## Facts

- Honeywell sold industrial control systems that used Honeywell-branded printed circuit boards and offered customers a “board exchange” program (replacement for 50% of list price upon return of the defective board).
- Honeywell used proprietary board designs and arranged for Honeywell-specific boards and components to be available only through Honeywell and not sold to independent repair firms.
- PSI, an independent board repair company, alleged that limited access to boards and components prevented it from competing effectively to repair many Honeywell boards.
- Honeywell’s customers allegedly understood at the time they bought the control systems that Honeywell would be the effective source for replacement or repaired boards.
- PSI sued under § 1 of the Sherman Act (tying) and § 2 (monopolization/attempted monopolization); the district court granted summary judgment to Honeywell.
- PSI appealed; the court of appeals affirmed on different reasoning.

## Issues

1. Whether Honeywell unlawfully tied the purchase of its control systems to Honeywell board repair/replacement services in violation of Sherman Act § 1.
2. Whether Honeywell monopolized or attempted to monopolize a properly defined market for repair of Honeywell boards in violation of Sherman Act § 2.

## Decision

- Affirmed summary judgment for Honeywell on both claims.
- Held the record did not support an unlawful tying arrangement because the alleged “tie” functioned as part of an integrated product/aftermarket policy disclosed to customers rather than coerced conditioning of a separate purchase.
- Held PSI failed to show monopoly power unlawfully acquired or maintained, or exclusionary conduct sufficient for § 2 liability, given competitive constraints from the primary equipment market and the absence of exploitative aftermarket conduct.

## Legal Principles

- A § 1 tying claim generally requires two distinct products, conditioning/coercion linking them, sufficient tying-product power, and a substantial effect in the tied market; embedded product design or disclosed aftermarket policies may defeat the “separate product” and “coercion” elements.
- Aftermarket control is less likely to violate antitrust law when buyers can make an informed upfront choice and primary-market competition constrains lifecycle pricing; “surprise” aftermarket restrictions and exploitation are central concerns.
- For § 2, monopoly power and willful acquisition or maintenance through exclusionary conduct are required; high share in an aftermarket may be treated as derivative of competition in the foremarket when customers consider total cost of ownership at purchase.
- Proprietary design choices and supplier arrangements can be lawful when supported by legitimate business justifications (e.g., quality control, product integrity) and not used to impose predatory or supracompetitive aftermarket pricing.

## Conclusion

The court upheld judgment for Honeywell because PSI did not show coerced tying or exclusionary monopolization: Honeywell’s control over repair inputs flowed from disclosed proprietary design and was constrained by competition in the initial equipment market, with no showing of exploitative aftermarket pricing or post-purchase policy “surprise.”


PSI Repair Servs., Inc. v. Honeywell, Inc., 104 F.3d 811 (6th Cir. 1997)