Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


1-16-2002

Lepages Inc v. MN Mining Mfg Co
Precedential or Non-Precedential:

Docket 0-1368




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"Lepages Inc v. MN Mining Mfg Co" (2002). 2002 Decisions. Paper 20.
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Volume 1 of 2

Filed January 14, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 00-1368 and 00-1473

LEPAGE'S INCORPORATED;
LEPAGE'S MANAGEMENT COMPANY, LLC,

       Appellees/Cross-Appellants

v.

3M (MINNESOTA MINING AND MANUFACTURING
COMPANY); KROLL ASSOCIATES, INC.

Minnesota Mining and Manufacturing Company,

       Appellant

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 97-03983)
District Judge: The Honorable John R. Padova

Argued July 12, 2001

BEFORE: SLOVITER, ALITO, and GREENBERG,
Circuit Judges

(Filed: January 14, 2002)
Barbara W. Mather (argued)
Jeremy Heep
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103-2799

Peter Hearn
Peter Hearn, P.C.
519 Pine Street
Philadelphia, PA 19106

Mark W. Ryan
Kerry Lynn Edwards
Donald M. Falk
Robert L. Bronston
David A.J. Goldfine
Mayer, Brown & Platt
1909 K Street, N.W.
Washington, D.C. 20006-1101

 Attorneys for Appellees/
Cross-Appellants

M. Laurence Popofsky
Stephen V. Bomse (argued)
Paul Alexander
Marie L. Fiala
Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, CA 94104

John G. Harkins, Jr.
Harkins Cunningham
2800 One Commerce Square
2005 Market Street
Philadelphia, PA 19103

 Attorneys for Appellant/
Cross-Appellee

                           2
OPINION OF THE COURT

GREENBERG, Circuit Judge.

This matter comes on before the court on defendant 3M's
(Minnesota Mining and Manufacturing Company) appeal
from an order of the district court entered March 14, 2000,
partially granting and partially denying its motion for
judgment as a matter of law and denying 3M's motion for
a new trial and on plaintiff LePage's Incorporated's cross-
appeal from the order partially granting 3M's motion for
judgment as a matter of law.1 LePage's brought this
antitrust action asserting that 3M used its monopoly over
its "Scotch" tape brand to gain a competitive advantage in
the private label tape portion of the transparent tape
market in the United States through the use of 3M's multi-
tiered "bundled rebate" structure, which offered higher
rebates when customers purchased products in a number
of 3M's different product lines. LePage's also alleged that
3M offered some LePage's customers large lump-sum cash
payments, promotional allowances and other cash
incentives to encourage them to enter into exclusive dealing
arrangements with 3M.

After the jury found in 3M's favor on LePage's's claims for
unlawful agreements in restraint of trade and exclusive
dealing but against 3M on LePage's's monopolization and
attempted monopolization claims, 3M filed its motions for
judgment as a matter of law and for a new trial, arguing
that its rebate and discount programs and its other alleged
conduct of which LePage's complained did not constitute
the basis for a valid antitrust claim as a matter of law and
that, in any event, the court's charge to the jury was
insufficiently specific and LePage's's damages proof was
speculative.2 The district court granted 3M's motion for
_________________________________________________________________

1. The plaintiffs in this action are LePage's Incorporated and LePage's
Management Company, LLC, and both are appellees and cross-
appellants. Inasmuch as we can discern no distinction between their
interests, we refer to them simply as LePage's singularly.

2. 3M unsuccessfully had moved for a judgment as a matter of law at the
close of LePage's's case and after the close of the entire case.

                               3
judgment as a matter of law on LePage's's "attempted
maintenance of monopoly power" claim but denied 3M's
motion for judgment as a matter of law in all other respects
and denied its motion for new trial. See LePage's Inc. v. 3M,
No. Civ. A. 97-3986, 

(E.D. Pa. Mar. 14,
2000). The court subsequently entered a judgment for
trebled damages of $68,486,679 to which interest was to be
added, and this appeal and cross-appeal then followed.

We will affirm the district court's order granting the
motion for judgment as a matter of law with respect to the
"attempted maintenance of monopoly" claim but will reverse
the district court's order denying the motion for judgment
as a matter of law in all other respects. Thus, we will
remand the case to the district court to enter judgment in
favor of 3M.

I. BACKGROUND

A. FACTUAL BACKGROUND

3M, founded in 1902, introduced transparent tape for
home and office use over 70 years ago. The readers of this
opinion no doubt will recognize that 3M's Scotch products
have become a familiar brand, and, in fact, 3M dominated
the United States transparent tape market with a market
share above 90% until the early 1990s. LePage's, founded
in 1876, has sold a variety of office products and, around
1980, decided to sell "second brand" and private label tape,
i.e., tape sold under the retailer's, rather than the
manufacturer's name. This endeavor was successful to the
extent that LePage's captured 88% of private label tape
sales in the United States by 1992. Moreover, changing
distribution patterns and consumer acceptance of"second
brand" and private label tape accounted for a shift of some
tape sales from branded tape to private label tape. These
changes were attributable to the rapid growth of office
superstores such as Staples and Office Depot and mass
merchandisers such as Wal-Mart and Kmart, as many of
these retailers wanted to use their "brand names" to sell
stationery products including transparent tape. Not
surprisingly, during the early 1990s, 3M also entered the
private label business.

                                4
LePage's claims that, in response to the growth of this
competitive market, 3M engaged in a series of related,
anticompetitive acts aimed at restricting the availability of
lower-priced transparent tape to consumers. It also claims
that 3M devised programs that prevented LePage's and the
other domestic company in the business, Tesa Tuck, Inc.,
from gaining or maintaining large volume sales and that 3M
maintained its monopoly by stifling growth of private label
tape and by coordinating efforts aimed at large distributors
to keep retail prices for Scotch tape high.3 LePage's claims
that it barely was surviving at the time of trial and that it
suffered large operating losses from 1996 through 1999.

1. Rebate program

This case centers on 3M's programs that, beginning in
1993, involved offers by 3M of "package" or"bundled"
discounts for various items ranging from home care and
leisure products to audio/visual and stationery products.
Customers could earn rebates by purchasing, in addition to
transparent tape, a variety of products within 3M's
stationery division, such as Post-It Notes and packaging
products. These programs created incentives for retailers to
purchase more 3M products and enabled customers to
have single invoices, single shipments and uniform pricing
programs for various products in its consumer products
division. The size of the rebate, however, was linked to the
number of product lines in which the customers met the
targets, an aggregate number that determined the rebate
percentage the customer was to receive on all of its 3M
purchases across all product lines. Therefore, if customers
failed to meet growth targets in multiple categories, they
received no rebate, and if they failed to meet the target in
one product line, 3M reduced their rebates substantially.
These requirements are at the crux of the controversy here,
as LePage's claims that customers could not meet these
growth targets without eliminating LePage's as a supplier.

In practice, 3M's rebate program evolved so that it offered
three different types of rebates: Executive Growth Fund,
_________________________________________________________________

3. It appears that at least at the times material to this action, there
were
no other domestic manufacturers of transparent tape. There were,
however, foreign manufacturers.

                               5
Partnership Growth Fund and Brand Mix Rebates. 3M
developed a "test program" called Executive Growth Fund
("EGF ") for a small number of retailers, 11 in 1993 and 15
in 1994. Under EGF, 3M negotiated volume and growth
targets for each customer's purchases from the six 3M
consumer product divisions involved in the EGF program.
A customer meeting the target in three or more divisions
earned a volume rebate of between 0.2-1.25% of total sales.

Beginning in 1995, 3M undertook to end the EGF test
program and institute a rebate program called Partnership
Growth Fund ("PGF ") for the same six 3M consumer
products divisions. Under this program, 3M established
uniform growth targets applicable to all participants.
Customers who increased their purchases from at least two
divisions by $1.00 and increased their total purchases by at
least 12% over the previous year qualified for the rebate,
which ranged from 0.5% to 2%, depending on the number
of divisions (between two to five divisions) in which the
customer increased its purchases and the total volume of
purchases. Under both the EGF and PGF programs,
customers could use their rebates as they saw fit.

In 1996 and 1997, 3M offered price incentives called
Brand Mix Rebates to two tape customers, Office Depot and
Staples, to increase purchases of Scotch brand tapes. 3M
imposed a minimum purchase level for tape set at the level
of Office Depot's and Staples's purchases the previous year
with "growth" factored in. To obtain a higher rebate, these
two customers could increase their percentage of Scotch
purchases relative to certain lower-priced orders.

2. The Major Customers

The evidence at trial focused on the parties' actual
experience with a limited number of customers which we
thus discuss at length.

Wal-Mart

Before 1992, Wal-Mart bought private label tape only
from LePage's but, in August 1992, decided to buy private
label tape from 3M as well. In response, LePage's lowered
its prices and increased its sales to Wal-Mart. In 1997, Wal-
Mart stopped buying private label tape but offered

                               6
LePage's's branded tape as its "second tier" offering. In
1998, however, Wal-Mart told LePage's that it was going to
switch to a tape program from 3M. LePage's's president
then visited Wal-Mart following which Wal-Mart changed its
plans and retained LePage's as a supplier. Afterwards, Wal-
Mart designed a test comparing LePage's's brand against a
3M Scotch utility tape to determine who would win Wal-
Mart's "second tier" tape business. LePage's added more
inches (approximately 20% more) to its rolls of tape and
won the test. 3M continued, however, to sell other Scotch
brand tapes to Wal-Mart, and LePage's saw its sales to Wal-
Mart decline to approximately $2,000,000 annually by the
time of trial. LePage's claims that Wal-Mart cut back on its
tape purchases to qualify for 3M's bundled rebate of
$1,468,835 in 1995.

Kmart

Kmart accounted for 10% of LePage's's annual tape sales
when LePage's lost its business to 3M in 1993. Kmart
asked its suppliers, including 3M, to provide a single bid on
its entire private label tape business for the following year.
LePage's's president believed, however, that Kmart was "too
lazy to make a change," and that it would "never put their
eggs in one basket" by giving all the business to 3M.
LePage's offered the same price it had offered the previous
year but also offered a volume rebate. 3M offered a lower
price and won the bid. Kmart asked for rebates and
"market development" funds as part of the private label
tape bid process. 3M offered $200,000 for promotional
activities and a $300,000 volume rebate if Kmart purchased
$10,000,000 of 3M's Stationery Division products.

LePage's claims that 3M offered Kmart $1,000,000 to
eliminate LePage's and Tesa as suppliers and to make 3M
its sole tape supplier. LePage's points to a 3M document
outlining 3M's goal for Kmart to exceed $15,000,000 in 3M
purchases with the reward being that Kmart would receive
$75,000 in each of the first two quarters and $100,000 in
the last two quarters for promotional activities and would
receive $650,000 as a volume rebate if the sales exceeded
$15,000,000. If the sales were less, the rebate would be
decreased accordingly, e.g., a $400,000 rebate for
$13,000,000 of sales. LePage's claims that, as a practical

                                7
matter, Kmart had to eliminate LePage's and Tesa to reach
the growth 3M required in order to qualify for the rebate.
LePage's asserts that, despite its efforts to regain the
private label business from Kmart, one Kmart buyer told it
that he could not talk to LePage's about tape products for
the next three years. See Br. of Appellee at 9.

Staples

Staples had been a LePage's customer for several years.
From 1990 to 1993, LePage's increased its sales to Staples
by 440%, growing from $357,000 to $1,954,000. In 1994,
Staples considered reducing suppliers and asked LePage's
and 3M for their best offers in 1994. LePage's assumed that
if 3M did make a good offer, LePage's would have a chance
to make a better proposal. LePage's did not make its lowest
offer, and 3M won the account. When LePage's went back
to Staples with a new price, it was told that the decision
had been made. LePage's claims that 3M offered an extra
1% bonus rebate on Scotch products if Staples eliminated
LePage's as a supplier (a "growth" rebate that only could be
met by converting all of LePage's's private label business to
3M). 3M paid Staples an advertising allowance in four
payments totalling $1,000,000 in 1995 and gave it
$500,000 in free merchandise delivered during Staples's
fiscal year 1994. 3M refers to a "$1.5 million settlement"
with Staples and refers to multiple payments for different
purposes. LePage's, however, implies that these payments
bore some connection to Staples's award of its second-tier
tape business to 3M. Br. of Appellee at 10.

Office Max

In 1998, after a dispute between Office Max and LePage's,
Office Max accepted 3M's offer that matched but did not
beat LePage's's price. LePage's objected to 3M's matching
whatever price LePage's offered, and also objected to 3M's
"clout" payment. Office Max required its suppliers to make
payments to help advertise the Office Max name, and
LePage's had paid this "clout" payment in the years
previous to 1998 when it refused to pay it because of its
dispute with Office Max. Nevertheless, the buyer for Office
Max testified that its decision to give its business to 3M
was not related to its pricing and rebate program but rather
to the consistency of its service.

                                8
Walgreens

Walgreens had purchased private label tape from
LePage's from 1992 until 1998, when it decided to import
tape from Taiwan. LePage's's chief executive officer
acknowledged that LePage's did not lose the account due to
3M's activities.

American Stores

Until 1995, LePage's's sales of private label tape to
American Stores exceeded $1,000,000 annually. According
to LePage's, a month after American Stores decided that it
would try to maximize 3M's PGF rebate, it shifted its tape
business to 3M. In 1995, American Stores decided to stop
buying LePage's tape, principally because of quality
concerns. In a letter to James Kowieski, Senior Vice
President of Sales at LePage's, Kevin Winsauer, the
manager of the private label department at American,
wrote: "After much deliberation comparing the pros and
cons of LePage's program and 3M's program, I have decided
to award the business to 3M. 3M's proposal was very
competitive and I am sure LePage's would meet their costs
to retain the business. However, the decision to move to 3M
is primarily based on Quality." SJA 2050-51 (emphasis in
original). When American Stores decided to purchase from
3M, it was not participating in any rebate programs, and
Winsauer testified that he was not aware that there were
rebate programs. He also testified that even without the
volume incentive programs, 3M's price was still slightly
lower than LePage's's.

Dollar General, CVS, and Sam's Club

LePage's lost Dollar General's private label business to a
foreign supplier but later won the business back. According
to LePage's's president, Dollar General used the bid for
import tape to leverage a price reduction from LePage's. 3M
bid on the CVS account, but LePage's retained CVS as a
customer by lowering its prices and increasing its rebate. At
Sam's Club, LePage's tape had been selling well when its
buyers were directed by senior management to "maximize"
all purchases from 3M to maximize the EGF/PGF rebate.
Subsequently, Sam's Club stopped purchasing from
LePage's.

