## Facts

- Petroleum dispensing equipment manufacturers sold gasoline dispensers both directly to large customers (via negotiated contracts) and indirectly to smaller customers through authorized distributors.
- Five manufacturers competed in the U.S. market: Gilbarco, Dresser Wayne, Tokheim, Schlumberger, and Bennett.
- Gilbarco used authorized distributor agreements that effectively required distributors to sell only Gilbarco dispensers (exclusive dealing).
- Omega, a non-manufacturer, attempted to build a national distribution network offering equipment from multiple manufacturers (“one-stop shopping”) by acquiring existing authorized Gilbarco distributors.
- After Omega acquired certain distributors, Gilbarco terminated the distribution agreements, asserting the acquisitions conflicted with its exclusivity requirements.
- Omega sued in federal district court alleging federal antitrust violations (including a Clayton Act § 3 exclusive dealing claim) and state-law claims.
- The district court resolved several claims against Omega pretrial but sent the Clayton Act § 3 claim and certain state-law claims to the jury.
- The jury found for Omega on the § 3 claim and some state-law claims and awarded damages; the district court denied Gilbarco’s post-verdict motion for judgment as a matter of law.
- Gilbarco appealed the adverse judgment; Omega cross-appealed adverse pretrial and trial rulings.

## Issues

1. Whether Gilbarco’s exclusive dealing arrangements and terminations violated § 3 of the Clayton Act by foreclosing a substantial share of a properly defined relevant market and thereby likely lessening competition.
2. Whether the evidence of market definition, foreclosure, and competitive effects was sufficient to sustain the jury’s § 3 verdict under the market-foreclosure analysis associated with Tampa Electric.
3. Whether the district court properly submitted certain state-law claims to the jury and whether the evidence supported those claims and damages.
4. Whether identified instructional, evidentiary, and damages rulings required reversal or modification of the judgment.

## Decision

- The Ninth Circuit reversed the judgment on the Clayton Act § 3 exclusive dealing claim.
- The court held Omega failed to prove substantial foreclosure of the relevant market or a likely anticompetitive effect as required for § 3 liability.
- The court recognized Omega showed harm to its business plan and distribution strategy, but found that evidence did not establish harm to competition in the market as a whole.
- The court modified the treatment of state-law claims (rejecting some and allowing others only in narrowed form) and remanded for further proceedings consistent with its rulings.

## Legal Principles

- Exclusive dealing is not unlawful under Clayton Act § 3 unless, in light of the competitive conditions, it likely forecloses a substantial share of a relevant market and may substantially lessen competition or tend to create a monopoly.
- A § 3 plaintiff must define relevant product and geographic markets and quantify foreclosure in relation to overall market opportunities, not merely a single preferred distribution channel.
- Injury to a particular competitor (including disruption of a distinctive business model) is insufficient without proof of likely harm to interbrand competition or marketwide competitive conditions.
- Evidence that customers can obtain competitive bids and that rival manufacturers retain meaningful access to customers through other distributors or direct sales weighs against a finding of substantial foreclosure.

## Conclusion

The Ninth Circuit set aside the federal exclusive-dealing verdict because Omega did not show that Gilbarco’s distributor exclusivity substantially foreclosed the market or likely reduced competition; the case was remanded with state-law outcomes narrowed or adjusted to reflect the absence of proven marketwide anticompetitive effects.


Omega Env’t, Inc. v. Gilbarco, Inc., 127 F.3d 1157 (9th Cir. 1997)