 3M). 3M label Staple’s private Stores decided American 3M. allowance advertising Staples an paid be- principally LePage’s tape, buying stop $1,000,000in 1995 totalling payments four In a letter to concerns. quality cause merchandise $500,000 free gave Kowieski, President Vice Senior James year fiscal during Staples’s delivered Winsauer, Kevin LePage’s, Sales settlement” million refers to “$1.5 department private manager of pay- multiple Staples refers much delibera- American, “After wrote: LePage’s, purposes. for different ments cons Le- pros comparing tion bore payments these however, implies that Page’s program program, I 3M’s have Stores. LePage’s claimed that 3M offered to decided award the to 3M. 3M’s these stores discounts conditioned on ex- proposal very competitive was and I am clusivity, thereby preventing LePage’s sure would meet their costs to from selling private label tape to them. However, retain business. the deci- LePage’s lost Venture Stores’ business in to move SM sion to based on 'primarily five years provided before 3M ” Quality. SJA 2050-51 (emphasis origi- (4) discount at issue. Office Buying nal). When American Stores decided to Groups. 3M offered an optional 0.3% 3M, purchase from it was not participating price discount to buying certain groups any programs, rebate and Winsauer tes- they exclusively promoted certain 3M tified that he was aware that there in their catalogs. If the buying were programs. rebate He also testified group carried a lower value brand alterna- that even without (its volume incentive tive to line), 3M’s main brand second programs, 3M’s price slightly was still low- then group receive a would lower an- LePage’s’s. er than nual volume rebate. LePage’s viewed

these kind of provisions contract “pen- as a General, CVS, Dollar and Sam’s Club alty” that coerced buying group members purchase tape only from 3M. For exam- LePage’s lost private Dollar General’s ple, if buying promoted group the prod- label business to a foreign supplier but ucts of a competitor, it lost rebates for won later According business back. purchases in categories three products. LePage’s’s president, Dollar General used argues 3M that LePage’s could have of- the bid for imported tape leverage fered its own discount or rebate but in- price reduction LePage’s. 3M bid on stead refused in one instance pay account, the CVS but LePage’s retained promotional standard fee charged suppli- CVS as customer lowering prices ers for in catalog. inclusion and increasing Club, At rebate. Sam’s LePage’s tape had selling been well when Notwithstanding the evidence which buyers were directed by senior man- demonstrates that LePage’s lost business agement to “maximize” all purchases from for reasons that not possibly could be at- 3M to maximize the rebate. any tributable to 3M, EGF/PGF unlawful conduct Subsequently, Sam’s stopped pur- Club it argues that willfully maintained its chasing from LePage’s. monopoly through a “monopoly broth” of

anticompetitive predatory conduct. I Other distributors buying groups reject LePage’s’s argument as I agree with 3M that LePage’s simply did LePage’s claimed that 3M’s pricing not establish that conduct illegal, practices prevented or hindered it from did not demonstrate that 3M’s selling private label tape to certain compa- (a pricing was below point that cost is not (1) Costco, however, nies: Costco. never and, dispute) in the absence of such (2) private has sold tape. label Office De- proof, the record not supply any does oth- pot. Depot Office also never pri- has sold er basis on which we can uphold judg- label tape. LePage’s vate tried to con- ment. Depot vince Office buy private (before tape in 1991 or 1992 imple- There are two elements of a monopoli- mented the programs), rebate but Office zation claim under 2 of the section Sher- Depot “(1) decided to purchasing continue 3M man Act: possession of monopoly (3) tape. brand (2) Pamida and Venture power relevant market and 174 it did face which product segment the of that or maintenance acquisition