                                9
Other distributors and buying groups

LePage's claimed that 3M's pricing practices prevented or
hindered it from selling private label tape to certain
companies:

(1) Costco. Costco, however, never has sold private label
tape. (2) Office Depot. Office Depot also never has sold
private label tape. LePage's tried to convince Office Depot to
buy private label tape in 1991 or 1992 (before 3M
implemented the rebate programs), but Office Depot
decided to continue purchasing 3M brand tape. (3) Pamida
and Venture Stores. LePage's claimed that 3M offered these
stores discounts conditioned on exclusivity, thereby
preventing LePage's from selling private label tape to them.
LePage's lost Venture Stores' business in 1989, five years
before 3M provided the discount at issue. (4) Office Buying
Groups. 3M offered an optional 0.3% price discount to
National Office Buyers ("NOB") and UDI if they exclusively
promoted certain 3M products in their catalogs. If the
buying group carried a lower value brand alternative to
3M's main brand (its second line), then the group would
receive a lower annual volume rebate. LePage's viewed
these kind of contract provisions as a "penalty" that coerced
buying group members to purchase tape only from 3M. For
example, if a buying group promoted the products of a
competitor, it lost rebates for purchases in three categories
of products. See Br. of Appellee at 20. 3M argues that
LePage's could have offered its own discount or rebate but
instead refused to pay the standard promotional fee that
UDI charged suppliers for inclusion in its catalog.

B. PROCEDURAL BACKGROUND

LePage's began this action on June 11, 1997, alleging
that 3M had engaged in predatory pricing,4 tying, full-line
forcing, monopoly leveraging, and exclusive dealing in
violation of sections 1 and 2 of the Sherman Act, 15 U.S.C.
SS 1, 2, and/or section 3 of the Clayton Act, 15 U.S.C. S 14.
_________________________________________________________________

4. LePage's in its original complaint alleged on information and belief
that 3M's "bundled rebates, promotional allowances and other cash
incentives across its home and office product line .. . in the aggregate
lower the . . . net price for 3M's tape below 3M's cost."

                               10
After 3M filed a motion to dismiss, LePage's dropped its
allegations of full-line forcing and tying because the
necessary element of coercion was not present. LePage's
filed two amended complaints and ultimately alleged that
3M:

       (1) began targeting LePage's['s] customers with private-
       label tape programs in order to deprive LePage's of
       sales revenue, efficient volume distribution, and
       transactional efficiency (2) sought to drive LePage's
       from the [m]arket through use of `bundled rebates' (3)
       offered a multi-tiered rebate to its customers across its
       product line . . . thereby forcing customers to give up
       buying from LePage's; and (4) offered some of
       LePage's['s] largest customers large lump-sum cash
       payments, promotional allowances, inventory
       repurchase, and other cash incentives to encourage
       them to enter into an exclusive dealing arrangement
       with 3M.

Br. of Appellant at 3-4.

3M moved for summary judgment after discovery,
claiming that its conduct was permissible as a matter of
law. In this regard, 3M argued that its rebates were in effect
an element of pricing and that its prices were above its
costs. Thus, it contended that LePage's's case failed for in
Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.,

, 222, 

, 2587 (1993), the Court
indicated that "a plaintiff seeking to establish competitive
injury from a rival's low prices must prove that the prices
complained of are below an appropriate measure of its
rival's costs." 

at 2587. Of course, 3M adheres
to the same fundamental point on this appeal as it
emphasizes that LePage's disavows any contention that
3M's prices were predatory or below costs and that"[a]bove-
costs pricing cannot give rise to an antitrust offense as a
matter of law" inasmuch as in Brooke Group the Court held
"that it is not unlawful to lower one's prices so long as they
remain above cost." Br. of Appellant at 30, 36.

Notwithstanding its original allegations to the contrary,
LePage's answered that it did not claim in this case that 3M
engaged in predatory pricing and that it could satisfy the

                               11
legal standards reflected in SmithKline Corp. v. Eli Lilly &
Co., 

(3d Cir. 1978), so as to justify this
action. The district court denied 3M's motion for summary
judgment based on the court's view that LePage's might be
able to prove a SmithKline intra-market monopoly
leveraging claim depending on the structure of the program
and the role of 3M's monopoly power in it. See LePage's Inc.
v. 3M, No. Civ. A 97-3983, 

, at *7 (E.D. Pa.
May 14, 1999).

The case was tried before a jury on the following claims:
exclusive dealing and unreasonable restraint of trade under
section 1 of the Sherman Act and section 3 of the Clayton
Act and monopolization and attempted maintenance of
monopoly power under section 2 of the Sherman Act. After
a lengthy trial, the jury unanimously found for 3M on
LePage's's claims for unlawful agreements in restraint of
trade and exclusive dealing and for LePage's on its
monopolization and attempted monopolization claims. The
jury awarded LePage's damages of $22,828,899, which the
court later trebled to $68,486,697 when it entered the
judgment on April 6, 2000.

On November 24, 1999, 3M moved for judgment as a
matter of law and for a new trial. 3M argued that its rebate
and discount programs and other allegedly predatory
conduct did not give rise to a valid antitrust claim as a
matter of law, that the jury charge was insufficiently
specific, and that LePage's's damage proof was speculative
and failed to relate damages to specific unlawful conduct.
As we have indicated, the district court granted 3M's
motion for judgment as a matter of law on the "attempted
maintenance of monopoly power" claim but denied 3M's
motion for judgment as a matter of law in all other respects
and denied its motion for a new trial. See LePage's, 

, at *12-13.

3M filed a timely notice of appeal on April 25, 2000, and
LePage's filed a timely notice of cross-appeal on its
"attempted maintenance of monopoly power" claim on May
5, 2000. LePage's has not appealed the jury's verdict that
3M did not engage in exclusive dealing or otherwise violate
section 1 of the Sherman Act or section 3 of the Clayton
Act, and thus those claims no longer are directly in issue in

                               12
the case. Therefore, this appeal and cross-appeal concern
only whether 3M violated section 2 of the Sherman Act by
unlawfully maintaining a monopoly in the United States
market for home and office transparent tape and for
unlawful attempted maintenance of monopoly power in that
market.

II. DISCUSSION

A. JURISDICTION

The district court had jurisdiction over this case
pursuant to 28 U.S.C. SS 1331 and 1337(a) because
LePage's brought these claims under the Sherman and
Clayton Acts. We have jurisdiction over this appeal
pursuant to 28 U.S.C. S 1291.

B. STANDARD OF REVIEW

We exercise plenary review over an order granting or
denying a motion for judgment as a matter of law. See
Shade v. Great Lakes Dredge & Dock Co., 

,
149 (3d Cir. 1998). When, as here, a defendant makes such
a motion, a court should grant it "only if, viewing the
evidence in the light most favorable to the nonmovant and
giving it the advantage of every fair and reasonable
inference, there is insufficient evidence from which a jury
reasonably could find liability." Lightning Lube, Inc. v. Witco
Corp., 

, 1166 (3d Cir. 1993). Thus, we review
the evidence on the appeal in a light most favorable to
LePage's and on the cross-appeal in a light most favorable
to 3M. We note, however, that our opinion largely turns on
legal determinations and the historical facts are not in
sharp dispute. We review questions of law underlying the
jury verdict on a plenary basis as well. See Bloom v.
Consolidated Rail Corp., 

, 913 (3d Cir. 1994).
While the parties tender issues on this appeal relating to
the review of an order denying a new trial and with respect
to damages, we do not set forth a standard of review on
these issues as we do not reach them.

                               13
C. MONOPOLIZATION CLAIM

We will reverse the denial of 3M's motion for judgment as
a matter of law on the monopolization claim. LePage's
argues that 3M willfully maintained its monopoly through a
"monopoly broth" of anticompetitive and predatory conduct.
LePage's relies heavily on our opinion in SmithKline for its
argument that a court can find that a company willfully has
acquired and maintained monopoly power if it links a
product on which it does not face competition with a
product on which it faces competition. We conclude,
however, that this case is distinguishable from SmithKline,
which thus is not controlling. Rather, we agree with 3M
that LePage's simply did not establish that 3M's conduct
was illegal, as LePage's did not demonstrate that 3M's
pricing was below cost and, in the absence of such proof,
the record does not supply a basis on which we can uphold
the judgment.

There are two elements of a monopolization claim under
section 2 of the Sherman Act: "(1) the possession of
monopoly power in the relevant market and (2) the willful
acquisition or maintenance of that power as distinguished
from growth or development as a consequence of a superior
product, business acumen, or historic accident." United
States v. Grinnell Corp., 

, 570-71, 

, 1704 (1966). Willful maintenance involves using
anticompetitive conduct to "foreclose competition, to gain a
competitive advantage, or to destroy a competitor." Eastman
Kodak Co. v. Image Technical Servs., 

, 482-83,

, 2090 (1992) (internal quotation marks
omitted). LePage's contends that 3M's bundled rebates were
anticompetitive and predatory. It also argues that 3M's
other practices, such as exclusionary contracts and the
timing of its rebates, were also anticompetitive and
predatory.

1. Bundled Rebates

LePage's primarily complains of 3M's use of bundled
rebates. While we have held that rebates on volume
purchases are lawful, see Advo, Inc. v. Philadelphia
Newspapers, Inc., 

, 1203 (3d Cir. 1995),
LePage's seeks to avoid that principle by pointing out that

                               14
3M offered higher rebates if customers met their target
growth rate in different product categories, in effect linking
the sale of private label tape with the sale of other
products, such as Scotch tape, which customers had to buy
from 3M. Thus, LePage's explains:

       3M understood that, as a practical matter, every
       retailer in the country had to carry Scotch-brand tape
       . . . . It therefore decided to structure its rebates into
       bundles that linked that product with the product
       segment in which it did face competition from LePage's
       (second-line tape) . . . . To increase the leverage on the
       targeted segment, 3M further linked rebates on
       transparent tape with those for many other products
       . . . . The rival would have to `compensate' the
       customer for the amount of rebate it would lose not
       only on the large volume of Scotch-brand tape it had to
       buy, but also for rebates on many other products
       purchased from 3M.5

Br. of Appellee at 40.

As we have suggested, the principal case on which
LePage's relies for support for its argument is SmithKline.
_________________________________________________________________

5. While LePage's does not label this argument"monopoly leveraging"
and argued against the jury being instructed on the elements of a
monopoly leveraging case (claiming that this is an"old fashioned
monopoly case"), it is undeniable that the claim is similar to that
advanced in the SmithKline, which has been labeled a monopoly
leveraging case. See 

; Fineman v. Armstrong World
Indus., Inc., 

, 204 (3d Cir. 1992). In a monopoly leveraging
case, however, there are two markets--one in which the company enjoys
a monopoly and another in which it tries to leverage the former
monopoly power. ERNEST GELLHORN & WILLIAM E. KOVACIC, ANTITRUST LAW AND
ECONOMICS 152 (4th ed. 1994). In this case and in SmithKline, there was
only one market (the transparent tape market in this case and the
cephalosporin market in SmithKline). Consequently, our prior
characterization of SmithKline may be problematical. LePage's's reference
to customers' "inelastic" need for Scotch tape, see Br. of Appellee at 28,
and its contention that, as a practical matter, stores had no choice but
to carry Scotch tape, see 

does suggest that there may be either
two separate markets or one market and one submarket. We do not
address this point, however, because the parties treat this case as
having only one market for the purposes of this appeal.
Even if this were considered a monopoly leveraging case, however, then
Fineman would control, and LePage's would not have established the

                               15
In that case, Eli Lilly & Co. had two products, Keflin and
Keflex, on which it faced no competition, and one product,
Kefzol, on which it faced competition from SmithKline's
product, Ancef. See 

. Lilly
offered a higher rebate of 3% to companies that purchased
specified quantities of any three (which, practically
speaking, meant combined purchases of Kefzol, Keflin and
Keflex) of Lilly's cephalosporin products. See 

were free to purchase SmithKline's Ancef with
their Keflin and Keflex orders with Lilly, thus avoiding the
penalties of a tie-in sale,6 the practical effect of that
_________________________________________________________________

requirements for 3M to be liable. See Fineman , 980 F.2d at 204. LePage's
does not show that 3M had an actual or threatened monopoly in the
leveraged market (private label tape). At the time of trial, LePage's
still
had 67% of the private label market, down from 88% previously. See Br.
of Appellant at 8.

Fineman involved a producer of a videotape magazine to be sold via
distributors to retailers of floor covering products, which (with its
principal) brought action against the floor covering manufacturer,
alleging, inter alia, antitrust violations such as monopoly leveraging
under the Sherman Act. See 

. In Fineman, we
declined to follow Berkey Photo, Inc. v. Eastman Kodak Co., 

, 275 (2d Cir. 1979), which involved a plaintiff that alleged that
Kodak had leveraged its monopoly power in the camera and film markets
to obtain a "competitive advantage" in the photofinishing equipment and
services markets. In Berkey Photo the court held that the use of
monopoly power attained in one market to gain a competitive advantage
in another is a violation of section 2, even if there has not been an
attempt to monopolize the second market. See 

Noting that
only the Court of Appeals for the Sixth Circuit has adopted the Berkey
Photo reasoning, in Fineman we agreed that in order to prevail upon a
theory of monopoly leveraging, a plaintiff must prove threatened or
actual monopoly in the leveraged market. See 

.
That circumstance does not apply here.

6. 3M also avoids the penalties of a tie-in sale, because its customers
were free to purchase its Scotch tape by itself. To prove an illegal tie-
in,
a plaintiff must establish that the agreement to sell one product was
conditioned on the purchase of a different or tied product; the seller
"has
sufficient economic power with respect to the tying product to
appreciably restrain free competition in the market for the tied product
and a `not insubstantial' amount of interstate commerce is affected."
Northern Pac. Ry. Co. v. United States, 

, 6, 

, 518
(1958).

                               16
decision would be to deny the Ancef purchaser the 3%
bonus rebate on all its cephalosporin products." 

added). Because of Lilly's volume
advantage, to offer a rebate of the same net dollar amount
as Lilly's, SmithKline would have had to offer companies
rebates ranging from 16% for average size hospitals to 35%
for larger volume hospitals for their purchase of Ancef. See

that Lilly willfully acquired and maintained
monopoly power by linking products on which Lilly faced no
competition (Keflin and Keflex) with a competitive product,
resulting in the sale of all three products on a non-
competitive basis in what otherwise would have been a
competitive market between Ancef and Kefzol. See 

Moreover, this arrangement would force SmithKline
to pay rebates on one product equal to rebates paid by Lilly
based on sales volume of three products. See 

and the evidence on pricing showed that in the
circumstances SmithKline's prospects for continuing in the
Ancef market were poor.

