Links between vertically related markets: ITS v Kodak

In 1987 seventeen small companies filed an antitrust lawsuit against the Eastman Kodak Corporation, alleging that Kodak used its monopoly power over repair parts for its high-volume copiers and micrographics equipment in order to monopolize the service markets for those machines. Eleven years later, there have been two District Court opinions, two from the Ninth Circuit Court of Appeals, and one from the Supreme Court, and further post-trial, post-appeal disputes continue. Since the initial Supreme Court opinion in Kodak, there have been at least seven closely related Appeals Court opinions, and they stand in sharply divided conflict. Kodak is one of the most significant antitrust cases of the last decade or two. It is also one of the most controversial, and the controversy is far from resolved. We review the facts and the procedural history. We then present the main economic issues in dispute, and summarize the evidence presented at trial. We close with brief observations on some unresolved questions that affect future antitrust economic analysis, and describe the post-Kodak conflict among other Circuit Courts of Appeal. ITS v. Kodak Page 2 of 23 D:\PAPERS\Kodak\Kodak_rev4.doc Version Date: 10/09/97 1:47 AM Print Date: 10/9/97 1:50 AM Links between vertically related markets: ITS v Kodak (1997) “The difficulty of obtaining parts, technical information and diagnostic software has effectively kept 3 party service suppliers out of the advanced equipment service market” “Both IBM and Xerox will sell spare parts, but we do not. This makes it more difficult for a third party to service our copiers.”