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LePage's, Inc. v. 3M - 324 F.3d 141 (3d Cir. 2003)

Rule:

It can be assumed that a monopolist seeks to further its economic interests and does so when it engages in exclusionary conduct. Thus, for example, exclusionary practice is defined as a method by which a firm trades a part of its monopoly profits, at least temporarily, for a larger market share, by making it unprofitable for other sellers to compete with it. Once a monopolist achieves its goal by excluding potential competitors, it can then increase the price of its product to the point at which it will maximize its profit. This price is invariably higher than the price determined in a competitive market. That is one of the principal reasons why monopolization violates the antitrust laws.

Facts:

Minnesota Mining and Manufacturing Company (3M) possessed monopoly power in the United States transparent tape market, with a 90 percent market share. LePage’s, Inc. alleged that 3M violated § 2 of the Sherman Act15 U.S.C.S. § 2, by (1) offering rebates to customers conditioned on purchases spanning six of 3M’s diverse product lines, and (2) entering into contracts that expressly or effectively required dealing virtually exclusively with 3M. 3M did not contest the allegations, but it contended that its conduct was legal because it never priced its transparent tape below its cost. 3M appealed from the United States District Court for the Eastern District of Pennsylvania's order declining to overturn the jury's verdict for LePage's in its suit against 3M under § 2, but granted 3M's motion for judgment as a matter of law as to the attempted maintenance of monopoly power claim. Both LePage's and 3M filed appeals.

Issue:

Could a verdict under § 2 of the Sherman Act be sustained because of 3M’s exclusionary conduct?

Answer:

Yes

Conclusion:

The Court of Appeals for the Third Circuit concluded that a jury could reasonably find that 3M’s exclusionary conduct, its exclusive dealing and bundled rebates, could sustain a verdict under § 2 of the Sherman Act. It can be assumed that a monopolist seeks to further its economic interests and does so when it engages in exclusionary conduct. Thus, for example, exclusionary practice is defined as a method by which a firm trades a part of its monopoly profits, at least temporarily, for a larger market share, by making it unprofitable for other sellers to compete with it. Once a monopolist achieves its goal by excluding potential competitors, it can then increase the price of its product to the point at which it will maximize its profit. This price is invariably higher than the price determined in a competitive market. That is one of the principal reasons why monopolization violates the antitrust laws. Also, there was sufficient evidence for the jury to conclude the long-term effects of 3M’s conduct were anticompetitive. In addition, 3M failed to show adequate business justification for its practices. Finally, the court rejected 3M’s arguments as to damages and jury instructions. Because the jury returned the same amount of damages on both claims, LePage's conceded that discussion of the attempted monopolization was unnecessary.

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