## Facts

- Ductile iron pipe fittings (DIPF) are used to join and direct pressurized water pipes and are sold mainly to municipal water authorities and their contractors through distributors.
- Certain publicly funded projects required domestically manufactured DIPF, creating a distinct market segment for “domestic-only” projects where imports were not acceptable substitutes.
- McWane, a dominant domestic producer, held 100% of the domestic DIPF market from 2006 to 2009.
- In 2009, increased demand for domestic fittings tied to federal funding led Star Pipe Products to enter the domestic DIPF market.
- After Star’s entry, McWane adopted an exclusive-dealing policy called the “Full Support Program.”
- Under the program, distributors generally had to buy all of their domestic fittings from McWane or (i) lose accrued rebates and (ii) face a 12-week supply cutoff, subject to limited exceptions.
- The FTC found evidence that distributors continued purchasing from McWane because of the exclusivity threat, even when Star offered lower prices.
- By 2011, Star had about a 10% share of the domestic market, while McWane retained about 90%; McWane also raised prices after Star’s entry.

## Issues

1. Whether substantial evidence supported the FTC’s definition of a relevant product market limited to domestically manufactured DIPF for domestic-only projects.
2. Whether substantial evidence supported findings that McWane possessed monopoly power in that market and used the Full Support Program to maintain it.
3. Whether the Full Support Program’s exclusive-dealing terms harmed competition by foreclosing rivals from key distributors.
4. Whether asserted business justifications (including a desire to retain market share and ensure reliable supply) defeated liability or required reversal of the FTC’s order.

## Decision

- The Eleventh Circuit affirmed the FTC’s final order.
- The court held that the FTC’s factual and economic findings on market definition, monopoly power, and competitive harm were supported by substantial evidence under a deferential review standard.
- The court agreed that McWane’s Full Support Program operated as unlawful exclusive dealing that impeded rival access to critical distribution channels and maintained McWane’s monopoly power.
- The court rejected the argument that a rival’s limited entry or partial market share gain categorically forecloses a monopoly-maintenance finding.
- The court upheld the remedy prohibiting McWane from requiring exclusivity from customers in the domestic DIPF market, along with related compliance provisions.

## Legal Principles

- A distinct relevant product market may be limited to domestic products where regulatory or funding requirements make imports not reasonably interchangeable for a substantial set of sales.
- Exclusive-dealing conduct by a firm with monopoly power can constitute unlawful monopoly maintenance when it substantially forecloses rivals from necessary distribution outlets and thereby impairs effective competition.
- Competitive harm focuses on exclusionary effects and maintenance of monopoly power (including the ability to raise prices), not merely injury to a competitor.
- Limited rival entry or some achieved market share does not, by itself, preclude liability for monopoly maintenance if the challenged conduct materially constrained rival growth and competitive pressure.
- A monopolist’s general desire to preserve or increase market share is not a sufficient procompetitive justification for exclusionary conduct; claimed benefits must be cognizable and not achievable through materially less restrictive means.
- On judicial review of FTC adjudications, factual and economic determinations are upheld when supported by substantial evidence.

## Conclusion

The court sustained the FTC’s determination that McWane used coercive distributor exclusivity—rebate forfeiture and a 12-week cutoff—to foreclose effective access to distribution and maintain monopoly power in domestically manufactured DIPF for domestic-only projects, and it upheld an order barring McWane from imposing such exclusivity.


McWane, Inc. v. Fed. Trade Comm'n, 783 F.3d 814 (11th Cir. 2015)