Part 11- Regulation of Business, Chapter 49: Antitrust The Sherman Act, Note 9

Legal Analysis of the Scenarios Under Sherman Act 6. Orson, Inc. v. Miramax Film Corp.    Issue: Orson alleged that Miramax and the Ritz conspired to exclude the Roxy from the art film market by granting exclusive first-run licenses to the Ritz. Rule of Reason: The court correctly applied the rule of reason, as the alleged agreement was vertical (between a distributor and an exhibitor). Vertical agreements are typically analyzed under this standard rather than as per se violations. Summary Judgment: The district court’s granting of summary judgment was appropriate because Orson failed to demonstrate that the exclusivity agreements substantially foreclosed competition in the art film market, as evidenced by the large number of first-run licenses granted by other distributors to the Roxy. 7. Eastman Kodak Co. v. ISOs    Issue: Kodak’s restrictions on parts sales allegedly tied service to parts in violation of Sherman Act § 1. Two Distinct Products: The Supreme Court ruled that parts and service were separate products because customers could purchase parts without requiring Kodak’s service, and vice versa. Market Power: The Court held that Kodak’s control over its replacement parts gave it sufficient market power to force customers into unwanted service arrangements, which supported the ISOs’ tying claim. The Ninth Circuit’s reversal of summary judgment was upheld. 8. Grinnell Corp. Monopolization Case    Issue: Whether fire-protection services and burglary-protection services were part of the same relevant market, and whether Grinnell maintained monopoly power in that market. Relevant Market: The court determined that the relevant market was central station services because insurance discounts for accredited central stations created distinct demand. Non-central station services were not substitutes. Monopoly Power: Grinnell, through its ownership of major firms, held monopoly power in the central station services market and engaged in willful maintenance of that power, violating § 2 of the Sherman Act. 9. AOL v. Martindale Empowerment   Issue: Martindale claimed AOL monopolized the market for advertising to AOL subscribers, violating Sherman Act § 2. Market Definition: The court likely rejected Martindale's contention that the relevant market was “email advertising” because it was overly narrow and ignored the broader advertising industry. A properly defined market would include alternative advertising channels like social media and search engines, in which AOL lacked monopoly power. 10. Hyde v. East Jefferson Hospital    Issue: Whether the hospital’s exclusive contract for anesthesiology services was an illegal tying arrangement under Sherman Act § 1. Market Definition: The Fifth Circuit defined the relevant market narrowly as the East Bank of Jefferson Parish, where the hospital had significant market power due to patient preference for location. Per Se Violation: The Fifth Circuit found the contract to be a per se illegal tying arrangement because the hospital’s position forced patients to accept the tied service. However, the Supreme Court could have applied a rule-ofreason analysis to evaluate procompetitive benefits, as the district court initially did. 11. McQuillans v. Sorbothane Distributors   Issue: The McQuillans’ lawsuit would hinge on whether the termination of their distributorship and the actions of the defendants amounted to anticompetitive behavior under Sherman Act § 1 or § 2. Analysis: The plaintiffs would need to prove that the distributorship agreements or their termination restrained trade or contributed to monopolization. Without evidence of market foreclosure or anticompetitive conduct, their claim might fail. Vitamin Producers and the DOJ Antitrust Division In the late 1990s, the U.S. Department of Justice Antitrust Division targeted an international cartel among major vitamin producers, including BASF, Roche, and others, for price-fixing and market allocation. These companies conspired to fix prices and allocate sales across vitamin products worldwide, affecting billions of dollars in commerce. Legal outcomes included:    Fines: Roche and BASF paid record-breaking fines exceeding $500 million. Criminal Charges: Executives faced charges and imprisonment for their roles. Impact: The case reinforced the DOJ’s commitment to dismantling cartels and safeguarding consumer interests.