willful (second-line LePage’s competition from or de- growth distinguished power as on leverage the To increase tape).... superior of a consequence aas velopment linked further segment, targeted the acumen, acci- or historic product, those tape with on rebates Corp., v. Grinnell States United dent.” The rival products.... other 1704, many 1698, 570-71, 563, S.Ct. 86 U.S. 384 customer the ‘compensate’ to have would (1966). mainte- Willful 778 L.Ed.2d 16 lose it would of rebate amount for the con- anticompetitive using involves nance of Scotch- volume large only on a gain to competition, to “foreclose duct also for buy, but it had to tape brand destroy or to advantage, competitive pur- many other on rebates v. Im- Kodak Co. Eastman competitor.” from 3M. 482-83, chased Servs., U.S. 504 age Technical 265 119 L.Ed.2d 40. Appellee 112 at S.Ct. Br. of omitted). marks (internal (1992) quotation relies LePage’s argument making In re- that 3M’s bundled contends Lilly & v. Eli Corp. SmithKline on part predatory. and anticompetitive were bates which, (3d as Cir.1978), Co., 575 F.2d practices, other that 3M’s argues It also en this notes, not bind majority does and contracts exclusionary such as prec- have can nevertheless court but banc anticom- rebates, were also of its timing SmithKline, Lilly & Eh edential value. these I discuss predatory. and petitive Keflex, Keflin products, had two Co. them. I have stated in the order claims one competition, no it faced on competi- Kefzol, it faced of 3M’s on which complains product, LePage’s primarily Ancef. While, product, as from SmithKline’s rebates. tion bundled of use higher Lilly re- offered have held 1061. id. at recognizes, we See majority lawful, purchased see companies to of 3% purchases rebate volume on bates (which, three any Newspapers, Philadelphia quantities Advo, specified v. Inc. Cir.1995), pur- (3d combined Le- meant speaking, Inc., practically F.3d Keflex) of Kefzol, Keflin principle avoid chases to seeks Page’s id. See products. re- higher cephalosporin Lilly’s offered that 3M out pointing purchase free growth garget hospitals were “Although their met if customers bates ef- their Keflin with categories, Ancef product in different SmithKline’s rate avoiding the Lilly, thus with private sale of orders linking Keflex fect sale,1 practical as such products, a tie-in penalties other the sale of with deny buy be would had that decision customers effect tape, which Scotch on rebate the 3% bonus Thus, explains: purchaser Ancef from 3M. products.” cephalosporin all that, mat- practical as a understood added). Be- (internal footnote 1061-62 had country in the ter, every retailer to offer advantage, volume Lilly’s cause It there- tape.... carry Scotch-brand amount dollar net the same into rebate its rebates to structure fore decided had to offer have Lilly’s, SmithKline with product linked bundles appreci- product to tying sale, respect to a tie-in penalties avoids 3M also 1. competition free ably restrain purchase free were its customers because insubstantial' a 'not product and for the tied illegal prove an To itself. its Scotch tie-in, is affected.” commerce of interstate amount agree- plaintiff must establish States, 356 Ry. v. United Co. Pac. Northern product was conditioned to sell one ment 1, 6, 2 L.Ed.2d S.Ct. U.S. product; tied a different purchase of (1958). power economic sufficient "has the seller companies ranging rebates from 16% for “3M’s conduct was at least as anticompeti- average hospitals to larger size 35% for tive as the conduct which held [we] violat- hospitals volume purchase their of An- ed in SmithKline.” Maj. Op. at 157. cef. See id. I disagree with the majority’s use of Lilly

We concluded that willfully ac- SmithKline. SmithKline showed that it quired and monopoly maintained power by could not compete by explaining how much linking products on which it faced no com- it would have had to prices lower for both (Keflin Keflex) petition compet- with a small big customers to do so. Smith- product, itive resulting the sale of all Kline ascertained the Lilly rebates that three a non-competitive on basis was giving to customers on all prod- three in what would have otherwise been com- ucts and calculated how much it would petitive market between Ancef and Kefzol. have had to lower the price of product Moreover, See id. at 1065. arrange- this if the rebates were all attributed to the ment would force SmithKline to re- pay one competitive product. contrast, In Le- product bates on one equal to paid Page’s rebates did not even attempt to show that it by Lilly based on sales volume of three could compete by not calculating the dis- products. Expert See testimony id. and count it that would have provide had to the evidence on pricing showed that to order match the discounts by offered circumstances SmithKline’s prospects for through rebates, its bundled and thus continuing in the Ancef poor. market were its brief point does not to evidence along such lines.