Here, LePage's argues that it does not have to show that
3M's package discounts could prevent an equally efficient
firm from matching or beating 3M's package discounts. In
its brief, LePage's argues that its expert economist
explained that 3M's programs and cash payments have the
same anticompetitive impact regardless of the cost
structure of the rival suppliers or their efficiency relative to
that of 3M. See Br. of Appellee at 43. LePage's alleges that
the relative efficiency or cost structure of the competitor
simply affects how long it would take 3M to foreclose the
rival from obtaining the volume of business necessary to
survive. See 

"Competition is harmed just the
same by the loss of the only existing competitive
constraints on 3M in a market with high entry barriers." 

court stated that LePage's introduced
substantial evidence that the anticompetitive effects of 3M's
rebate program caused its losses. See LePage's , 

, at *7-8.

We disagree with LePage's and the district court. In
SmithKline, it was important that SmithKline showed that
it could not compete by explaining how much it would have

                               17
had to lower prices for both small and big customers to do
so. SmithKline ascertained the rebates that Lilly was giving
to customers on all three products and calculated how
much it would have had to lower the price of its product if
the rebates were all attributed to the one competitive
product. In contrast, LePage's did not even attempt to show
that it could not compete by calculating the discount that
it would have had to provide in order to match the
discounts offered by 3M through its bundled rebates, and
thus its brief does not point to evidence along such lines.
It also did not show the amount by which it lowered its
prices in actual monetary figures or by percentage to
compete with 3M and how its profitability thus was
decreased, and once again, its brief does not point to
evidence along such lines. Rather, LePage's merely
maintains, through the use of an expert, that it would have
had to cut its prices drastically to compete and thus would
have gone out of business.

Although we are not evaluating the expert's method of
calculating damages,7 and indeed, we do not reach the
damages issue, we cannot overlook the lack of evidence to
prove that pricing was what caused the drop in LePage's's
market share. Simply pointing to an expert to support the
contention that the company would have gone out of
business, without providing even the most basic pricing
information, is insufficient. "Expert testimony is useful as a
guide to interpreting market facts, but it is not a substitute
_________________________________________________________________

7. We note that LePage's has pointed out that case law supports its
expert's use of the but-for model of calculating damages. See Zenith
Radio Corp. v. Hazeltine Research, Inc., 

, 117 n.11, 89 S.
Ct. 1562, 1573 n.11 (1969); Rossi v. Standard Roofing, Inc., 

, 484-87 (3d Cir. 1998). In Bonjorno v. Kaiser Aluminum & Chem.
Corp., 

, 812 (3d Cir. 1984), we stated that in constructing
a hypothetical world free of defendants' exclusionary conduct, the
plaintiffs are given some latitude in calculating damages, as long as
their
theory is not "wholly speculative." There we ruled that the implications
of the expert's testimony were not so inconsistent with the plaintiffs'
theory of liability as to warrant a new trial. See 

We also
stated
that once a jury has found that the unlawful activity caused the
antitrust injury, the damages may be determined without strict proof of
what act caused which injury, as long as the damages are not based on
speculation or guesswork. See 

                               18
for them." Brooke 

, 113 S.Ct. at
2598; see also Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 

, 594 n.19, 

, 1360 n.19
(1986); 

; Virgin Atlantic Airways
Ltd. v. British Airways PLC, 

, 579
(S.D.N.Y. 1999) ("[A]n expert's opinion is not a substitute
for a plaintiff 's obligation to provide evidence of facts that
support the applicability of the expert's opinion to the
case."), aff 'd, 

(2d Cir. 2001). Without such
pricing information, it is difficult even to begin to estimate
how much of the market share LePage's lost was due to
3M's bundled rebates. Furthermore, some experts have
questioned the validity of attributing all the rebates to the
one competitive product in situations such as these. 8 We do
not need, however, to decide the validity of that method of
_________________________________________________________________

8. One court has mentioned a hypothetical situation where a low-cost
shampoo maker could not match a competitor's package discount for
shampoo and conditioner even though both products were priced above
their respective costs. See Ortho Diagnostic Sys., Inc. v. Abbott Labs.,
Inc., 

, 467 (S.D.N.Y. 1996). In that case, the court
suggested that the bundled price could be unlawful under section 2 even
though neither item in the package was priced below cost. If the entire
package discount were attributed to the one product where the two
parties compete, the low-cost shampoo maker could not lower its prices
on the product enough to match the total discount without selling below
its cost. See 

The Areeda treatise, however, suggests that
this analysis is incorrect. See III PHILLIP E. AREEDA & HERBERT HOVENKAMP,
ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND THEIR APPLICATI
              ON
P 749, at 467 n.6 (rev. ed. 1996).

One aspect of this method of calculation worth noting is that the
volume of the products ordered has a drastic effect on how much the
competitor would have to lower its prices to compete. For example,
suppose in a similar rebate program, a company was the only producer
of products A and B but faced competition in C. If a customer orders 100
units each of A, B, and C at a price of $1.00 each, a 3% rebate would
be $9.00 (3% of the total of $300.00). If the rebate on all three products
were attributed to product C, then the competitor would have to lower its
price to $0.91 in order to compete with it. The results would be starkly
different, however, if a customer orders 100 units of A and B but only
needs 10 units of C. Then the 3% rebate on the total purchase amount
of $210.00 would be $6.30. If the rebate was attributed solely to product
C, then a competitor would have to lower its price to $.37 on product C
in order to match the company's price.

                               19
calculation, as LePage's does not even attempt to meet that
less strict test by calculating how much it would have had
to lower its prices to match the rebates, even if they all
were aggregated and attributed to private label tape.9

LePage's also has not satisfied the stricter tests devised
by other courts considering bundled rebates in situations
such as that here. In a case brought by a manufacturer of
products used in screening blood supply for viruses, Ortho
Diagnostic Systems, Inc. v. Abbot Laboratories, Inc. , 920 F.
Supp. 455 (S.D.N.Y. 1996), the district court held, inter
alia, that the defendant's discount pricing of products in
packages did not violate the Sherman Act. The defendant,
Abbott Laboratories, manufactured all five of the commonly
used tests to screen the blood supply for viruses. Ortho
claimed that Abbott violated sections 1 and 2 of the
Sherman Act by contracting with the Council of Community
Blood Centers to give those members advantageous pricing
if they purchased a package of four or five tests from
Abbott, thereby using its monopoly position in some of the
tests to foreclose or impair competition by Ortho in the sale
of those tests available from both companies. See 

The district court stated that to prevail on a
monopolization claim in "a case in which a monopolist (1)
faces competition on only part of a complementary group of
products, (2) offers the products both as a package and
individually, and (3) effectively forces its competitors to
absorb the differential between the bundled and unbundled
prices of the product in which the monopolist has market
power," the plaintiff must allege and prove "either that (a)
the monopolist has priced below its average variable cost or
(b) the plaintiff is at least as efficient a producer of the
competitive product as the defendant, but that the
defendant's pricing makes it unprofitable for the plaintiff to
continue to produce." 

Holding that the discount package pricing did not violate
_________________________________________________________________

9. The closest LePage's comes to supplying such information in its brief
is its statement that "LePage's made repeated efforts to save its tape
business with Staples, reducing its prices to 1990 levels, and then
reducing them again, to keep its plant open and people working." Br. of
Appellee at 11. This is not close enough.

                               20
the Sherman Act, the Ortho court explained that any other
rule would involve too substantial a risk that the antitrust
laws would be used to protect an inefficient competitor
against price competition that would benefit consumers.
See 

("The antitrust laws were not intended, and
may not be used, to require businesses to price their
products at unreasonably high prices (which penalize the
consumer) so that less efficient competitors can stay in
business.") (internal quotation marks omitted).

In this case, LePage's now does not contend that 3M
priced its products below average variable cost, an
allegation which, if made, in any event would be difficult to
prove. See 

.10 Moreover, LePage's's
economist conceded that LePage's is not as efficient a tape
producer as 3M. Furthermore, LePage's has not shown
through an explanation of the prices it would have had to
charge to match 3M's bundled rebates, that it would have
been unprofitable for it to continue to produce.

By its failure to show how much it would have to lower
its prices before it would be driven out of business,
LePage's effectively is arguing that it is the linkage of a
monopoly product with a competitive one that is the
significant factor to be considered rather than the pricing.
Indeed, apparently this is also why LePage's insists that,
while certain of 3M's actions were predatory, this is not a
predatory pricing case. But if the mere act of offering a
_________________________________________________________________

10. 3M argues that Brooke Group provides that lowering the effective
price of a product through price incentives cannot give rise to a section
2 Sherman Act claim unless the price is lower than an appropriate
measure of cost. In fact, the Court's language in Brooke Group does raise
a serious question as to whether or not it limits the holding of
SmithKline
to situations where prices are below average variable cost. However,
Brooke Group was a predatory pricing or primary-line price
discrimination case in which none of the tobacco companies had a
monopoly of the market. See Brooke 

, 113
S.Ct. at 2587. But inasmuch as LePage's does not even present a case
that fulfills the requirements to establish liability of SmithKline, we
need
not decide the effect of Brooke Group on SmithKline. In the
circumstances, we emphasize that we are not holding that if LePage's
had supplied pricing information similar to that SmithKline presented
our result would be different.

                               21
bundled rebate can be condemned under section 2 of the
Sherman Act without regard for the relative efficiency or
cost structure of the competitor, then competitors unwilling
to accept lower profits could use the law to insulate
themselves from competition. For example, a competitor
who would have to lower its prices by 1% in order to match
a bundled rebate could file suit against the alleged
monopolist and obtain relief merely because it does not
want to accept lower profits. It is difficult to see how
consumers are better off if bundled rebates are illegal
regardless of how competition is affected. After all, the
Sherman Act "directs itself not against conduct which is
competitive, even severely so, but against conduct which
unfairly tends to destroy competition itself." Spectrum
Sports, Inc. v. McQuillan, 

, 458, 

,
892 (1993); see also United States v. Microsoft Corp., 

, 58 (D.C. Cir.), cert. denied, 

(2001).

Furthermore, this is not a situation in which there is no
business justification for 3M's actions. Inasmuch as it is
difficult to distinguish legitimate competition from
exclusionary conduct that harms competition, see Microsoft

, some cases suggest that when a
company acts against its economic interests and there is no
valid business justification for its actions, then it is a good
sign that its acts were intended to eliminate competition.

For example, Aspen Skiing Co. v. Aspen Highlands Skiing
Corp., 

, 608, 

, 2860 (1985), sets
forth the lack of a valid business reason as a basis for
finding liability. In that case, the Court affirmed a jury
verdict for the plaintiff under section 2 of the Sherman Act
where the defendant monopolist had stopped cooperating
with the plaintiff to offer a multi-venue skiing package for
Aspen skiers. The Court held that because the defendant
had acted contrary to its economic interests, by losing
business and customers, there was no other rationale for
its conduct except that it wished to eliminate the plaintiff
as a competitor. See 

105 S.Ct. at 2860; see also
Eastman 

, 112 S.Ct. at 2090
(exclusionary conduct properly is condemned if valid
business reasons do not justify conduct that tends to
impair the opportunities of a monopolist's rivals or if a valid

                               22
asserted purpose would be served fully by less restrictive
means).11

Similarly, in Concord Boat Corp. v. Brunswick Corp., 

, 1043, 1063 (8th Cir.), cert. denied, 

, 

(2000), where boat builders brought an
antitrust action against a stern drive engine manufacturer,
the court held, inter alia, that the evidence was insufficient
to find that the engine manufacturer's discount programs
restrained trade and monopolized the market. Brunswick
offered a higher percentage discount when boat builders
bought a higher percentage of their engines from it, but
there was no allegation that its pricing was below cost. See

1062. In Concord Boat the district court cited
the district court opinion in this case when 3M filed its
motion to dismiss. See LePage's Inc. v. 3M, No. Civ. A. 97-
3983, 

(E.D. Pa. Nov. 14, 1997). The
Concord Boat district court agreed with the plaintiff that it
was not the price (above cost or not) that was relevant but
the "strings" attached to the price and that the district
court here was correct to distinguish Brooke Group since
there were no "strings" attached (bundled rebates) in that
case. In Concord Boat, the strings attached were the
_________________________________________________________________

11. Microsoft also offers some guiding principles on monopolization under
section 2. To be condemned as exclusionary, a monopolist's act must
have an "anticompetitive effect," which means that it must harm the
competitive process and thereby harm consumers. Harm to a competitor
will not suffice. 

. Competitive conduct is
acceptable, but conduct that destroys competition is not. See 

burden of proof is on the plaintiff, it must demonstrate that the
monopolist's conduct has the requisite anticompetitive effect. See 

If a plaintiff establishes a prima facie case under section 2, then
the monopolist may offer a "procompetitive justification" for its conduct
(a nonpretextual claim that its conduct is indeed a form of competition
on the merits because it involves greater efficiency or enhanced
consumer appeal), after which the burden would shift back to the
plaintiff to rebut that claim. See 

And finally, if the
monopolist's
procompetitive justification is unrebutted, then the plaintiff must
demonstrate that the anticompetitive harm outweighs the procompetitive
benefits. See 

indicates that in considering the
monopolist's conduct, the focus is on the effect of the conduct rather
than on the intent behind it, as intent is only relevant in that it helps
a
court understand the likely effect of the conduct. 

provisions. See Concord Boat Corp. v. Brunswick
Corp., 

, 930 (E.D. Ark. 1998).

The Court of Appeals for the Eighth Circuit, however,
disagreed with the district court in Concord Boat. The court
of appeal's opinion reflected an application of Brooke
Group's strong stance favoring vigorous price competition
and expressing skepticism of the ability of a court to
separate anticompetitive from procompetitive actions when
it comes to above-cost strategic pricing. See Concord 

. More importantly, the court perceived
that Brooke Group should be considered even with claims
based on pricing with strings. See 

firm has
discounted prices to a level that remains above the firm's
average variable cost, the plaintiff must overcome a strong
presumption of legality by showing other factors indicating
that the price charged is anticompetitive." 

v. Ponder, 

, 1360 (8th Cir. 1989) (internal
quotation marks omitted). The court stated that a section 2
defendant's proffered business justification is the most
important factor in determining whether its challenged
conduct is not competition on the merits. See 

The court, however, distinguished cases such as SmithKline
and Ortho where products were bundled since they involved
two markets. See 

situation of the defendant in Aspen , 3M's
pricing structure and bundled rebates were not necessarily
contrary to its economic interests, as they likely increased
its sales. Furthermore, other than the obvious reasons such
as increasing bulk sales, market share and customer
loyalty, there are several other potential "procompetitive" or
valid business reasons for 3M's pricing structure and
bundled rebates: efficiency in having single invoices, single
shipments and uniform pricing programs for various
products. See Br. of Appellant at 7. Moreover, the record
demonstrates that, with the biggest customers, 3M's
rebates were not eliminating the competitive process, as
LePage's still was able to retain some customers through
negotiation, and even though it lost other customers, the
losses were attributable to their switching to foreign
suppliers or changing suppliers because of quality or
service without regard to the rebates.

