## Facts

- Eastman Kodak Co. manufactured photocopiers and micrographic equipment and also sold replacement parts and service for that equipment.
- Independent service organizations (ISOs) serviced Kodak equipment and competed with Kodak in the aftermarkets for service and parts.
- Kodak adopted policies intended to limit ISO access to parts and hinder ISO competition in servicing Kodak equipment.
- Kodak sold parts to third parties only if they agreed not to buy service from ISOs and limited parts sales to direct equipment purchasers, restricting ISO ability to obtain parts needed for repairs.
- ISOs alleged Kodak’s policies effectively tied parts and service and excluded ISOs from the service and parts aftermarkets for Kodak machines.
- The district court granted Kodak summary judgment on Sherman Act § 1 (tying) and § 2 (monopolization/attempt) claims after limited discovery.
- The Ninth Circuit reversed, finding triable issues as to Kodak’s aftermarket market power and exclusionary conduct; the Supreme Court granted review.

## Issues

1. Whether Kodak was entitled to summary judgment on a Sherman Act § 1 tying claim where plaintiffs alleged Kodak conditioned access to parts on customers’ agreement not to use ISO service.
2. Whether Kodak was entitled to summary judgment on Sherman Act § 2 claims alleging monopolization or attempted monopolization of the service and parts aftermarkets for Kodak equipment.
3. Whether lack of market power in the primary equipment market precludes, as a matter of law, market power in derivative single-brand aftermarkets.

## Decision

- The Supreme Court affirmed the judgment of the court of appeals, holding summary judgment for Kodak was improper.
- On § 1, plaintiffs produced evidence from which a reasonable jury could find (i) parts and service were separate products and (ii) Kodak conditioned parts availability to restrict customers’ use of ISO service.
- The Court held Kodak’s asserted absence of equipment-market power did not foreclose aftermarket market power as a matter of law on the record presented.
- The Court relied on evidence that information costs and product complexity could prevent customers from accurately pricing lifecycle service/parts costs at the time of equipment purchase, enabling post-purchase “lock-in.”
- On § 2, the Court held the record contained sufficient evidence of aftermarket market power and exclusionary conduct to require trial on monopolization and attempted monopolization claims.
- The dissent would have granted summary judgment, reasoning equipment-market competition should discipline aftermarket pricing and conduct.

## Legal Principles

- A tying arrangement is an agreement to sell one product on the condition that the buyer also purchases a different product or agrees not to purchase that product from others; it violates § 1 only if the seller has appreciable economic power in the tying product market.
- Separate-products analysis may turn on whether the items are, and have been, sold separately such that a factfinder could treat them as distinct products.
- A defendant’s lack of market power in a primary market does not, as a matter of law, defeat claims of market power in a single-brand aftermarket when evidence supports information problems and customer lock-in.
- In antitrust cases at summary judgment, the nonmovant’s evidence is credited and reasonable inferences must be drawn in its favor; plaintiffs need only present reasonable inferences to reach a jury, not negate every theoretical explanation advanced by a defendant.
- Single-brand aftermarkets may constitute relevant antitrust markets when customers are effectively locked in and switching is costly, permitting supracompetitive pricing or exclusionary restrictions.

## Conclusion

The Court held that competition in the primary equipment market does not automatically eliminate the possibility of market power in an aftermarket for parts and service, and that plaintiffs’ evidence of separate products, conditional parts policies, information costs, and lock-in created triable issues on Sherman Act § 1 tying and § 2 monopolization theories.


Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451 (1992)