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Barry Wright Corp. v. ITT Grinnell Corp. - 724 F.2d 227 (1st Cir. 1983)

Rule:

Monopolization, under 15 U.S.C.S. § 2, has two elements: First, the possession of monopoly power in the relevant market, and; second, the acquisition or maintenance of that power by other than such legitimate means as patents, superior product, business acumen, or historic accident. 

Facts:

Barry Wright Corporation (Barry) and ITT Grinnell (Grinnell) both manufactured and sold certain components used in constructing nuclear power plants. Barry and Grinnell collaborated in an effort to break Pacific Scientific Company’s (Pacific) strong market presence for the components, but Grinnell bought components from Pacific to meet its then-current needs for the components. When Pacific learned of Barry’s and Grinnell’s intentions it entered into exclusive buy-sell contracts with Grinnell for the components at substantial discounts. Plaintiff Barry initiated suit alleging that that the exclusive contracts entered into between defendants Pacific and Grinnell violated the Sherman Act, 15 U.S.C.S. § 2. The trial court found for defendants.

Issue:

Did Pacific engage in "exclusionary practices" in violation of the anti-monopoly law, Sherman Act § 215 U.S.C. § 2?

Answer:

No

Conclusion:

The Court of Appeals for the First Circuit held that because the prices charged by Pacific were not below its costs, and because the sales generated a profit margin for Pacific, there was no antitrust violation, as non-predatory, non-discriminatory price reductions, made in response to the competition presented by Barry, were not violative of § 2.

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