                               24
In sum, we have concluded as a matter of law after an
intensive analysis that 3M did not violate section 2 of the
Sherman Act by reason of its bundled rebates. If we held
otherwise, notwithstanding the effects of the challenged
practices on 3M's competitors, we would risk curtailing
price competition and a method of pricing beneficial to
customers because the bundled rebates effectively lowered
their costs.

2. Other Methods

LePage's also claims that, through a variety of other
allegedly anticompetitive actions, 3M prevented LePage's
from competing. LePage's asserts that 3M foreclosed
competition by directly purchasing sole-supplier status. See
Br. of Appellee at 45. There was some dispute as to whether
the contracts were conditioned on 3M being the sole
supplier, and 3M claims that there are only two customers
for which there is any evidence of a sole supplier
agreement. It appears that most of 3M's contracts with
customers were not conditioned on exclusivity, but
practically speaking, some customers dropped LePage's as
a supplier to maximize the rebates that 3M was offering.
Moreover, United Shoe Machinery Corp. v. United States,

, 465, 

, 368 (1922), explained that
a contract that does not contain specific agreements not to
use the products of a competitor still will come within the
Clayton Act as to exclusivity if its practical effect is to
prevent such use.

Even assuming, however, that 3M did have exclusive
contracts with some of the customers, LePage's has not
demonstrated that 3M acted illegally, as one-year exclusive
contracts have been held to be reasonable and not unduly
restrictive. See Federal Trade Comm'n v. Motion Picture
Adver. Serv. Co., 

, 395-96, 

, 363-
64 (1953) (holding that evidence sustained the
Commission's finding that the distributor's exclusive
screening agreements with theater operators unreasonably
restrained competition, but stating that the Commission
had found that the term of one-year exclusive contracts had
become a standard practice and would not be an undue
restraint on competition). See also 

.
In Tampa Electric Co. v. Nashville Coal Co., 

,

                               25
327, 

, 627-28 (1961), the Court stated that
even if in practical application a contract is found to be an
exclusive-dealing arrangement, it does not violate section 3
of the Clayton Act unless the court believes it probable that
performance of the contract will foreclose competition in a
substantial share of the line of commerce affected. Using
that standard, although LePage's's market share in private
label tape has fallen from 88% to 67%, it has not been
established that, as a result of the allegedly exclusive
contracts, competition was foreclosed in a substantial share
of the line of commerce affected. Indeed, in view of
LePage's's two-thirds share of the private label business, its
attack on exclusivity agreements seems rather attenuated.

There appear to be very few cases supporting liability
based on section 2 of the Sherman Act for exclusive
dealing, as some cases suggest that if, as is the case here
under the jury's findings, there is no liability under section
3 of the Clayton Act, it is more difficult to find liability
under the Sherman Act since its scope is more restricted.12
In any event, the record shows only two allegedly exclusive
contracts (with the Venture and Pamida stores), and
"[b]ecause an exclusive deal affecting a small fraction of a
market clearly cannot have the requisite harmful effect
upon competition, the requirement of a significant degree of
foreclosure serves a useful screening function." 

. The Microsoft court explained that although
exclusive contracts are commonplace, particularly in the
field of distribution, in certain circumstances the use of
exclusive contracts may give rise to a section 2 violation
even though the contracts foreclose less than the roughly
40 to 50% share usually required to establish a section 1
violation. See 

In this case, it cannot be
concluded that the two contracts with Venture and Pamida
were responsible for the total drop in LePage's's market
share. Furthermore, even if all 3M's contracts were
considered exclusive, LePage's's total drop in market share
was only 21%, and some of this loss was shown in the
_________________________________________________________________

12. It is more common for charges of exclusive dealing to be brought
under section 1 of the Sherman Act or the Clayton Act, which the jury
found that 3M did not violate. See, e.g ., Barr Labs., Inc. v. Abbott
Labs.,

, 110 (3d Cir. 1992).

                               26
record to be due to quality or service consistency concerns
rather than to 3M's tactics. Therefore, there was not
enough foreclosure of the market to have an
anticompetitive effect.

LePage's also claims that by calculating the rebates only
once a year, 3M made it more difficult for a purchaser to
pass on the savings to its customers, thereby making it
harder for companies to switch suppliers and keeping retail
prices and margins high. See Br. of Appellee at 39-40. As
discussed above, one-year contracts may be considered
standard, and even if they make it more unlikely that
rebates are passed on in the form of lower retail prices, the
discounts could be applied towards lowering retail prices
the following year or towards other costs by companies that
are factored into the retail prices (such as advertising). In
the circumstances, we conclude that this conduct does not
qualify as predatory or anticompetitive so as to establish
liability under section 2 of the Sherman Act.

LePage's also alleges that 3M entered the retail private
label tape portion of the market to destroy the market and
thereby increase its sales of branded tape, but the case law
does not support liability under section 2 for this type of
action. In Brooke 

, 113 S.Ct. at
2584, Liggett/Brooke Group alleged that Brown &
Williamson Tobacco Corporation ("B&W") sold generic
cigarettes in order to decrease losses of sales in its branded
cigarettes. B&W sold generic cigarettes at the same list
price as Liggett but also offered large volume rebates to
certain wholesalers so they would buy their generic
cigarettes from B&W. See 

113 S.Ct. at 2584.
B&W wanted to take a larger part of the generic market
from Liggett and drive Liggett to raise prices on generic
cigarettes, which B&W would match, thereby encouraging
consumers to switch back to branded cigarettes. See 

113 S.Ct. at 2584. The Court held that because
B&W had no reasonable prospect of recouping its predatory
losses and could not inflict the injury to competition that
antitrust laws prohibit, it did not violate the Robinson-
Patman Act or the Sherman Act. See 

113 S.Ct.
at 2598. In this case, however, 3M did not use below
average variable cost pricing (LePage's does not charge

                               27
predatory pricing) and therefore 3M did not have predatory
costs to recoup.

We recognize that LePage's attempts to distinguish
Brooke Group on the ground that "3M used other
techniques [i.e., techniques other than predatory pricing] to
extinguish the private-label category subjecting itself to
different legal standards," Br. of Appellee at 55, but we
nevertheless reject LePage's's argument on this point. While
LePage's does not contend that 3M engaged in predatory
pricing, it does contend that the goal of 3M's other conduct
was "to extinguish the private-label category, subjecting
itself to different legal standards" than those applicable in
Brooke Group. See 

3M denies that it
was attempting to eliminate the private label category of
transparent tape, the record supports a finding that it had
that intent.13 We are satisfied, however, that its efforts to
eliminate the private label aspect of the transparent tape
market are not unlawful as, "examined without reference to
its effects on competitors," it is evident that in view of 3M's
dominance in brand tape, that it was rational for it to want
the sale of tape to be concentrated in that category of the
market. See Stearns Airport Equip. Co. v. FMC Corp., 

, 523 (5th Cir. 1999).14

Accordingly, we find that 3M's actions in the record,
including the bundled rebates and other elements of the
"monopoly broth," were not anticompetitive and predatory
as to violate section 2 of the Sherman Act.
_________________________________________________________________

13. It is not possible from the verdict to know how the jury found on this
point, and thus we assume for purposes of this opinion that 3M was
trying to eliminate the private label category of the transparent tape
market. Therefore, if we concluded, which we do not, that a verdict could
be upheld on the basis of that finding, we would order a new trial as the
verdict nevertheless might, in fact, have been predicated on other
theories that could not be justified.

14. We do not understand why 3M's brief misquotes Stearns 

by substituting the words "A finding of predatory conduct" in a
direct quotation for "a finding of exclusionary conduct." Br. of Appellant
at 35 n.23.

                                28
D. ATTEMPTED MAINTENANCE OF MONOPOLY

We will affirm on LePage's's cross-appeal of the district
court's grant of 3M's motion for judgment as a matter of
law on the "attempted maintenance of monopoly power"
claim, although we believe that the district court erred in
its reasoning in reaching its result. Section 2 of the
Sherman Act does not create a cause of action for an
"attempt to maintain a monopoly." Section 2 of the
Sherman Act provides: "Every person who shall monopolize,
or attempt to monopolize, or combine or conspire with any
other person or persons, to monopolize any part of the
trade or commerce among the several States, or with
foreign nations, shall be deemed guilty of a felony." 15
U.S.C. S 2. Therefore, there can be claims for an attempt to
monopolize and claims for monopolization, which include:
"(1) the possession of monopoly power in the relevant
market and (2) the willful acquisition or maintenance of
that power as distinguished from growth or development as
a consequence of a superior product, business acumen, or
historic accident." Grinnell 

, 86
S.Ct. at 1704; see also Houser v. Fox Theatres Mgmt. Corp.,

, 1229 (3d Cir. 1988). But even if we treat its
claim as an attempted monopolization claim, LePage's has
not presented proofs establishing the elements of such a
claim.

It is not clear what LePage's intended when it filed an
"attempted maintenance of monopoly power" claim. If
LePage's wanted to establish liability for 3M's conduct in
maintaining a monopoly, then its claim would be covered
by the "willful maintenance" part of the "monopolization"
offense and would have been encompassed adequately by
the monopolization count on appeal. Because 3M long has
had monopoly power,15 any violation it committed would be
actual monopolization as opposed to attempted
_________________________________________________________________

15. LePage's repeatedly states throughout its brief that 3M concedes that
it enjoys monopoly power with a 90% share of the overall relevant
market (the United States transparent tape market). See Br. of Appellee
at 3. Monopoly power can be defined as the power to control prices and
exclude competition regarding a particular product and within a
particular geographic market. See Borough of Lansdale v. Philadelphia
Elec. Co., 

, 311 (3d Cir. 1982).

                               29
monopolization inasmuch as attempted monopolization is
defined as an unsuccessful attempt to achieve
monopolization, see American Tobacco Co. v. United States,

, 785, 

, 1127 (1946), and
requires "(1) that the defendant has engaged in predatory or
anti-competitive conduct with (2) a specific intent to
monopolize and (3) a dangerous probability of achieving
monopoly power." Spectrum 

, 113
S.Ct. at 890-91; see also Ideal Dairy Farms, Inc. v. John
Labatt, Ltd., 

, 750 (3d Cir. 1996).

The district court construed LePage's's "attempted
maintenance of monopoly power" claim as reflecting a third
cause of action (besides monopolization and attempted
monopolization) but found it inherently illogical. See
LePage's, 

, at *2-3. The court explained
that "[a]ny `attempt claim' rests on the underlying theory
that the defendant has failed to achieve its goal, which in
this case is maintenance of monopoly power. But, if the
defendant has failed to achieve its goal of maintaining
monopoly power, then it follows that the defendant lacks
monopoly power. Lacking any monopoly power to maintain,
the defendant cannot be held liable for `attempted
maintenance of monopoly power.' " 

We believe,
however, that the district court erred in its reasoning that
if a party failed in its goal to maintain monopoly power,
then it lacked monopoly power and therefore could not have
any monopoly power to maintain. After all, a company
could have a legal monopoly and attempt to maintain that
monopoly through anticompetitive acts but fail and no
longer have a monopoly. It then would have attempted to
maintain its monopoly but would not have succeeded in its
attempt. This does not mean, however, that it lacked
monopoly power and therefore could not have any
monopoly power to maintain.

The district court concluded that this "attempted
maintenance" concept was actually a standard attempted
monopolization claim -- that the defendant does not have
monopoly power but eventually would achieve monopoly
power if it continued to engage in predatory conduct. 

LePage's also argues on this appeal that the attempt
to maintain a monopoly should fall under the "attempted

                               30
monopolization" offense and points to cases to support its
point of view. Therefore, LePage's opposes the view that
because 3M long has had a monopoly, its actions would
fall under monopolization rather than attempted
monopolization. It argues that a company can succeed in
possessing a monopoly and still be held liable for
"attempted monopolization."16 In Lorain Journal Co. v.
_________________________________________________________________

16. However, it seems to make more sense that in an attempt case the
party did not succeed in achieving the monopoly. Indeed, early
statements on attempts to monopolize characterize it as "conduct that
closely approaches but does not quite attain completed monopolization,
plus a wrongful intent to monopolize." GELLHORN at 153. Gellhorn and
Kovacic state, "[B]y definition, an attempt case involves prosecution of
the unsuccessful monopolist, which increases judicial caution." GELLHORN
at 154. They add that, as LePage's claims, a defendant can be convicted
of both monopolization and an attempt to monopolize, but the more
common view is that the attempt merges into the offense of
monopolization. See 

Similarly, the Areeda treatise adds that
despite the rhetoric of some cases, exclusionary conduct by a monopolist
within its own market, whether successful or not, is best treated as an
aspect of the full monopolization offense. IIIA A REEDA P 806a. The Areeda
treatise also states that to say that one who has monopolized also has
attempted to monopolize is "redundant and adds nothing to the scope of
available remedies." 

Therefore, the attempt to monopolize
should be merged into the completed offense. See 

Inc. v.
Samuel Moore & Co., 

, 990 (5th Cir. 1983), the court stated
that "it is only the failure of the scheme that keeps the [attempted
monopolization] charge from becoming actual monopolization."

Indeed, in the case that LePage's cites to support the claim that a
party can be held liable for both attempted monopolization and
monopolization, American Tobacco 

, 66 S.Ct. at
1126, the Court states that the attempted monopolization count was
merged into the monopolization claim. See 

case, the jury
instructions defined "attempt to monopolize" as

       the employment of methods, means and practices which would, if
       successful, accomplish monopolization, and which, though falling
       short, nevertheless approach so close as to create a dangerous
       probability of it, which methods, means and practices are so
       employed by the members of and pursuant to a combination or
       conspiracy formed for the purpose of such accomplishment.

66 S.Ct. at 1127.

                                31
United States, 

, 152-53, 

, 186
(1951), the Court stated, "It is consistent with that result to
hold here that a single newspaper, already enjoying a
substantial monopoly in its area, violates the `attempt to
monopolize' clause of S 2 when it uses its monopoly to
destroy threatened competition." 