LePage’s argues does not have to show that 3M’s package discounts could recognize While I that it is obvious from - prevent equally an efficient firm from the size of 3M’s compared rebates as to matching beating or 3M’s package LePage’s’s dis sales that LePage’s have brief, In counts. LePage’s contends had to make substantial reductions in expert economist explained that prices to match the rebates 3M paid to programs 3M’s payments and cash particular customers, have LePage’s did not the same anticompetitive impact regard show the by amount which it lowered its less of the cost structure of sup the rival prices monetary actual figures or pliers or their efficiency relative to that of percentage compete to with 3M and how 3M. See Br. of Appellee at 43. LePage’s its profitability thus was decreased. Rath- alleges that er, the relative efficiency cost LePage’s maintains, merely through structure of competitor simply affects the use expert, of an that it would have long how it would take 3M to had foreclose to cut its prices drastically compete rival obtaining the volume of business and thus would have gone of out business. necessary to Furthermore, survive. See id. “Competi it is important critically tion just is harmed same recognize loss of LePage’s had 67% of the competitive existing private constraints label business at the time of the in a market with high Thus, barri entry trial. rebates, notwithstanding ers.” Id. The district court stated that LePage’s'was able to retain most of the LePage’s introduced substantial private evidence label business. In the circum- anticompetitive stances, effects of 3M’s it is ironical that LePage’s com- program rebate caused its losses. plains Le See 3M’s use of power as 3M, Page’s Inc. v. 97-3983, No. Civ. A. undisputed fact LePage’s, is that not (E.D.Pa. 2000 WL 3M, *7-*8 was the dominant private supplier 2000). Mar.14, majority finds that label both before and after 3M initi- PLC, F.Supp.2d Airways Indeed, British the rec- programs. its rebate ated (“[A]n opinion expert’s (S.D.N.Y.1999) as inasmuch suggests ord obli plaintiffs share a 67% a substitute profit not make not could have sales, it must facts that label evidence private provide of the gation sup- essentially the exclusive expert’s to be needed applicability support to be for its such plier case.”), F.3d aff'd, 257 opinion an had when it fact was it in profitable in Cir.2001). pricing such (2d Without tape sales private share 88% begin even to formation, difficult it is business. share the market how much estimate ex evaluating the I Although am bundled to 3M’s was due lost Ias damages calculating method pert’s I fact, de the evidence rebates. issue, I em damages the reach would not demonstrates conclusively above scribed expert to an pointing simply phasize busi sale private LePage’s lost compa that the the contention support to 3M’s re to not related reasons ness for business, with out gone of have ny would Furthermore, experts have some bates. pricing basic the most even providing out all attributing of validity the questioned testi “Expert information, is insufficient. prod competitive the one to the rebates interpreting to guide a useful as mony is I do not these.2 as such situations uct in for facts, a substitute it is not but validity of the however, need, to decide & Brown v. Group Ltd. Brooke them.” calculation, of that method 209, 509 U.S. Corp., Tobacco Williamson that less to meet attempt even does not 2598, L.Ed.2d 2578, 125 242, S.Ct. 113 much it calculating how by test strict In Elec. (1993); Matsushita see also 168 to prices its lower to have had would U.S. Corp., 475 Radio v. Zenith Co. dus. rebates, they all were even the match n. 1360 S.Ct. n. 106 594 private to attributed and aggregated Advo, at (1986); F.8d 51 538 L.Ed.2d 89 tape.3 Ltd. v. Airways Atlantic 1198-99; Virgin how much effect on a drastic ucts ordered has hypothetical sit a has mentioned

