Exclusion continuum
Exclusion continuum (most P-friendly cases first):
Lorain Journal: everyone agrees P should have won
- P: anticompetitive exclusion in response to entry
- D: no procompetitive justifications (court rejects argument that D was just exercising its right to choose who to deal with)
McWane (pipe fittings): 80% agreement that P should have won
- P:
- Similar to Lorain: McWane was the incumbent monopolist, Star enters, McWane responded with exclusionary conduct
- Substantial switching costs: Star can't enter the market at the same scale as McWane, distributors are reluctant to switch to Star because Star isn't full service
- Testimony from distributors that they feared being cut off by McWane if they switched to Star
- High likelihood of harm: P grew slower than expected
- No benefits from exclusive dealing: only reason D created the policy was to exclude P
- D:
- Contract was short term
- No direct proof of harm to entry: P entered the market and got 10% share
Gilbarco (gas dispenser): D won, will win most of the time
- P:
- P's one-stop-shop arrangement was procompetitive, D's exclusive dealing response was an anticompetitive attempt to protect oligopoly
- There are high switching costs
- Exclusive dealing enables tacit collusion
- D:
- Short contract duration
- No proof of foreclosure, i.e., that seller of dispenser can't find buyers: competitors can sell through another distributor or directly to customers
- There are benefits to exclusive dealing: every petrol distributor was organized to sell dispensers, which was an efficient way to structure the market
Meritor (truck transmissions): P won because of non-price constraints (note D wins if price is the clear driving force behind the exclusion because Brooke Group would apply)
- P:
- Anticompetitive long-term market-share discounts in response to entry
- Codebook exclusion
- Possible loss of supply
- D: prices were above cost
Evolution of law: restraints incentivize companies to avoid the most anticompetitive practices; the practices that are left are mixed in terms of their anticompetitive effects.
Exam note: analogize to restraints from cases and give arguments about what is anticompetitive/procompetitive.