copyright protect the aftermarket goods.[1] In addition, some courts have viewed certain aftermarket practices as being product improvements.[2] Also, some courts have been reluctant to find that high switching costs can be the basis of a relevant market claim.[3]
Subsequent lower court decisions have limited the reach of the decision and affirmed that “significant or long-lived consumer injury based on monopolized aftermarkets is likely to be rare, especially if equipment markets are competitive.”[4] A number of principles can be derived from these cases. If a purchaser signed a contract containing aftermarket obligations for parts or servicing at the initial sale, courts likely will not find liability if the purchaser had other options. As a corollary, if the purchaser was aware of aftermarket costs at the time of sale, courts may deem that the purchaser engaged in “lifecycle” pricing analysis and that competition for the primary product has disciplined such aftermarket costs. On the other hand, if aftermarket costs were unavailable up front, the courts may find that the purchaser is locked-in and liability is possible. Also, if there has been no change in policy by the manufacturer, the courts are unlikely to find the policy exclusionary.
Manufacturer repair restrictions may also raise antitrust claims involving monopolization. Under Section 2 of the Sherman Act, a claim of monopolization requires proof of (1) the possession of monopoly power in the relevant market and (2) “the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”[5] As the Supreme Court underscored in Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458 (1993), “[t]he law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.” Accordingly, courts will first determine whether the defendant has monopoly power in a relevant market, and, if it does, whether it acted to maintain or attain its monopoly through anticompetitive conduct.[6]
Under the jurisprudential standards that apply to single-firm conduct, a manufacturer must have market power in a well-defined relevant antitrust market to be subject to antitrust prohibitions on unilateral conduct (or a dangerous probability of acquiring monopoly power). In the context of aftermarkets, a key question regarding product market definition is whether the
- ↑ OECD Note, Competition in Aftermarkets at 9–10 (collecting cases). See In re Indep. Serv. Org. Antitrust Litig., 203 F.3d 1322 (Fed. Cir. 2000) (a company does not violate antitrust law when it refuses to sell or license its copyrighted works as an aftermarket product).
- ↑ Queen City Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 433 (3d Cir. 1997) (affirming dismissal of monopolization, attempt to monopolize, exclusive dealing, and tying claims brought by franchisees against franchisor regarding standard franchise agreement that promoted uniform standards for ingredients, beverages, and packaging materials); SMS Sys. Maintenance Servs., Inc. v. Digital Equip. Corp., 188 F.3d 11, 13–14, 20–21 (1st Cir. 1999) (affirming summary judgment for manufacturer against ISO claims that integration of three-year warranty with sale of computer systems constituted attempted monopolization).
- ↑ Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494 (3d Cir. 1988) (rejecting plaintiff pharmacy’s argument that high switching costs were sufficiently high to cause lock-in to a health care plan).
- ↑ Carl Shapiro, Aftermarkets and Consumer Welfare: Making Sense of Kodak, 63 Antitrust L.J. 483, 485 (1995).
- ↑ United States v. Grinnell Corp., 384 U.S. 563, 570–71 (1966).
- ↑ United States v. Microsoft Corp., 253 F.3d 34, 79 (D.C. Cir. 2001).
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