72 S.Ct. at
187. The Court, however, made reference to the publisher's
attempt to regain its monopoly by forcing advertisers to
boycott a competing radio station and also mentioned the
publisher's attempt to regain its pre-1948 substantial
monopoly over the mass dissemination of all news and
advertising.

Regardless of whether the attempted monopolization
claim should merge into the monopolization claim in cases
where the defendant has a monopoly, and even if the claim
of "attempted maintenance of monopoly" was actually an
"attempted monopolization" claim, as LePage's now claims,
see Br. of Appellee at 87-90, it still would have to meet the
requirements of the latter claim to establish liability.
Spectrum Sports clarifies the requirements of an attempted
monopolization claim--that the defendant engaged in
predatory or anticompetitive conduct with a specific intent
to monopolize and a dangerous probability of achieving
monopoly power. See Spectrum 

,
113 S.Ct. at 890-91. LePage's could not create a separate
cause of action under the attempted monopolization offense
of section 2 and, by calling it "attempted maintenance of
monopoly," avoid the standards of an attempted
monopolization claim in an effort to establish liability.
_________________________________________________________________

Under those instructions, it seems logical that a company that actually
achieved a monopoly could not be found liable for an attempt to
monopolize, unless the reasons for the possession of its monopoly were
not related to the unlawful conduct that was meant to achieve that
monopoly. For example, suppose a company tried through
anticompetitive means to achieve a monopoly and came dangerously
close to doing so but failed. It nevertheless then obtained a patent and
achieved a legal monopoly, following which its competitor filed suit
against it for attempted monopolization. In such a circumstance, it
would not be illogical to allow an attempt to monopolize claim even
though the defendant had achieved an actual monopoly.

                               32
LePage's has not demonstrated that the facts support a
conclusion that 3M engaged in conduct that established
each element of an attempted monopolization claim.
Although it argues throughout its brief that 3M's actions
were predatory and anticompetitive, the attempted
monopolization claim has a requirement of specific intent
rather than general intent that LePage's did not argue
specifically. See 

. In any event, quite
aside from the scope of the LePage's's arguments, in our
analysis of the monopolization claim we have come to the
conclusion that 3M's rebate program and the other
elements of the alleged "monopoly broth" were not
predatory and anticompetitive. In the circumstances,
inasmuch as LePage's relies on this conduct to establish its
attempted maintenance of monopoly claim, its claim must
fail. Accordingly, we will affirm the district court's partial
grant of the motion for judgment as a matter of law in favor
of 3M, although not for the reasons the district court stated
in its opinion.

III. CONCLUSION

For the foregoing reasons, we will affirm the district
court's order granting 3M's motion for judgment as a
matter of law on the attempted maintenance of monopoly
claim and will reverse the district court's order denying its
motion for judgment as a matter of law in all other
respects. We will remand to the district court to enter
judgment for 3M in accordance with this opinion. In view of
our result, we do not reach the points 3M has raised in its
motion for a new trial.

                               33
[This page intentionally left blank]

                               34
Volume 2 of 2

                35
SLOVITER, Circuit Judge, dissenting:

In overturning the jury's verdict for LePage's on its claim
that 3M violated S 2 of the Sherman Act and reversing the
District Court's denial of 3M's motion for judgment as a
matter of law, the majority applies reasoning that would
weaken S 2 of the Sherman Act to the point of impotence.
While that may be a consummation greatly to be desired by
the behemoths of industry, such as Microsoft or 3M, it
would be an incalculable loss to business generally and to
the consumer. Section 2, the provision of the antitrust laws
designed to curb the excesses of monopolists and near-
monopolists, is the equivalent in our economic sphere of
the guarantees of free and unhampered elections in the
political sphere. Just as democracy can thrive only in a free
political system unhindered by outside forces, so also can
market capitalism survive only if those with market power
are kept in check. That is the goal of the antitrust laws. The
alternative, government control of markets and regulation
of prices, is unacceptable to most of us.

The majority has accomplished its enervation ofS 2 by
relying on theories and cases inapplicable here and by
failing to consider the synergistic effect of 3M's conduct
taken as a whole. In the process, it ignores the jury verdict,
the District Court's careful analysis, and this court's
directly applicable precedent. It is a development that calls
for full en banc review.

I.

INTRODUCTION

It has been well established, as the Supreme Court
enunciated thirty-five years ago, that a defendant company
who possesses monopoly power in the relevant market will
be found in violation of S 2 of the Sherman Act if the
defendant wilfully acquired or maintained that power.
United States v. Grinnell Corp., 

, 570-71
(1966).

In many S 2 cases, the parties spend much time and
effort in seeking to define the market and to determine

                                36
whether the defendant has monopoly power. Fortunately, in
this case we need devote no effort to these issues. It is
agreed that the relevant product market is transparent
tape, and the relevant geographic market is the United
States.1 Moreover, as to the issue of monopoly power, 3M
concedes it possesses monopoly power in the United States
transparent tape market, with a ninety percent market
share. In fact, the evidence showed that the household
penetration of 3M's Scotch-brand tape is virtually one
hundred percent.

The sole remaining issue and our focus on this appeal is
whether 3M took steps to maintain that power in a manner
that violated S 2 of the Sherman Act. A monopolist wilfully
acquires or maintains monopoly power when it competes on
some basis other than the merits. Eastman Kodak Co. v.
Image Tech. Servs., Inc., 

, 482-83 (1992);
Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 

, 605 n.32 (1985). The District Court, in instructing the
jury on Count I, LePage's claim of unlawful maintenance of
monopoly power under S 2, explained:

       Count I in this case is unlawful maintenance of
       monopoly power.

        LePage's alleges that it was injured by 3M's unlawful
       monopolization in the United States market for
       invisible and transparent tape for home and office use.

        To win on their claim of monopolization, LePage's
       must prove each of the following elements by a
       preponderance of the evidence.

        First, that 3M had monopoly power in the relevant
       market.

        Secondly, that 3M willfully maintained that power
       through predatory or exclusionary conduct. . . .
_________________________________________________________________

1. Although 3M originally challenged LePage's selection of the United
States as the relevant geographic market, App. at 7, the District Court
held that LePage's had introduced sufficient evidence from which the
jury could properly find that the relevant geographic market is the
United States and 3M does not challenge that market definition on
appeal.

                               37
        And thirdly, that LePage's was injured in its business
       or property because of 3M's restrictive or exclusionary
       conduct.

App. at 5663-64.

The jury was given the following questions on Count I.

       (1) Do you find that LePage's has proven, by a
       preponderance of the evidence, that the relevant
       market is invisible and transparent tape for home and
       office use in the United States?

       (2) Do you find that LePage's has proven, by a
       preponderance of the evidence, that 3M unlawfully
       maintained monopoly power as defined under the
       instructions for Count I?; [and]

       [(3)] Do you find that LePage's has proven, as a matter
       of fact and with a fair degree of certainty, that 3M's
       unlawful maintenance of monopoly power injured
       LePage's business or property as defined in these
       instructions?

App. at 6523. The jury answered "yes" to each of the three
questions. It awarded LePage's more than $22 million
before trebling.

Our review of a jury's verdict is limited to determining
whether some evidence in the record supports the jury's
verdict. Swineford v. Snyder County, 

, 1265
(3d Cir. 1994) ("A jury verdict will not be overturned unless
the record is critically deficient of that quantum of evidence
from which a jury could have rationally reached its
verdict."). This is essentially the same inquiry that the
District Court made. In considering whether to overturn the
jury's verdict, this court must view the evidence in the light
most favorable to the verdict winner, here LePage's.
Lightning Lube, Inc. v. Witco Corp., 

, 1166 (3d
Cir. 1993). We must accord LePage's "the advantage of
every fair and reasonable inference." 

that 3M wilfully maintained its monopoly
in the transparent tape market primarily by bundling its
rebates and by exclusionary conduct, such as by contracts
that expressly or effectively required dealing virtually

                                38
exclusively with 3M. 3M does not argue that it did not
engage in this conduct. It agrees that it offered bundled
rebates and entered into some exclusive dealing contracts.
Instead, 3M argues that its conduct was legal as a matter
of law because it never priced its transparent tape above its
cost. For this argument, it relies on the Supreme Court's
decision in Brooke Group Ltd. v. Brown & Williamson
Tobacco Corp., 

(1993). The majority in
essence agrees. But Brooke Group did not deal with a
monopolist and the antitrust claim in that case was
predatory pricing, which is not one that LePage's raised
here.

The majority discusses bundled rebates and exclusive
dealing separately. I view that as a serious error. That is
because in determining whether a monopolist competes on
some basis other than the merits, which as noted is the
definition of monopolistic behavior, almost all courts,
including this one, have looked to the monopolist's conduct
taken as a whole rather than considering each aspect in
isolation. See, e.g., Cont'l Ore Co. v. Union Carbide &
Carbon Corp., 

, 699 (1962) (stating"in a case
like the one before us [alleging S 1 andS 2 violations], the
duty of the jury was to look at the whole picture and not
merely at the individual figures in it") (citation and
quotation omitted); SmithKline Corp. v. Eli Lilly & Co., 

, 1061 n.3 (3d Cir. 1978) (determining that
although defendant's anticompetitive scheme "lack[ed] the
element of coercion necessary for liability under the theory
of tie-ins [under S 1]," the evidence of tying was "sufficient
to establish the offense of monopolization underS 2 of the
Sherman Act"); City of Anaheim v. So. Cal. Edison Co., 

, 1376 (9th Cir. 1992) ("[I]t would not be proper
to focus on specific individual acts of an accused
monopolist while refusing to consider their overall
combined effect. . . . We are dealing with what has been
called the `synergistic effect' of the mixture of the
elements."); Aspen Highlands Skiing Corp. v. Aspen Skiing
Co., 

, 1522 n.18 (10th Cir. 1984) ("Each of
the six [aspects of defendant's exclusionary conduct2]
_________________________________________________________________

2. The six aspects referred to by the court were"(1) forcing plaintiff out
of the four-area ticket by requiring that revenues be divided below

                               39
viewed in isolation need not be supported by sufficient
evidence to amount to a S 2 violation. It is enough that
taken together they are sufficient to prove the
monopolization claim."), aff 'd on other grounds, 

(1985); City of Groton v. Conn. Light & Power Co., 

, 928 (2d Cir. 1981) (" `It is the mix of the various
ingredients of utility behavior in a monopoly broth that
produces its unsavory flavor.' ") (quoting City of Mishawaka
v. Am. Elec. Power Co., Inc., 

, 986 (7th Cir.
1980)); Northeastern Tel. Co. v. AT&T, 

, 95 n.28
(2d Cir. 1981) (following Continental Ore to consider
defendants' various activities as a whole, although
concluding proof of violation "utterly lacking"); cf. United
States v. Microsoft, 

, 78 (D.C. Cir. 2001)
(avoiding issue because district court "did not point to any
series of acts, each of which harms competition only
slightly but the cumulative effect of which is significant
enough to form an independent basis for liability"); 2 Philip
E. Areeda, Roger D. Blair & Herbert Hovenkamp, Antitrust
Law P 310, at 147 (2d ed. 2000) ("In a monopolization case,
conduct must always be analyzed `as a whole.' A
monopolist bent on preserving its dominant position is
likely to engage in repeated and varied exclusionary
practices. Each one viewed in isolation might be viewed as
de minimis . . . , but the pattern gives increased plausibility
to the claim.").

In concluding that there was an insufficient basis to
support the jury's verdict, the majority fails to consider
whether the synergistic effect of the conduct considered as
a whole is anticompetitive. As will be seen, even considered
individually the evidence underlying each of LePage's claims
supports the jury's verdict. When 3M's conduct is
considered as a whole, the conclusion is inescapable that
the synergistic effect of 3M's conduct was anticompetitive.
_________________________________________________________________

plaintiff 's market share; (2) substituting defendant's three area ticket
for
a four area ticket; (3) marketing and advertising its three mountains in
a manner designed to convince consumers that Aspen had only three
mountains, not mentioning Aspen Highlands; (4) making an agreement
with a tour operator to sell defendant's tickets to the exclusion of
plaintiffs; (5) refusing to accept plaintiff 's coupons during the 1978-79
season; and (6) raising ticket prices for a single-day lift ticket thus
eliminating plaintiff 's ability to offer a multi-area ticket." 

                               40
II.

DISCUSSION

A.

Bundled Rebates

Through a sophisticated program of rebates,
denominated Executive Growth Fund and Partnership
Growth Fund, 3M induced customers to eliminate or
substantially reduce their purchases from LePage's. Rather
than relying on volume discounts which often reflect cost
savings, 3M offered discounts to customers for purchases
spanning six of 3M's diverse product lines. Those covered
by the rebate program were: Health Care Products, Home
Care Products, Home Improvement Products, Stationery
Products (including transparent tape), Retail Auto Products,
and Leisure Time. Sealed App. at 2979. Both of 3M's rebate
programs set customer-specific target growth rates in each
product line. The size of the rebate was linked to the
number of product lines in which targets were met, and the
number of targets met by the buyer determined the rebate
it would receive on all of its purchases.

The rebates were considerable. For example, Kmart
received $926,287 in 1997, Sealed App. at 2980, and in
1996 Wal-Mart received more than $1.5 million, Sam's
Club received $666,620, and Target received $482,001.
Sealed App. at 2773. A failure to meet the target for a single
product line would diminish the rebate received across all
product lines. Thus, there was a substantial incentive for
each customer to meet the targets across all product lines
to maximize its rebates.

1. Applicability of SmithKline

In discussing 3M's bundled rebates, the majority
recognizes that it must address our decision in SmithKline
Corp. v. Eli Lilly & Co., 

(3d Cir. 1978), where
this court held that conduct substantially identical to 3M's
was anticompetitive and sustained the finding of a violation
of S 2. SmithKline concerned sales to hospitals by Eli Lilly &

                                 41
Company, the pharmaceutical manufacturer, of three of its
cephalosporins which it sold under the trade names Kefzol,
Keflin and Keflex. Cephalosporins, which are broad
spectrum antibiotics, were at that time indispensable to
hospital pharmacies. Lilly had a monopoly on both Keflin
and Keflex because of its patents. However, those drugs
faced competition from the generic drug cefazolin which
Lilly sold under the trade name Kefzol and which
SmithKline sold under the trade name Ancef.

Lilly's profits on the patented Keflin were far higher than
those on Kefzol where its pricing was constrained by the
existence of a competitor (SmithKline). Thus, Lilly sought to
preserve its market position in Keflin and discourage sales
of Ancef and even its own Kefzol. 