2. One court prices its to lower competitor would have the shampoo maker low-cost where a uation suppose in simi- example, compete. dis For package to competitor's match could not only company was program, a even conditioner lar shampoo and rebate count faced com- B but products their A and priced of producer above products were though both 100 units Sys., orders Diagnostic a C. If customer petition Ortho costs. See respective each, Inc., A, B, Labs., price F.Supp. $1.00 of C a 920 v. Abbott each Inc. case, (3% court of the total $9.00 (S.D.N.Y.1996). be would rebate 3% $300.00). products be price could all three on bundled If rebate suggested that C, the com- though neither product then even to under section attributed were unlawful If price $0.91 cost. to priced below its to package have lower petitor would item were attributed The results compete with it. package discount the entire in order however, different, parties com cus- two if a product starkly where the one be would could not shampoo maker butB of A and pete, low-cost 100 units orders tomer enough to on product rebate prices on C. 3% lower Then 10 units needs selling below without would $210.00 discount total purchase match the amount the total Commentators, solely at 467-69. See id. was attributed rebate its cost. however, If the $6.30. be incor analysis is C, have to suggests competitor that this would then a product order product E. C in $.37 III price rect. See Phillip Herbert lower & Areeda price. Analysis of Anti company's to match An Hovenkamp, Law: Antitrust ¶ Application Principles their trust supplying LePage's comes to ed.1996). (rev. closest 3. The 467 n.6 statement brief in its information such calculation aspect of this method One to save repeated efforts ''LePage’s made prod- noting the volume is that worth LePage’s also has not Holding satisfied the that the discount package pric- ing stricter tests devised other courts con- did not violate Act, the Sherman sidering bundled Ortho court explained rebates situations such that any other rule as that here. In a involve too brought by case substantial a risk that the antitrust laws manufacturer of used in would be protect screen- used to an viruses, inefficient ing competitor supply against price blood Diag- Ortho competition that would benefit Systems, nostic Inc. v. consumers. Abbott Laborato- (“The See id. at 469-70 ries, Inc., antitrust laws F.Supp. (S.D.N.Y.1996), were intended, may used, not be alia, held, the district court inter that the require businesses to price their products defendant’s pricing discount of products in (which at unreasonably high prices penal- packages did not violate the Sherman Act. consumer) ize the so less efficient defendant, Laboratories, man- Abbott business.”) (inter- competitors can stay in ufactured all five of the commonly used omitted). quotation nal marks tests to screen the supply blood for virus- es. Ortho claimed that Abbott violated case, In this as the majority acknowl- sections the Sherman Act edges, LePage’s now does not contend that contracting with the Council of Community priced its products average below vari- Blood give cost, Centers to those which, members ad- able an allegation made, if in vantageous pricing any they purchased if event would be difficult to prove. See Advo, package Abbott, Moreover, of four or 51 F.3d at five tests from 1198-99. Le- Page’s’s thereby economist using monopoly its conceded that position LePage’s in is not as efficient a tape producer some of the tests to as impair foreclose or 3M. Thus, in this case section 2 of competition by the Sherman Ortho sale those Act being is used to protect an tests available from inefficient companies. both See producer from a competitor not using id. at 458. The court district stated that predatory pricing but rather selling above prevail on a monopolization claim “a cost. While the majority contends that (1) case in which a monopolist faces com- Group, Brooke a case on which heavily petition only part of a complementary relies, distinguishable is as none of the (2) group products, offers the products defendants there had a (3) both a package as and individually, and market, the fact remains that the Court in effectively forces its competitors to absorb describing section Sherman Act the differential between the bundled and said flat out in Group Brooke plain- that “a prices unbundled product in which tiff seeking to competitive establish injury the monopolist has power,” market from prices low rival’s prove must plaintiff allege prove must “either that prices complained ap- of are below an (a) the monopolist priced has below its propriate measure of its rival’s costs.” (b) average cost variable the plaintiff is 222, Brooke Group, 509 at U.S. 113 S.Ct. at least as efficient a producer of the com- at 2587. simply did not do this. petitive product defendant, as the but that the defendant’s pricing unprofit- makes it I majority realize that the indicates that able for the plaintiff to pro- continue to “LePage’s unlike plaintiff in Brooke duce.” Id. at Group, does predatory not make a pricing course, Staples, reducing business with enough. Lepage’s's prices Of overall levels,

