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OEMs intentionally purchased more parts than needed for their
manufacturing process and resold the extra (surplus) parts to
petitioner at prices far less than the prices which the
authorized distributors paid Allen-Bradley for the same parts.
During the relevant years, petitioner also purchased
Allen-Bradley parts at fire sale prices from distressed companies
which had either overbought the parts for their own needs or gone
out of business.
Petitioner’s inventory during the relevant years included
approximately 50,000 different types of parts made by
Allen-Bradley, including many parts that Allen-Bradley no longer
manufactured but which were still used as replacement parts in
some older equipment. Petitioner sold its inventory throughout
the continental United States to approximately 1,100 customers at
prices that approximated the prices at which the authorized
distributors purchased those parts from Allen-Bradley.
Petitioner’s typical customers were (1) large plants, such as
General Motors Corp., that had a nonperforming part that had to
be replaced immediately rather than in the 2 or more days that it
took to receive a replacement part from an authorized
distributor, and (2) the authorized distributors of Allen-Bradley
parts who also needed a part immediately rather than in the 2 or
more weeks that it took to receive the part directly from
Allen-Bradley.
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Last modified: May 25, 2011