To do this,
Lilly instituted a rebate program that provided a 3% bonus
rebate for hospitals that purchased specified quantities of
any three of Lilly's five cephalosporins. SmithKline brought
a S 2 monopolization claim, alleging that Lilly used these
multi-line volume rebates to maintain its monopoly over the
nonprofit hospital market for cephalosporins.

The district court (Judge A. Leon Higginbotham, later a
member of this court) found that Lilly's pricing policy
violated S 2. SmithKline Corp. v. Eli Lilly & Co., 

(E.D. Pa. 1976). We affirmed by a unanimous
decision. Although customers were not forced to select
which cephalosporins from Lilly's stable they purchased, we
recognized that the effect of the rebate program was to
induce hospitals to conjoin their purchases of Kefzol with
Keflin and Keflex, Lilly's "leading sellers." 

. As we stated, "[a]lthough eligibility for the 3%
bonus rebate was based on the purchase of specified
quantities of any three of Lilly's cephalosporins, in reality it
meant the combined purchases of Kefzol and the leading
sellers, Keflin and Keflex." 

of Lilly's S 2
violation was that Lilly linked a product on which it faced
competition with products on which it faced no
competition. 

The effect of the 3% bundled rebate was magnified by the
volume of Lilly products sold, so that "in order to offer a
rebate of the same net dollar amount as Lilly's, SmithKline
had to offer purchasers of Ancef rebates of some 16% to

                                42
hospitals of average size, and 35% to larger volume
hospitals." 

Lilly's rebate structure combining
Kefzol with Keflin and Keflex "insulat[ed] Kefzol from true
price competition with [its competitor] Ancef." 

LePage's private-label and second-tier tapes are, as Kefzol
and Ancef were in relation to Keflin, less expensive but
otherwise of similar quality to Scotch-brand tape. Indeed,
before 3M instituted its rebate program, LePage's had
begun to enjoy a small but rapidly expanding toehold in the
transparent tape market. 3M's incentive was thus the same
as Lilly's in SmithKline: to preserve the market position of
Scotch-brand tape by discouraging widespread acceptance
of the cheaper, but substantially similar, tape produced by
LePage's.

3M bundled its rebates for Scotch-brand tape with its
second-tier and private-label tape in much the same way
that Lilly bundled its rebates for Kefzol with Keflin and
Keflex. In both cases, the bundled rebates reflected an
exploitation of the seller's monopoly power. Just as
"[cephalosporins] [were] carried in . .. virtually every
general hospital in the country," SmithKline , 575 F.2d at
1062, Scotch-brand tape is indispensable to any retailer in
the transparent tape market.

In light of the manifest comparability between the facts in
SmithKline and here, this court's analysis of S 2 of the
Sherman Act in SmithKline and our conclusion in that case
is not only directly relevant but controlling. Speaking
through Judge Aldisert, we said:

        With Lilly's cephalosporins subject to no serious
       price competition from other sellers, with the barriers
       to entering the market substantial, and with the
       prospects of new competition extremely uncertain, we
       are confronted with a factual complex in which Lilly
       has the awesome power of a monopolist. Although it
       enjoyed the status of a legal monopolist when it was
       engaged in the manufacture and sale of its original
       patented products, that status changed when it
       instituted its [bundled rebate program]. The goal of
       that plan was to associate Lilly's legal monopolistic
       practices with an illegal activity that directly affected

                               43
       the price, supply, and demand of Kefzol and Ancef.
       Were it not for the [bundled rebate program] the price,
       supply, and demand of Kefzol and Ancef would have
       been determined by the economic laws of a competitive
       market. [Lilly's bundled rebate program] blatantly
       revised those economic laws and made Lilly a
       transgressor under S 2 of the Sherman Act.

The effect of 3M's rebates were even more powerfully
magnified than those in SmithKline because 3M's rebates
required purchases bridging 3M's extensive product lines.
In some cases, these magnified rebates to a particular
customer were as much as half of LePage's entire prior tape
sales to that customer. For example, LePage's sales to
Sam's Club in 1993 totaled $1,078,484, while 3M's 1996
rebate to Sam's was $666,620. Similarly, LePage's 1992
sales to Kmart were $2,482,756; 3M's 1997 rebate to Kmart
was $926,287. 3M used its monopoly in transparent tape,
backed by its considerable catalog of products, to squeeze
out LePage's. 3M's conduct was at least as anticompetitive
as the conduct which this court held violated S 2 in
SmithKline.

The majority makes several efforts to distinguish this
case from SmithKline but they are unpersuasive. In one
attempt, relegated to a footnote, the majority states that
LePage's claim, like that of the plaintiff in SmithKline, is one
of "monopoly leveraging" and as such must fail because a
monopoly leveraging case requires two separate markets
whereas the parties both treat this case as having only one
market for purposes of the appeal. See Maj. Op. at 15 n.5.

This is not a monopoly leveraging case, nor could it be.
As Judge Mansmann explained in Fineman v. Armstrong
World Industries, Inc., 

(3d Cir. 1992), a
leveraging claim entails an effort to convert monopoly power
in one market into either a monopoly or a dangerous
probability of monopoly in another market. 

see
also 3 Areeda & Hovenkamp, Antitrust LawP 652, at 83
(rev. ed. 1996) (defining monopoly leveraging as a situation
where "the monopolist . . . `misuse[s]' or `abuse[s]' its
monopoly power by `leveraging' it so as to give the

                               44
monopolist an unfair advantage in the secondary market,
even though (a) the monopolist lacks significant power in
the secondary market; and (b) there is no reasonable
prospect that it will acquire monopoly power there"). The
claim was unsuccessful in Fineman because, although
defendant Armstrong probably could have been viewed as
having dominance in the leveraging market, which was
resilient floor covering, there was no evidence of a use of
that market power to attempt to monopolize the video
magazine market (producing a monthly videotape magazine
for retailers of floor covering products). Significant is the
fact that there were two separate non-competitive markets
at issue--floor coverings and video magazines.

Although there is some passing reference in Fineman
categorizing SmithKline among monopoly leveraging claims,

("[a]lthough monopoly leveraging
claims are not entirely foreign to us, see Danny Kresky
Enterprises, Corp. v. Magid, 

(3d Cir. 1983),
[and] SmithKline"), there was no further discussion of
SmithKline in that context and no explication. 3

Advo, Inc. v. Philadelphia Newspapers, Inc., 

(3d Cir. 1995), which the majority cites, is completely
inapplicable here.4 In that case, the claim was an attempt
to monopolize the market for delivering preprinted
advertising circulars in the greater Philadelphia area, and
plaintiff alleged that the defendant offered predatorily low
prices to major purchasers of delivery services for circular
advertising. It was not a market leveraging case.

SmithKline never argued monopoly leveraging in its case
and it never claimed predatory pricing. Even more
important, LePage's did not claim that this was a monopoly
_________________________________________________________________

3. This court held in Fineman that the district court erred in granting a
judgment notwithstanding the verdict but that there was sufficient
evidence of anti-competitive conduct to warrant a new trial for violation
of S 1 of the Sherman Act.

4. The only reference in Advo to SmithKline is the statement that the
quantity discounts offered by the defendant distinguished that case from
SmithKline, "where we found that discounts tied to the purchase of
specific items might amount to unlawful leveraging of monopoly 

(emphasis omitted).

                               45
leveraging case and, in fact, requested that the court not
charge the jury on a monopoly leveraging theory. App. at
5466-67. The court did not so charge. The majority has
floated a red herring.

Unlike the monopoly leveraging cases where the harm is
the extension of monopoly power from one market to
another, here 3M, if successful in eliminating competition
from LePage's second-tier or private-label tape, would
consolidate its monopoly in the transparent tape market. It
would destroy any serious threat to the dominance of the
Scotch-brand tape, as foreign competition was not viable
and there were no incipient competitors on the horizon.
Thus unrestrained, 3M could eliminate or reduce the
rebates that it offered to favored customers, which it had
introduced only after LePage's entry into the market with
its lower priced options. This is not the scenario to which
monopoly leveraging cases are directed. It is whatS 2 of the
Sherman Act was designed to prevent.

2. Anticompetitive Effect

The importance of the fact that 3M can exercise
monopoly power in the transparent tape market cannot be
underestimated when considering the anticompetitive effect
of its conduct. See, e.g., Robert Pitofsky, New Definitions of
Relevant Market and the Assault on Antitrust, 90 Colum. L.
Rev. 1805, 1807 (1990) ("In monopoly enforcement under
section 2 of the Sherman Act, the pivotal inquiry is almost
always whether the challenged party has substantial
market power in its relevant market."). Monopoly power is
"the power to control prices or exclude competition."

(quoting United States v. E.I.
Du Pont de Nemours & Co., 

, 391 (1956)); see
also Borough of Lansdale v. Phila. Elec. Co., 

,
311 (3d Cir. 1982).

The District Court, recognizing that "this case presents a
unique bundled rebate program that the jury found had an
anti-competitive effect," Le Page's, Inc. v. 3M, No. 97-3983,

, at *5 (E.D. Pa. Mar. 14, 2000), denied
3M's motion for judgment as a matter of law (JMOL),
stating:

                                46
Plaintiff introduced evidence that Scotch is a monopoly
product, and that 3M's bundled rebate programs
caused distributors to displace Le Page's entirely, or in
some cases, drastically reduce purchases from Le
Page's. Tr. Vol. 30 at 105-106; Vol. 27 at 30. Under
3M's rebate programs, 3M set overall growth targets for
unrelated product lines. In the distributors' view, 3M
set these targets in a manner which forced the
distributor to either drop any non-Scotch products, or
lose the maximum rebate. PX 24 at 3M 48136. Thus,
in order to qualify for the maximum rebate under the
EGF/PGF programs, the record shows that most
customers diverted private label business to 3M at
3M's suggestion. Tr. Vol. 28 at 74-75; PX23, 28, 32,
34, 715. Similarly, under the newer Brand Mix rebate
program, 3M set higher rebates for tape sales which
produced a shift from private label tape to branded
tape. Tr. Vol. 31 at 79. PX 393 at 534906.

 Furthermore, Plaintiff introduced evidence of
customized rebate programs that similarly caused
distributors to forego purchasing from Le Page's if they
wished to obtain rebates on 3M's products. Specifically,
the trial record establishes that 3M offered Kmart a
customized growth rebate and Market Development
Funds payment. In order to reach the $15 million sales
target and qualify for the $1 million rebate, however,
Kmart had to increase its consumer stationary
purchases by $5.5 million. Kmart substantially
achieved this "growth" by dropping Le Page's and
another private label manufacturer, Tesa. PX 51 at 3M
102175, PX 121 at 156838. Likewise, 3M customized a
program with Staples that provided for an extra 1%
bonus rebate on Scotch tape sales "if Le Page's
business is given to 3M." PX 98 at 3M 149794. Finally,
3M provided a similar discount on Scotch tape to
Venture Stores "based on the contingency of Venture
dropping private label." PX 712 at 3M 450738. Thus,
the jury could have reasonably concluded that 3M's
customers were forced to forego purchasing Le Page's
private label tape in order to obtain the rebates on
Scotch tape.

                        47


principal basis for overturning the jury's
verdict and the District Court's denial of judgment as a
matter of law is its disagreement with the District Court's
finding that "[LePage's] introduced substantial evidence that
the anti-competitive effects of 3M's rebate programs caused
LePage's losses." 

Glossing over the substantial
evidence of loss and its connection to 3M's conduct, the
majority imposes a new requirement on S 2 plaintiffs by
holding that LePage's failed to "show that it could not
compete by calculating the discount that it would have had
to provide in order to match the discounts offered by 3M
through its bundled rebates." Maj. Op. at 18. The majority
cites no authority for this novel proposition. Moreover, it
has no relationship to the record in this case.

The jury was capable of calculating from the evidence the
amount of rebate a customer of 3M would lose if it failed to
meet 3M's quota of sales in even one of the bundled
products. Thus, the majority's requirement to show"the
discount that [LePage's] would have had to provide to
match the discounts offered by 3M through its bundled
rebates" can be measured by the discounts 3M gave or
offered. For example, LePage's points out that in 1993
Sam's Club would have stood to lose $264,900, Sealed App.
at 1166, and Kmart $450,000 for failure to meet one of
3M's growth targets in a single product line. Sealed App. at
1110.

Moreover, even using the majority's analysis, it is not the
amount the customer would have lost had it stayed with
LePage's without a comparable discount that is important
but the effect of 3M's rebates on LePage's earnings, if
LePage's had attempted to match 3M's discounts. That
amount would represent the impact of 3M's bundled
rebates on LePage's ability to compete, and that is what is
relevant under S 2 of the Sherman Act.

The impact of 3M's discounts was apparent from the
chart introduced by LePage's that shows that LePage's
earnings as a percentage of sales plummeted to below zero
--to negative 10%--during 3M's rebate program. See App.
at 7037; see also App. at 7044 (documenting LePage's

                               48
healthy operating income from 1990 to 1993, rapidly
declining operating income from 1993 to 1995, and large
operating losses suffered from 1996 through 1999).
Demand for LePage's tape, especially its private-label tape,
decreased significantly following the introduction of 3M's
rebates. Although 3M claims that customers participating
in its rebate programs continued to purchase tape from
LePage's, the evidence does not support this contention.
Most distributors dropped LePage's entirely.

As the District Court found, "[LePage's] introduced
evidence . . . that 3M's bundled rebate programs caused
distributors to displace Le Page's entirely, or in some cases,
drastically reduce purchases from Le Page's." Le Page's,

, at *5. For example, LePage's lost key
large volume customers, such as Kmart, Staples, American
Drugstores, Office Max, and Sam's Club. App. at 943-44,
2416-17. Other large customers, like Wal-Mart, drastically
cut back their purchases. App. at 2417. In transparent tape
manufacturing, large volume customers are essential to
achieving efficiencies of scale. As 3M concedes in its brief,
" `large customers were extremely important to [LePage's], to
everyone.' . . . Large volumes . . . permitted `long runs'
making the manufacturing process more economical and
predictable." Br. of Appellant at 10 (quoting trial testimony
of Les Baggett, LePage's former president and CEO, App. at
234) (citation omitted). By March of 1997, LePage's was
forced to close one of its two plants. App. at 2401. Making
all inferences in LePage's favor, the conclusion is
unavoidable that LePage's could not effectively compete.
LePage's has more than satisfied even the majority's
draconian standard.