prices to 1990 reducing and then them enough were low to have it 67% again, keep plant open people work- private label business. ing.” Appellee Br. of at 11. This is not close interests, by losing business economic circum- at 151. But Maj. Op. claim.” rationale for customers, was no other there strengthens rather than stance weakens' it to elimi- except that wished its conduct confirms merely as LePage’s’s position id. competitor. See plaintiff as nate the Further- conduct. of 3M’s the lawfulness 2860; also East- at 105 S.Ct. see at is not more, that 3M circumstance Kodak, 112 S.Ct. man 504 U.S. should oligopolistic in an dealing con- properly is (exclusionary conduct the harm matter as not reasons do if demned valid the bundled suffered from claims to have impair tends to justify conduct inflicted no less if be rebates would rivals or monopolist’s aof opportunities Moreover, monopo- multiple competitors. be served purpose would a valid asserted not, 3M, in the absence even list or means). fully by less restrictive private label Tesa from the LePage’s and only supplier of business, not be the hand, Boat Concord On the other foreign for there private label Corp., F.3d Brunswick Corp. v. by the plainly suppliers as is demonstrated denied, (8th Cir.), cert. 531 U.S. and Dollar Walgreens that both (2000), evidence 121 S.Ct. L.Ed.2d suppliers. such General dealt an antitrust brought where boat builders engine manu a stern drive against action view, this is Contrary majority’s to the alia, held, facturer, inter the court is no busi in which there not a situation was insufficient find evidence actions. This for 3M’s justification ness programs discount engine manufacturer’s it is diffi important inasmuch point mar monopolized the restrained trade legitimate competition distinguish cult to higher percent Brunswick offered ket. that harms exclusionary conduct bought a boat discount builders age when v. States competition, see United Microsoft it, enginés of their higher percentage (D.C.Cir.), 34, cert. de 58 F.3d Corp., 253 pricing its allegation no there was but nied, 122 151 S.Ct. 534 U.S. In 1062. cost. See id. at was below (2001), sug cases and some L.Ed.2d 264 district cited the Boat the court Concord against acts its company a gest when when 3M opinion this case district court is no valid and there economic interests motion to dismiss. See filed its actions, it then justification for business its 97-3983, 3M, 1997 WL v. Civ. A. Inc. No. intended that its were good sign a acts 1997). (E.D.Pa. Nov.14, The Con 734005 competition. to eliminate agreed court with Boat district cord (above not the price that it was plaintiff Aspen v. example, Aspen Skiing Co. For not) that was relevant but cost Skiing Corp., 472 U.S. Highlands and that the price to the “strings” attached 2847, 2860, 467 L.Ed.2d 105 S.Ct. correct to distin court here was district (1985), majority, sets by the discussed no Group since were Brooke there guish as reason of valid business forth lack rebates) (bundled “strings” attached case, liability. In that finding a basis for Boat, In Concord Group. Brooke for the verdict affirmed exclusivity were the “strings” attached the Sherman section plaintiff under Corp. v. Boat Concord provisions. See had monopolist Act where the defendant 923, 930 F.Supp.2d Corp., Brunswick plaintiff cooperating with stopped Ark.1998). (E.D. for As- skiing package offer a multi-venue Eighth for the Appeals The Court that because The Court held pen skiers. however, the dis- Circuit, disagreed with contrary to had acted the defendant trict court in Concord Boat