Interbrand Vertical Foreclosure

1
Interbrand Vertical Foreclosure

• Exclusive dealing under Sherman 1 (goods or
  services) and Clayton 3 (goods only)
• Incentives for (or collateralization of loans
  for) costly capital improvements
• Interbrand free-riding buyer price stability
• If universally used in industry becomes barrier
  to entry
• Treated under the Rule of Reason
• Formerly per se under Standard Stations

2
Requirements Contracts

• Tampa Electric20 yr coal reqt of generator
• What is to substantially lessen?
• 7 in concentrated industry in Standard Stations
• In Tampa 1 analyze qualitative
  substantiality
• What line of commerce?
• Bituminous coal from Appalachia
• Test is proportion of sellers foreclosed, not
  absolute size of purchase
• Duration of foreclosure also very relevant
• Market dominance of seller also relevant

3
More on Requirements Contracts

• Does a long-term requirements contract mean the
  market for that customer is totally
  non-competitive?

4
Tying in Sherman 1 Clayton 3

• The tying and the tied product/service
• Need two, not package or system or pair
• The leverage concept unwilling buyers
• Market Power with tying item
• Per se violation
• Bundling, Block-booking, Full-line Forcing
• Franchising issues
• Efficiencies metering

5
More on Tying

• Good will/QC defense largely rejected
• Resolve by disclosure of tight specifications
• The double negative of Intl Saltnot
  insubstantial
• Times-Picayune one product or two?
• Monopoly in AM paper ads?
• Windfall to one or the other party?

6
More on Tying

• Dominance substantial volume of commerce
  restrained collapsed in NorPac to sufficient
  econ power to impose an appreciable restraint on
  free competition in the tied product although
  cts still require evidence of both
• In NorPac what was the tying product?
• Did NorPacs preferential routing clauses really
  restrain trade?