But perhaps more important, the majority's imposition of
a requirement that plaintiffs demonstrate that they could
not compete "by calculating the discount [the plaintiff]
would have to provide . . . to match the [monopolist's
bundled discounts]" is contrary to our precedent and that
of the Supreme Court. If this is intended to make a
plaintiff 's cost and efficiency the key factors in all S 2
cases, it introduces a novel consideration into an analysis
that should be directed to actions taken by a monopolist. In
our opinion in SmithKline, we nowhere discussed

                               49
SmithKline's costs. The district court in SmithKline
acknowledged that SmithKline was less efficient than Lilly,

, but it nonetheless held
that SmithKline prevailed on its claim.

Admittedly, LePage's must bear the initial burden of
demonstrating that the defendant's conduct "produced
adverse, anti-competitive effects within the relevant product
and geographic markets." United States v. Brown Univ., 

, 668 (3d Cir. 1993).5 There is no exclusive way to
make that showing. We have stated that "[t]he plaintiff may
[show anticompetitive effects] by proving the existence of
actual anticompetitive effects, such as reduction of output,
. . . increase in price, or deterioration in quality of goods or
services." 

(citations omitted). But, as
we observed in Brown, "[s]uch proof is often impossible to
make . . . due to the difficulty of isolating the market effects
of challenged conduct." 

Areeda, Antitrust Law
P 1503, at 376 (1986)).

We noted, however, that "[m]arket power, the ability to
raise prices above those that would prevail in a competitive
market . . . is essentially a `surrogate for detrimental
effects.' " 

v. Ind. Fed'n of Dentists, 

, 460-61 (1986)). For example, in SmithKline , the
district court, in an opinion which this court characterized
as, "meticulous and comprehensive," 

n.1, touched not only on the effect of Lilly's
conduct on the plaintiff but equally, if not more
importantly, the effect on competition generally. Judge
Higginbotham observed, "[a]fter a review of the operation of
[Lilly's rebate program] and its impact on SmithKline, and,
more importantly, on the nonprofit hospital market for
cephalosporins, I find Lilly guilty of the offense of
monopolization in violation of section two of the Sherman
Act." 

(emphasis added).
_________________________________________________________________

5. Although Brown is a S1 rule of reason case, the legal frameworks for
analyzing rule of reason violations of S 1 and monopolization claims
under S 2 are similar. See, e.g., 

; Mid-Texas
Communications Sys., Inc. v. AT&T, 

, 1389 n. 13 (6th Cir.
1980).

                               50
Ironically, the majority even quotes the well-accepted
proposition that to be anticompetitive, conduct must harm
competition itself-- "[h]arm to a competitor will not suffice."
Maj. Op. at 23, n.11. Harm to a competitor becomes
relevant to damages only after a violation is shown, but the
majority disclaims reaching the damages issue. Maj. Op. at
18. Inexplicably the majority fails to consider whether 3M's
actions were harmful to competition, a sine qua non for a
violation of S 2.

LePage's presented powerful evidence that competition
itself was harmed. The District Court recognized this in its
opinion, when it said:

        The jury could reasonably infer that 3M's planned
       elimination of the lower priced private label tape, as
       well as the lower priced Highland brand, would
       channel consumer selection to the higher priced Scotch
       brand and lead to higher profits for 3M. Indeed,
       Defendant concedes that "3M could later recoup the
       profits it has forsaken on Scotch tape and private label
       tape by selling more higher priced Scotch tape . . . if
       there would be no competition by others in the private
       label tape segment when 3M abandoned that part of
       the market to sell only higher-priced Scotch tape."

Le Page's, 

, at *7.

The plan that the District Court posited, that 3M sought
to force LePage's from the market to eliminate the
competition from LePage's second-tier tape, so that 3M
could decrease its sales of its less profitable second-tier
branded tape and force customers back to the higher priced
Scotch-brand tape, was not implausible. Prior to the
introduction of 3M's rebate program, LePage's share of the
transparent tape market had been skyrocketing. For
example, LePage's sales to Staples increased by 440% from
1990 to 1993. App. at 1907-08. Following the introduction
of 3M's rebate program which bundled its private-label tape
with its other products, 3M's private-label tape sales
increased 478% from 1992 to 1997.6 LePage's in turn lost
_________________________________________________________________

6. In 1992 3M's private-label tape sales were $1,142,000. By 1997, its
private-label tape sales had increased to $5,464,222. Sealed App. at 489.

                               51
a proportional amount of sales.7 As a result, LePage's
manufacturing process became less efficient and its profit
margins declined. In 1997, the only other domestic
transparent tape manufacturer, Tesa Tuck, Inc., bowed out
of the transparent tape business entirely. App. at 3008-09.
Had 3M continued with its program 3M could have
eventually forced LePage's out of the market.

3M could effectuate such a plan because there was no
ease of entry. See 

(commenting that
ease of entry would prevent monopolist's predatory pricing
scheme from succeeding); see also Edward A. Snyder &
Thomas E. Kauper, Misuses of the Antitrust Laws: The
Competitor Plaintiff, 

. Rev. 551 (1991) (finding
"barriers to entry" to be one of two necessary conditions for
exclusionary conduct, the other being "market power").

The District Court found that there was "substantial
evidence at trial that significant entry barriers prevent
competitors from entering the . . . tape market in the
United States. Thus, this case presents a situation in which
a monopolist remains unchecked in the market." Le Page's,

, at *7. In the time period at issue here,
there has never been a competitor that has genuinely
challenged 3M's monopoly and it never lost a significant
transparent tape account to a foreign competitor. App. at
4272.

The significance of entry barriers is emphasized in
Concord Boat Corp. v. Brunswick Corp., 

(8th
Cir. 2000), a case cited by the majority. In that case the
court reviewed a multimillion dollar jury verdict on behalf
of plaintiff boat builders who alleged that the dominant
stern drive engine manufacturer violated S 7 of the Clayton
Act and SS 1 and 2 of the Sherman Act. The Court of
_________________________________________________________________

7. According to the majority, some of these losses were attributable to
quality or service issues. Maj. Op. at 26-27. That evidence is in dispute.
Given the existence of evidence to the contrary, the majority's reading of
the facts is simply not consistent with this court's precedent, which the
majority cites with approval, see Maj. Op. at 13, that, when considering
whether to overturn the jury's verdict, this court must view the evidence
in the light most favorable to the verdict winner. Lightning Lube, Inc. v.
Witco Corp., 

, 1166 (3d Cir. 1993).

                               52
Appeals overturned the S 7 verdict as barred by the statute
of limitations and the Sherman S 1 verdict because the
expert opinion on which it was based was not supported by
the facts. It also reversed the Sherman S 2 verdict, but here
the opinion shows the difference between the facts in that
case and those here. First, the court noted that the boat
builders "did not show that significant barriers to entry
existed in the stern drive market." 

It
commented that "[i]f entry barriers to new firms are not
significant, it may be difficult for even a monopoly company
to control prices through some type of exclusive dealing
arrangement because a new firm or firms easily can enter
the market to challenge it." 

"[i]f there are
significant entry barriers in the market, a potential
competitor would have difficulty entering in order to
challenge a firm that is charging supracompetitive high
prices." 

case, 3M does not dispute that there are
significant barriers to entry in the transparent tape market,
as the District Court found.

Second, in holding that the plaintiff boat builders had not
shown that Brunswick's engine price was below cost, the
court relied on the decision in Brooke Group where the
Court held that a predatory pricing claim could not be
grounded on above-cost discounting. The Concord court
distinguished other S 2 cases, including an earlier decision
of the District Court in this case, LePage's, Inc. v. 3M, No.
97-3983, 

(E.D. Pa. 1997), on the ground
that in Brunswick "there are no allegations of tying or
bundling with another product." 

. Of course, the bundled rebates offered by 3M occupy
a central place in LePage's case.

Finally, in its decision the Eighth Circuit noted that
"Brunswick's discount programs were not exclusive dealing
contracts and its customers were not required either to
purchase 100% from Brunswick or to refrain from
purchasing from competitors in order to receive the
discount." 

The court noted that its
customers could purchase up to forty percent of
requirements from other sellers without foregoing the
discount. That situation is far different from 3M's bundled
rebate programs, as there was ample evidence that its

                               53
discount was, in effect, available only if the customer
bought all of its transparent tape requirements from 3M. In
summary, unlike the Brunswick situation, here there were
significant barriers to entry, 3M bundled its rebates, and
3M imposed exclusive dealing requirements on some of its
principal customers.

As the majority concedes, Maj. Op. at 28, there was
evidence from which the jury could have determined that
3M intended to force LePage's from the market, and then
cease or severely curtail its own private-label and second-
tier tape lines. For example, by 1996, 3M had begun to
offer incentives to some customers to increase purchases of
its higher priced Scotch-brand tapes over its own second-
tier brand. The Supreme Court has made clear that intent
is relevant to proving monopolization, see Aspen Skiing Co.
v. Aspen Highlands Skiing Corp., 

, 602 (1985),
and attempt to monopolize, Lorain Journal Co. v. United
States, 

, 155 (1951).

3M's interest in raising prices is well-documented in the
record. LePage's expert testified that the price of Scotch-
brand tape has increased since 1994, after 3M instituted its
rebate program. App. at 3246-47, 5392-95. In its opinion,
the District Court cited the deposition testimony of a 3M
employee acknowledging that the payment of the rebates
after the end of the year discouraged passing the rebate on
to the ultimate customers. App. at 2092. The District Court
thus observed, "the record amply reflects that 3M's rebate
programs did not benefit the ultimate consumer." Le
Page's, 

, at *7. The record contained
sufficient evidence for the jury to conclude the long-term
effects of 3M's conduct were anticompetitive.

3. Relevance of Brooke Group

Running throughout the majority's opinion is the theme
that because 3M's prices on transparent tape were not
below its average variable cost it could not have violated S 2
of the Sherman Act. This is the principal argument made
by 3M on appeal. 3M argues that "[a]bove-cost pricing
cannot give rise to an antitrust offense as a matter of law,
since it is the very conduct that the antitrust laws wish to
promote in the interest of making consumers better off." Br.

                               54
of Appellant at 30. It cites for this proposition the Supreme
Court's decision in Brooke Group Ltd. v. Brown &
Williamson Tobacco Corp., 

, 222 (1993). Every
decision on S 2 since 1993 must deal with Brooke Group,
but that case does not hold that a claim of monopolizing or
attempting to monopolize will be unsuccessful unless
plaintiff shows below-cost predatory pricing.

In Brooke Group, Liggett, a cigarette manufacturer
responsible for the "innovative development" of generic
cigarettes, claimed that Brown & Williamson, which
introduced its own line of generic cigarettes, "cut prices on
generic cigarettes below cost and offered discriminatory
volume rebates to wholesalers to force Liggett to raise its
own generic cigarette prices and introduce oligopoly pricing
in the economy segment [of the national cigarette market]."

Brown & Williamson's deep price discounts or
rebates were concededly discriminatory (Liggett's claim
included violation of the Robinson- Patman Act), not cost
justified, and resulted in substantial loss to it. The
Supreme Court majority held that defendant was entitled to
judgment as a matter of law because there was no evidence
of injury to competition. The Court also held that the
evidence did not show that Brown & Williamson's alleged
scheme "was likely to result in oligopolistic price
coordination and sustained supracompetitive pricing in the
generic segment of the national cigarette market. Without
this, Brown & Williamson had no reasonable prospect of
recouping its predatory losses and could not inflict the
injury to competition the antitrust laws prohibit." 

The Brooke Group opinion is premised on the national
cigarette market at that time, which was composed of six
manufacturers whose prices for cigarettes "increased in
lockstep" and who "reaped the benefits of prices above a
competitive level." 

Brown & Williamson's share
_________________________________________________________________

8. In contrast, the District Court here noted that 3M had conceded that
it "could later recoup the profits it has forsaken on Scotch tape and
private-label tape by selling more higher priced Scotch tape . . . if
there
would be no competition by others in the private-label tape segment
when 3M abandoned that part of the market to sell only higher-priced
Scotch tape." Le Page's, 

, at *7 (omission in original).

                               55
of the oligopolistic market was described in the opinion as
twelve percent. Thus, its conduct and pricing were at all
times constrained by the presence of competitors who
could, and did, react to its conduct by undertaking similar
price cuts or pricing behavior.9

In contrast, 3M is a monopolist. It is a tenet of antitrust
law that a monopolist is not permitted to take certain
actions that a company in a competitive (or even
oligopolistic market) may take, because there is no
constraint on a monopolist's behavior. See, e.g. , Aspen

. Even if Brooke Group could be
read for the proposition that all pricing action is legal if the
company's prices are not below its costs, nothing in the
Supreme Court's decision suggests that its discussion of
the issue is applicable to a monopolist with its
unconstrained market power. And nothing in that opinion
gives the imprimatur of approval to bundled rebates, the
conduct by 3M that the jury found violated S 2.

Even if 3M had not engaged in other exclusionary
conduct, the jury's conclusion that 3M unlawfully
maintained its monopoly power is amply supported by the
evidence of 3M's bundled rebate programs.

B.

Exclusive Dealing

3M did not confine its monopolization actions to its
bundled rebate programs. LePage's produced substantial
evidence of exclusionary conduct by 3M, much of it
designed to achieve sole-source supplier status, either
facially or indirectly.10 Even though exclusivity
_________________________________________________________________

9. The Brooke Group opinions, both for the majority and the dissent,
discuss the responses by members of the oligopoly to the introduction of
discounted cigarettes. 

(Stevens, J.,
dissenting).

10. The jury's finding against LePage's on its exclusive dealing claim
under S 1 of the Sherman Act and S 3 of the Clayton Act does not
preclude the application of evidence of 3M's exclusive dealing to support

                               56
arrangements are often analyzed under S 1, such
exclusionary conduct may also be an element in aS 2
claim. U.S. Healthcare, Inc. v. Healthsource, Inc., 

, 593 (1st Cir. 1993) (observing that exclusivity may
also play "a role . . . as an element in attempted or actual
monopolization"). When evaluating a plaintiff 's exclusive
dealing claim under S 1, this court has looked to the
increase in the defendant's market share, the effects of
foreclosure on the market, benefits to customers and the
defendant, and the extent to which customers felt they were
precluded from dealing with other manufacturers. 

. There is no reason why these factors would
not be equally applicable under S 2.