The court of LePage’s still was able to retain some appeals opinion reflected an application of through customers negotiation, and even Group’s Brooke strong favoring stance vig- though it lost customers, other the losses price orous competition and expressing were attributable to switching their to for- skepticism of the ability of a sepa- court to eign suppliers or changing suppliers be- anticompetitive rate from procompetitive cause of quality or service without regard actions when comes to above-cost strate- to the Furthermore, rebates. overall Le- gic pricing. Boat, See Concord 207 F.3d at Page’s was quite successful in holding its importantly, More per- court share of private label sales as it had ceived that Brooke Group should be con- 67% of the business at the time of the trial. sidered even with claims based on pricing sum, In I conclude that as a matter of strings. See id. “If a firm has dis- law 3M did violate section prices counted level remains Sherman Act reason of its bundled above the cost, firm’s average variable rebates though even practices harmed plaintiff must overcome a strong presump- its competitors. majority The decision tion of legality by showing other factors which upholds the contrary verdict risks that the indicating price charged is anti- curtailing price competition and a method competitive.” Id. (citing Morgan v. Pon- of pricing beneficial tó customers because der, (8th Cir.1989)) 892 F.2d the bundled rebates effectively lowered (internal quotation omitted). marks their costs. I regard this result a sig- court stated that a section defendant’s nificant mistake which justified cannot be proffered justification is the most by a fear that somehow 3M will raise important factor in determining whether prices unreasonably later. regard this challenged conduct is not competition I reiterate that in addition to LePage’s on the merits. See id. 1062. The court there are foreign suppliers of transparent distinguished cases such as SmithKline tape so that with or without LePage’s Ortho where were bundled there will be constraints 3M’s pricing. they since involved two markets. See id. course, Of here we are dealing with a that, also through claims single market. variety of allegedly other anticompetitive actions, prevented 3M Unlike the situation of the defendant in competing. LePage’s asserts that Aspen, pricing 3M’s structure and bundled foreclosed competition by directly pur- rebates not were contrary to its economic chasing interests, sole-supplier status. There was they as likely increased sales. some fact, dispute In as to whether the that is contracts exactly what LePage’s is were conditioned on complaining being Furthermore, about. the sole other supplier, than the and 3M obvious claims that reasons such as increas- there sales, ing only bulk two share customers for market any customer there is loyalty, there are evidence of a several sole potential supplier agreement. other I “procompetitive” recognize, however, or valid business reasons although that most of for 3M’s pricing structure 3M’s contracts with and bundled customers not were rebates: efficiency in having single in- conditioned on exclusivity, practically voices, single shipments and pric- speaking uniform some dropped customers Le- ing programs for various products. Page’s More- as supplier to maximize the re- over, that, the record demonstrates with bates that Moreover, 3M was offering. biggest customers, the 3M’s rebates were United Shoe Machinery Corp. v. United not eliminating competitive the process, States, as 451, 458, 258 363, U.S. 42 S.Ct.

