## Facts

- 3M manufactured Scotch brand transparent tape and numerous other office products and conceded it held a monopoly in the U.S. transparent tape market.
- LePage’s manufactured and sold lower-priced “second-brand” and private-label transparent tape, selling a large share of private-label tape while private label remained a small segment of the overall transparent tape market.
- As major retailers expanded, demand increased for private-label offerings sold under the retailer’s name.
- 3M entered the private-label and second-brand segment and implemented rebate and discount programs spanning multiple 3M product lines.
- 3M’s programs provided higher rebates when retailers purchased across many 3M products, creating strong incentives to concentrate purchases with 3M rather than buying some products from rivals.
- LePage’s alleged 3M also offered lump-sum payments, promotional allowances, and similar incentives that effectively induced exclusive dealing or substantially reduced shelf space for LePage’s products.
- LePage’s claimed the combined effect foreclosed it from key retail channels for private-label tape, impaired its ability to compete, and caused substantial lost sales.

## Issues

1. Whether a monopolist’s bundled rebates and exclusive-dealing type arrangements can violate Sherman Act § 2 without proof of below-cost pricing.
2. Whether the evidence supported a jury finding of exclusionary conduct, anticompetitive effect, lack of sufficient business justification, and causation of injury.
3. Whether LePage’s damages proof was legally sufficient despite not fully separating damages attributable to lawful versus unlawful conduct.

## Decision

- The en banc Third Circuit affirmed the judgment for LePage’s on its § 2 monopolization claim and upheld the district court’s refusal to set aside the jury verdict.
- The court held that exclusionary conduct, including bundled rebates and de facto exclusive dealing by a monopolist, can support § 2 liability even if the defendant did not price below cost.
- The court concluded the record permitted the jury to find 3M’s programs foreclosed a substantial share of distribution opportunities and harmed competition by using leverage from a monopoly product and a broad product portfolio.
- The court rejected 3M’s asserted procompetitive justifications as insufficient on this record to outweigh the exclusionary effects.
- The court held LePage’s damages evidence was adequate; its expert was not required to fully disaggregate harm from lawful conduct where the challenged practices operated together and materially contributed to the losses.
- A dissent argued that condemning above-cost bundled rebates without a clearer economic test risked chilling legitimate discounting and provided uncertain guidance.

## Legal Principles

- Sherman Act § 2 reaches exclusionary conduct by a monopolist beyond predatory pricing; below-cost pricing is not a prerequisite where the theory is bundled rebates and exclusive-dealing type foreclosure.
- A monopolist violates § 2 when it willfully maintains monopoly power by conduct that operates on a basis other than competition on the merits, including arrangements that materially foreclose rivals from important distribution channels.
- Bundled or loyalty rebates may be unlawful when structured to use a monopoly product and broad product line to induce concentrated purchasing and effectively exclude equally efficient competitors that lack comparable product scope.
- In assessing exclusionary conduct, courts may consider the cumulative effect of multiple related practices on market access and competitive conditions.
- Antitrust damages need not be proven with mathematical precision; a plaintiff may recover where the evidence permits a reasonable approximation of loss attributable to the unlawful scheme, even if lawful and unlawful conduct are not perfectly separated.

## Conclusion

The Third Circuit sustained § 2 monopolization liability based on a monopolist’s bundled rebate and de facto exclusive-dealing practices that foreclosed rivals, holding that such exclusionary schemes can be unlawful even when the challenged prices remain above cost and that damages may be reasonably estimated without complete disaggregation of lawful effects.


LePage’s Inc. v. 3M, 324 F.3d 141 (3d Cir. 2003) (en banc)