Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 49 (1992)

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Cite as: 504 U. S. 451 (1992)

Scalia, J., dissenting

parts for its own brand amounts to "market power" of a character sufficient to permit invocation of the per se rule against tying. As the Court observes, ante, at 479-481, n. 29, we have applied the per se rule to manufacturer ties of foremarket equipment to aftermarket derivatives—but only when the manufacturer's monopoly power in the equipment, coupled with the use of derivative sales as "counting devices" to measure the intensity of customer equipment usage, enabled the manufacturer to engage in price discrimination, and thereby more fully exploit its interbrand power. See International Salt Co. v. United States, 332 U. S. 392 (1947); International Business Machines Corp. v. United States, 298 U. S. 131 (1936); United Shoe Machinery Corp. v. United States, 258 U. S. 451 (1922). That sort of enduring opportunity to engage in price discrimination is unavailable to a manufacturer—like Kodak—that lacks power at the inter-brand level. A tie between two aftermarket derivatives does next to nothing to improve a competitive manufacturer's ability to extract monopoly rents from its consumers.3

3 The Court insists that the record in this case suggests otherwise, i. e., that a tie between parts and service somehow does enable Kodak to increase overall monopoly profits. See ante, at 479-481, n. 29. Although the Court does not identify the record evidence on which it relies, the suggestion, apparently, is that such a tie facilitates price discrimination between sophisticated, "high-volume" users of Kodak equipment and their unsophisticated counterparts. The sophisticated users (who, the Court presumes, invariably self-service their equipment) are permitted to buy Kodak parts without also purchasing supracompetitively priced Kodak service, while the unsophisticated are—through the imposition of the tie— compelled to buy both. See ante, at 475-476.

While superficially appealing, at bottom this explanation lacks coherence. Whether they self-service their equipment or not, rational foremarket consumers (those consumers who are not yet "locked in" to Kodak hardware) will be driven to Kodak's competitors if the price of Kodak equipment, together with the expected cost of aftermarket support, exceeds competitive levels. This will be true no matter how Kodak distributes the total system price among equipment, parts, and service. See

499

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