180 exclusivity business, on its attack (1922), that a explained L.Ed. 708 66 is attenuated. agreements specific contain not does that contract aof use the sup- few cases not

agreements very be appear to There Clay- within the of the come will section still on competitor liability based porting as practical dealing, if its exclusivity as to Act exclusive ton Act Sherman if, case is the as use. that suggest such prevent tois some cases effect is no there findings, jury’s the here under however, 3M did that assuming, Even Act, Clayton 3 of under section liability some with contracts have exclusive liability to find difficult it more is not demonstrated customers, has more scope is since Act the Sherman exclu one-year illegally, acted that 3M event, shows record restricted,4 any In reason held be been have contracts sive contracts exclusive allegedly only two Fed. See unduly restrictive. not able and stores), and (with Pamida Venture Adver. Picture v. Motion Comm’n Trade affecting a an exclusive deal “[b]ecause 395-96, 73 S.Ct. Co., 344 U.S. Serv. cannot clearly a market fraction of small (1953) (holding 363-64, L.Ed. 426 upon effect harmful requisite have the the Commission’s sustained that evidence signifi- aof requirement competition, exclusive distributor’s finding useful serves a degree of foreclosure cant opera theater screening agreements F.3d Microsoft, 253 screening function.” competition, unreasonably restrained tors explained court at 69. Microsoft found had the Commission stating that but are common- contracts although exclusive con one-year exclusive term that the field of distribu- place, particularly practice a standard use of had become circumstances tion, tracts certain compe restraint undue sec- may give not be an rise to contracts exclusive Advo, at 1204. F.3d the contracts tition). though also See even tion violation 40 to 50% roughly Nashville Coal v. than the Electric Co. less Tampa foreclose 627-28, a sec- establish usually required Co., 81 S.Ct. share 365 U.S. In this 69-70. (1961), See id. at stated tion violation. 5 L.Ed.2d two case, concluded cannot be it contract application practical if in even were Pamida with Venture contracts arrange exclusive-dealing an to be found LePage’s’s drop in total for the responsible of the violate section ment, it does Furthermore, even all share. court believes Act unless Clayton exclusive, considered were contracts contract of the probable performance share in market drop total LePage’s’s in a substantial competition will foreclose shown loss was 21%, of this and some affected. line of commerce share or ser- quality to be due record standard, LePage’s’s although Using concerns, as for- as well consistency vice has tape label private share market tac- than to 3M’s rather eign competition, 67%, has not been it from 88% fallen enough Therefore, not there was tics. alleged that, of as a result the established anti- to have an market of the foreclosure contracts, competition ly exclusive effect. competitive line of the share in a substantial foreclosed calculating claims LePage’s also Indeed, of view affected. of commerce it 3M made year, only once the rebates private of the share two-thirds LePage’s’s See, e.g., violate. did not that 3M found charges exclusive of for is more It common 98, Labs., Labs., 978 F.2d v. Abbott Inc. Barr 1 of the brought dealing section to be under (3d Cir.1992). Act, the Clayton Act or the Sherman more difficult purchaser for to pass on or the Sherman Act. See at id. savings customers, the thereby mak- S.Ct. at case, 2598. In this however, 3M ing it harder companies to switch sup- did not use average below variable cost pliers and keeping prices retail and mar- pricing (LePage’s not charge does predato- gins high. above, As I one-year discussed ry pricing) and therefore 3M did not have contracts may be standard, considered and predatory costs recoup. they even if make it unlikely more I recognize that LePage’s attempts to passed rebates are on in the form lower distinguish Brooke Group ground on the retail prices, the discounts could be applied that “3M used lie., other techniques lowering towards tech retail prices the follow- niques other ing year than predatory or towards pricing] other costs compa- extinguish nies that private-label factored prices into retail category sub (such as jecting advertising). In the circum- itself to different legal standards,” stances, I am satisfied that this Br. of conduct Appellee at but I nevertheless does not qualify as predatory or anticom- cannot accept LePage’s’s argument on this petitive so as to establish liability under point. While does not contend section of the Sherman Act. that 3M engaged in predatory pricing, does contend that goal alleges also 3M’s other that 3M entered conduct the retail private was “to extinguish label portion private- market to destroy category, subjecting thereby itself different legal increase its tape, sales branded standards” but the than those applicable in case law does support not Brooke liability Group. Moreover, See id. though section type this of action. that it denies was attempting to elimi Group, Brooke 509 U.S. at 113 S.Ct. nate the private label category of transpar at Liggett/Brooke Group alleged that ent tape, supports record a finding Brown & Williamson Corporation Tobacco it had that intent. I am satisfied, (“B W”)& generic sold cigarettes in order however, that its efforts to eliminate the to decrease losses of sales its branded private label aspect of cigarettes. B & W sold generic cigarettes tape market are as, not unlawful “exam at the same list price as Liggett but also ined without reference to its effects on large offered volume rebates to certain competitors,” it is evident that in view wholesalers so they buy gener- their 3M’s dominance in brand tape, it was cigarettes ic B & W. See id. at rational for it to want the sale to be 113 S.Ct. at B 2584. & W wanted to take concentrated that category of the mar a larger part generic market from ket. See Stearns Airport Equip. v.Co. Liggett and drive Liggett to prices raise FMC Corp., (5th 170 F.3d Cir. on generic cigarettes, which B & W would 1999). Thus, we uphold should not match, thereby encouraging consumers to verdict on that basis. switch back to branded cigarettes. See id. 216-17, Accordingly, I S.Ct. 2584. The conclude that 3M’s ac-

