## Facts

- Roland Machinery Co. was a substantial construction-equipment dealer serving a 45-county area in central Illinois and had historically been International Harvester’s exclusive dealer in that territory.
- In 1982, Dresser Industries purchased International Harvester’s construction-equipment division and entered into a dealership agreement with Roland.
- The agreement allowed either party to terminate “without cause” on 90 days’ notice and did not expressly prohibit Roland from selling competitors’ products.
- Eight months later, Roland entered into a similar dealership arrangement with Komatsu, a competing manufacturer.
- After learning of the Komatsu relationship, Dresser gave Roland notice of termination under the 90-day, no-cause provision.
- Roland sought a preliminary injunction, asserting that termination effectively imposed an unlawful exclusive-dealing arrangement under § 3 of the Clayton Act.
- Roland presented evidence that roughly half of its revenue related to Dresser-branded equipment and that losing the line could severely impair its business.
- Dresser asserted it terminated Roland to secure a more committed dealer and because Roland’s continued presence would deter other potential Dresser dealers in the area; it also offered evidence that exclusive-brand dealerships were common in the industry.

## Issues

1. What standard governs issuance and appellate review of a preliminary injunction, including how irreparable harm and likelihood of success interact in the analysis?
2. Whether the record at the preliminary-injunction stage supported a plausible § 3 Clayton Act exclusive-dealing claim, including a showing of likely anticompetitive effect.

## Decision

- The Seventh Circuit vacated the preliminary injunction and remanded.
- The court applied a balancing (sliding-scale) approach requiring a threshold showing of some likelihood of success and irreparable harm, with the required strength of each varying with the balance of harms.
- The court concluded Roland’s showing of irreparable harm was insufficiently supported and potentially compensable through damages.
- The court concluded Roland had not shown a sufficient likelihood of success on its § 3 theory because the record did not adequately demonstrate an implied exclusivity condition or substantial foreclosure/anticompetitive effect.

## Legal Principles

- A preliminary injunction requires (i) irreparable harm (inadequacy of legal remedies), (ii) some likelihood of success on the merits, and (iii) a balancing of harms, with consideration of the public interest where relevant.
- Likelihood of success and balance of harms operate on a sliding scale: the less likely success appears, the more the balance of harms must favor the movant, and vice versa.
- Harm is “irreparable” because damages are practically inadequate (e.g., difficult to value or collect), not merely because harm is serious.
- Section 3 of the Clayton Act reaches sales made on a “condition, agreement, or understanding” restricting dealing in competitors’ goods, but liability requires a showing that the practice may substantially lessen competition or tend to create a monopoly.
- Exclusive dealing is not unlawful per se; the analysis focuses on market definition, degree of foreclosure, and realistic competitive effects, and may account for legitimate business justifications.

## Conclusion

The Seventh Circuit set aside an injunction that compelled a manufacturer to continue a terminable dealership relationship, holding that the movant had not shown a well-supported risk of irreparable harm or a sufficiently likely § 3 Clayton Act exclusive-dealing violation under the court’s sliding-scale preliminary-injunction framework.


Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380 (7th Cir. 1984)