held that B record, because & tions in had no W reason- including bundled able prospect recouping rebates predatory and other elements of the “monop- losses and broth,” could inflict oly the injury to were not anticompetitive competition that antitrust prohibit, laws predatory as to violate section of the did not violate the Robinson-Patman Act Thus, Sherman Act.5 I would reverse the I point While do not agree discuss the I disposition district court's attempt- remand court the district

judgment in favor of judgment entry of

the case join Alito Judge Judge Scirica

3M. opinion.

this Appellant MARKLE R.

William

v. BARNHART, Commissioner A.

Joanne Security.

of Social 02-3128.

No. Appeals, States

United Circuit.

Third 28, 2003. Jan.

Argued 26, 2003. March

Filed monopoly claim. maintenance

ed notes “the rable offer. recognized We this in our majority of bundled rebate programs yield decision Corp. SmithKline v. Eli Lilly aggregate prices above cost. Rather than Co., (3d Cir.1978), & 575 F.2d 1056 where analogizing them to predatory pricing, we held that substantially conduct identi- they compared are best with tying, whose cal to anticompetitive 3M’s was and sus- Indeed, foreclosure effects are similar. tained finding of a violation of the ‘package discount’ is often a close anal SmithKline is interest not ogy.” because the Phillip E. Areeda & Herbert Ho ¶ 794, venkamp, panel Antitrust decision binding Law at 83 on the en banc (Supp.2002). court but because the reasoning regarding practice of bundled rebates is equally The treatise then discusses the anticom- applicable here. The defendant in Smith- petitive effect as follows: Kline, Eli Lilly Company, & pharma- The anticompetitive feature of package manufacturer, ceutical sold three of its ce- discounting strong is the incentive it gives buyers phalosporins hospitals to take increasing amounts under the trade or even all of a product in order to Kefzol, take names Keflin Cepha- and Keflex. advantage of aggregated a discount losporins are spectrum broad antibiotics multiple products. across In the anti- indispensable were at that time case, competitive which presume we is in hospital pharmacies. Lilly had a monopo- minority, the defendant rewards the ly on both Keflin and Keflex because of its customer for buying product B rather However, patents. drugs those faced com- B, than plaintiffs not because defen- petition generic from the drug cefazolin dant’s B is better or even cheaper. Lilly which sold under the trade name Rather, buys customer the defen- Kefzol plaintiff and which SmithKline sold dant’s B in greater order to receive a under the trade name Ancef. A, discount on which plaintiff does produce. In that case the rival can Lilly’s profits on the patented Keflin compete in B by giving the custom- were far than higher those it received from a price er that compensates it for the pricing its sales of Kefzol where its foregone A discount. constrained the existence of Smith- preserve position Kline. To its market The authors then conclude: discourage Keflin and sales of Ancef and Keflin, but other- expensive less Kefzol, Lilly relation to id. at of its own even quality of similar to Scotch-brand provided wise program a rebate instituted Indeed, its re- before 3M instituted pur- tape. hospitals for rebate 3% bonus to en- any begun three of had program, bate quantities specified chased expanding toehold joy rapidly SmithKline a small cephalosporins. five but Lilly’s claim, in- alleg- market. 3M’s monopolization § 2 brought Lilly’s multi-line volume same as Lilly used these thus the ing centive was over the posi- market preserve to maintain rebates SmithKline: cephalosporins. by discouraging hospital tion Scotch-brand cheaper, but widespread acceptance A. Leon (Judge court district similar, tape produced Le- substantially of this later a member Higginbotham, Page’s. court) pricing policy vio- Lilly’s found that Corp. Lilly v. Eli & § 2. SmithKline lated rebates for Scotch-brand 3M bundled its (E.D.Pa.1976). Co., We F.Supp. in much sold tape with other Al- by a unanimous decision. affirmed Lilly bundled its re- way the same not forced select though customers were and Keflex. with Keflin bates Kefzol they purchased cephalosporins cases, re- the bundled rebates In both that the effect of Lilly, recognized we of the seller’s mo- exploitation flected an hospitals to was to induce program rebate

Notes

Notes as Post-It of law. a matter ment as programs that these but no doubt There indicates, dominated 3M majority As the purchase to retailers incentives for created tape market transparent States the United them to and enabled more 3M until 90% above share with a invoices, and shipments single single have decid- around early 1990s. 3M various programs pricing uniform label private and brand” to “second ed sell the re- of the size linked 3M products. retailer’s, sold tape, tape lines in product to the number bates name, an manufacturer’s than the rather targets, an met the the customers Le- the extent successful endeavor the re- determined aggregate number tape label private 88% Page’s captured would re- the customer percentage bate More- 1992. States the United sales in across all purchases 3M of its on all ceive private brand” over, “second growth Therefore, if customers lines. product of some a shift tape accounted label multiple in targets growth to meet failed private tape branded from tape sales rebate, any not receive they did categories, label private the size so tape label target one meet the they failed and if the circum- In expanded. tape business rebates their line, reduced 3M product early during the stances, surprisingly, not are at requirements substantially. These private 1990s, entered 3M also here, as Le- controversy the crux business. could that customers claims Page’s notes, claims majority theAs elimi- without targets growth these meet of this growth that, response tape. transparent supplier it as a nating in a ser- market, engaged 3M competitive rebate program practice, In aimed acts related, anticompetitive ies of types of different evolved, three it offered of lower- availability restricting Fund, Partner- Executive Growth rebates: consumers. priced Mix Re- and Brand Fund ship Growth- pro- devised that 3M it asserts particular, program” a “test developed bates. LePage’s and that prevented grams (“EGF”) for Fund Growth business, Executive called company domestic other retailers, number a small Inc., maintain- Tuck, gaining Tesa EGF, negotiated Under 15 in main- that 3M sales large volume ing for each cus- targets growth volume growth

Case Details

Case Name: Lepages Inc v. MN Mining Mfg Co

Court Name: Court of Appeals for the Third Circuit

Date Published: Mar 25, 2003

Citation: 324 F.3d 141

Docket Number: 00-1368, 00-1473

Court Abbreviation: 3rd Cir.