According to LePage's, 3M's exclusionary "tactics
foreclosed the competitive process by preventing rivals from
competing to gain (or maintain) a presence in the market."
Br. of Appellee at 45-46. The District Court instructed the
jury that for purposes of finding a S 2 violation,
" `exclusionary' comprehends . . . behavior that not only (1)
tends to impair the opportunities of rivals, but also (2)
either does not further competition on the merits or does so
in an unnecessarily restrictive way." App. at 6490. The
instruction followed the applicable legal principles
enunciated in Eastman Kodak Co. v. Image Tech. Servs.,
Inc., 

, 482-83 (1992). See also Aspen 

n.32. In fact, one of the foremost antitrust
treatises approvingly cites an unreported opinion by the
District Court in this case as an example of how discounts
conditioned on exclusivity are "problematic""when the
defendant is a dominant firm in a position to force
manufacturers to make an all-or-nothing choice." 11
Hovenkamp, Antitrust Law P 1807b, at 117 n.7 (1998)
(citing LePage's, 

(E.D. Pa. 1997)).
_________________________________________________________________

LePage's S 2 claim. See, e.g., Barr Labs. v. Abbott Labs., 

,
110-11 (3d Cir. 1992) (considering S 2 of the Sherman claims after
rejecting claims based on the same evidence underS 1 of the Sherman
Act and S 3 of the Clayton Act); 

, aff 'd,

(imposing S 2 Sherman Act liability for exclusionary
conduct, after rejecting an exclusive dealing claim under S 3 of the
Clayton Act).

                               57
In Tampa Electric Co. v. Nashville Coal Co., 

(1961), which the majority cites and which dealt with S 3 of
the Clayton Act, not S 2 of the Sherman Act, the Court took
cognizance of arrangements which, albeit not expressly
exclusive, effectively foreclosed the business of competitors.
It has been noted that even quantity discounts may
foreclose a substantial portion of the market. See, e.g., 11
Hovenkamp, Antitrust Law P 1807a, at 115-16. As
Professors Areeda and Hovenkamp recognize, "unilaterally
imposed quantity discounts can foreclose the opportunities
of rivals when a dealer can obtain its best discounts only by
dealing exclusively with the dominant firm. This is
particularly true when the discounts are cumulative over
lengthy periods of time--for example, one year--and where
no obvious economies result from giving lower prices in,
say, August on the basis of large purchases made in
January." 3A Areeda & Hovenkamp, Antitrust Law P 768b3,
at 151 (1996).

Because some of 3M's rebates were "all or nothing"
discounts, customers maximized their discounts only if
they dealt exclusively with the dominant market player, 3M,
and they were severely penalized financially for failing to
meet their quota in a single product line. Only by dealing
exclusively with 3M in as many product lines as possible
could customers enjoy the substantial discounts.

The majority acknowledges only two exclusive dealing
contracts, those with the Venture and Pomida stores.
However, LePage's introduced evidence that the jury could
well have believed rendered other arrangements exclusive.
Many of LePage's former customers refused to even meet
with LePage's sales representatives. App. at 1925, 1451. Of
more significance, a buyer of Kmart, LePage's largest
customer, which accounted for ten percent of its business,
told LePage's "I can't talk to you about tape products for
the next three years" and "don't bring me anything 3M
makes." App. at 302, 764-65. Kmart switched to 3M
following 3M's offer of a $1 million "growth" reward which
the jury could have understood to require that 3M be its
sole supplier. Similarly, Staples was offered an extra one
percent bonus rebate if it gave LePage's business to 3M.
The majority accepts 3M's argument that LePage's did not

                               58
try hard enough to retain Kmart, its customer for twenty
years, but the evidence is to the contrary.11 In any event,
this was an issue for the jury which, by its verdict, rejected
3M's argument.

In internal memoranda introduced into evidence by
LePage's, 3M executives boasted that the large retailers like
Office Max and Staples had no choice but to adhere to 3M's
demands. Sealed App. at 2585 ("Either they take the [price]
increase . . . or we hold orders . . . ."); see also Sealed App.
at 2571 (3M's directive when Staples objected to price
increase was "orders will be held if pricing is not up to date
on 1/1/98"). Judge Posner, well known for his familiarity
with economic doctrine, wrote in a case dealing with
exclusive contracts that in order to show that an exclusive-
dealing agreement is unreasonable, a plaintiff "must prove
that it is likely to keep at least one significant competitor of
the defendant from doing business in a relevant market
. . . . [and] must prove that the probable (not certain) effect
of the exclusion will be to raise prices above (and therefore
reduce output below) the competitive level, or otherwise
injure competition." Roland Mach. Co. v. Dresser Indus.,
Inc., 

, 394 (7th Cir. 1984).

According to the majority, "there was not enough
foreclosure of the market to have an anticompetitive effect,"
because "LePage's total drop in market share was only
21%." Maj. Op. at 26.12 The majority summarily concludes,
"[I]n view of LePage's two thirds share of the private label
_________________________________________________________________

11. At trial, LePage's presented the testimony of James Kowieski, its
former senior vice president of sales, who described LePage's efforts
following Kmart's rejection of its bid. LePage's made a desperate second
sales presentation attended by its president, App. at 957 ("I felt that it
was very critical to our company's success or failure, so I insured that
Mr. Les Baggett, our president, attended the meeting with me."), where
LePage's vainly offered additional price concessions, App. at 959 ("We
went through the cost savings, the benefits, and we came up with some,
again, price concessions, and some programs of a special buy once a
year, because, I mean, as far as we were concerned, we were on our last
leg.").

12. In fact, LePage's market share dropped 35% from 1992 to 1997. In
1992, LePage's net sales constituted 14.44% of the total transparent tape
market. By 1997, LePage's sales has fallen to 9.35%. Sealed App. at 489.

                               59
business, its attack on exclusivity agreements seems rather
attenuated." 

The first problem with this conclusion is that the
"market" share to which the majority refers is LePage's
market share in private-label tape. Maj. Op. at 26. But the
agreed upon relevant market is for transparent tape in the
United States. In that market, where 3M is a monopolist
enjoying better than a ninety percent share, LePage's had a
much smaller share -- approximately nine percent by 1997.
In that market, LePage's claim of exclusion does not at all
appear "rather attenuated."

Furthermore, the majority's conclusion is inconsistent
with both this court's decision in Barr and the Supreme
Court's decision in Tampa Electric, on which both Barr and
the majority rely. In Barr, we observed"the degree of
market foreclosure is only one of the factors in determining
the legality of an exclusive dealing arrangement." 

. The Barr court looked for the additional factors
in the qualitative substantiality test enunciated by the
Supreme Court in Tampa Electric. The majority entirely
omits analysis of the qualitative substantiality test.
According to that test,

       [I]t is necessary to weigh the probable effect of the
       contract on the relevant area of effective competition,
       taking into account the relative strength of the parties,
       the proportionate volume of commerce involved in
       relation to the total volume of commerce in the relevant
       market area, and the probable immediate and future
       effects which pre-emption of that share of the market
       might have on effective competition therein.

Tampa 

; see also 

(quoting same). Had the majority applied this test, it
would have been far more difficult for it to conclude 3M's
conduct was not anticompetitive.

Finally, the majority approvingly quotes the statement in
the Microsoft opinion of the Court of Appeals for the District
of Columbia that "[b]ecause an exclusive deal affecting a
small fraction of a market clearly cannot have the requisite
harmful effect upon competition, the requirement of a
significant degree of foreclosure serves a useful screening

                               60
function." Maj. Op. at 26 (quoting United States v. Microsoft
Corp., 

, 69 (D.C. Cir. 2001)). However, in the
Microsoft opinion, the court had concluded that Microsoft,
a monopolist in the operating system market, also
foreclosed rivals in the browser market from a "substantial
percentage of the available opportunities for browser
distribution," through the use of exclusive contracts with
key distributors. 

. Microsoft kept
usage of its competitor's browser below "the critical level
necessary for [its rival] . . . to pose a real threat to
[Microsoft's] monopoly." 

The Microsoft opinion
does not specify what percentage of the browser market
Microsoft locked up -- merely that, in one of the two
primary distribution channels for browsers, Microsoft had
exclusive arrangements with most of the top distributors.

Significantly, the Microsoft court observed that
Microsoft's exclusionary conduct violated S 2"even though
the contracts foreclose less than the roughly 40% or 50%
share usually required in order to establish a S 1 violation,"

a point the majority appears to have overlooked.

The Microsoft court properly treated exclusionary conduct
by a monopolist as more likely to be anticompetitive than
ordinary S 1 exclusionary conduct. The key exclusionary
conduct inquiry in Microsoft was whether the monopolist's
conduct excludes a competitor entirely from essential
facilities13 which would permit it to achieve the efficiencies
_________________________________________________________________

13. This is a version of the bottleneck, or essential facilities problem,
applied in the monopoly context. In one of the two distribution channels
available for browsers, Microsoft had locked up almost all the high
volume distributors. 

seminal Terminal Railroad case, an
association of railroad operators locked up the cheapest route across the
Mississippi river, the sole railroad bridge crossing at St. Louis. United
States v. Terminal R.R. Ass'n, 

(1912). The Supreme Court
determined that the defendant's agreement to provide access to the
bridge to other railroads on discriminatory terms violated S 1 of the
Sherman Act.

In the transparent tape market, superstores like Kmart and Wal-Mart
provide a crucial facility to any manufacturer--they supply high volume
sales with the concomitant substantially reduced distribution costs. By
wielding its monopoly power in transparent tape and its vast array of
product lines, 3M foreclosed LePage's from that critical bridge to
consumers which superstores provide, namely, cheap, high volume
supply lines.

                               61
of scale necessary to threaten the monopoly. 

see, e.g., Thomas Krattenmaker & Steven Salop,
Anticompetitive Exclusion: Raising Rivals' Costs to Achieve
Power Over Price, 96 Yale L.J. 209, 214 (1986) ("First one
should ask whether the conduct of the challenged firm
unavoidably and significantly increases the costs of its
competitors. If so, one should then ask whether raising
rivals' costs enables the excluding firm to exercise
monopoly power."); see also Aspen 

-
05 & n.31 (observing exclusionary conduct is
anticompetitive when it disrupts distribution patterns,
rendering competitors less efficient). In Microsoft, it was
enough that Microsoft had foreclosed enough distribution
links to undermine the survival of Netscape as a viable
competitor. As discussed above, 3M's exclusionary conduct
cut LePage's off from key retail pipelines necessary to
permit it to compete profitably. This left 3M free to exercise
its monopoly power unchallenged.

As I noted at the outset, the effect of 3M's conduct in
strengthening its monopoly position by destroying
competition by LePage's in second-tier tape is most
apparent when 3M's various activities are considered as a
whole. For example, 3M's bundling of its products via its
rebate programs reinforced the exclusionary effect of those
programs. Together with 3M's conduct designed to achieve
actual or virtual sole supplier status the conduct met the
criteria for a S 2 violation. There is significant evidence to
support the jury's verdict to that effect.

C.

Business Reasons Justification

The majority seeks to excuse 3M's exclusionary conduct
on the ground that it acted in furtherance of its economic
interests. However, the fact that the Court looked at
whether defendant's actions were carried out for"valid
business reasons" in Eastman 

,
does not mean that whatever is good for 3M is permissible
under S 2 of the Sherman Act. As one Court of Appeals has
explained:

                                 62
       In general, a business justification is valid if it relates
       directly or indirectly to the enhancement of consumer
       welfare. Thus, pursuit of efficiency and quality control
       might be legitimate competitive reasons . . . , while the
       desire to maintain a monopoly market share, or thwart
       the entry of competitors would not.

Data Gen. Corp. v. Grumman Sys. Support Corp. , 

, 1183 (1st Cir. 1994) (citing Eastman Kodak , 504 U.S.
at 483; Aspen 

).

The majority states that "[u]nlike the situation of the
defendant in Aspen, 3M's pricing structure and bundled
rebates were not necessarily contrary to its economic
interests, as they likely increased its sales. " Maj. Op. at 24
(emphasis added). Of course a monopolist seeks to further
its economic interests, and may do so by increasing its
sales. It is not surprising that a monopolist's sales, as
measured by market share, may increase when it engages
in exclusionary conduct. Thus, for example, exclusionary
practice has been defined as "a method by which a firm . . .
trades a part of its monopoly profits, at least temporarily,
for a larger market share, by making it unprofitable for
other sellers to compete with it." Richard A. Posner,
Antitrust Law 28 (1976). Once a monopolist achieves its
goal by excluding potential competitors, it can then
increase the price of its product to the point at which it will
maximize its profit. This price is invariably higher than the
price determined in a competitive market. That is one of the
principal reasons why monopolization violates the antitrust
laws. The fact that 3M acted to benefit its own economic
interests is hardly a reason to overturn the jury's finding
that it violated S 2 of the Sherman Act.

The defendant bears the burden of "persuad[ing] the jury
that its conduct was justified by any normal business
purpose." 

. The majority
hypothesizes what it terms "several other potential
`procompetitive' or valid business reasons for 3M's . . .
bundled rebates." Maj. Op. at 24 (emphasis added). It refers
to the "efficiency in having single invoices, single shipments
and uniform pricing programs for various products." 

cites to no testimony or evidence in the fifty-five
volume appendix that would support these "efficiencies,"

                               63
even though some customers may have found consolidated
billing desirable. It is highly unlikely that transparent tape
was shipped along with retail auto products or home
improvement products to customers such as Staples or
that, if it were, the savings stemming from the joint
shipment approaches the multi-million dollars 3M returned
to customers in bundled rebates.

There is considerable evidence in the record that 3M
entered the private-label market only to "kill it." See, e.g.,
Sealed App. at 809 (statement by 3M executive in internal
memorandum that "I don't want private label 3M products
to be successful in the office supply business, its
distribution or our consumers/end users"). The majority
concedes that the record supports a finding that 3M"was
attempting to eliminate the private label category of
transparent tape" and that "in view of 3M's dominance in
brand tape, . . . it was rational for it to want the sale of
tape to be concentrated in that category of the market."
Maj. Op. at 28.

That is precisely what S 2 of the Sherman Act outlaws by
covering conduct that maintains a monopoly. Maintaining a
monopoly is not the type of valid business reason that will
excuse exclusionary conduct. The majority usurps the
jury's province to decide the facts, despite sufficient
evidence to support the jury's verdict.

3M used its market power over transparent tape, backed
by its considerable catalog of products, to entrench its
monopoly, to the detriment of LePage's, its only serious
competitor. The jury's verdict reflects its view that 3M's
bundled rebate programs and other exclusionary conduct
made it difficult for LePage's to compete on the merits--that
is to say, on price, quality, or customer service.

III.

ATTEMPTED MONOPOLIZATION

The jury returned a verdict for LePage's against 3M on
LePage's claim that 3M illegally attempted to maintain its
monopoly. The District Court overturned the jury's

                                64
attempted monopolization verdict on the ground that"an
attempted maintenance of monopoly power" is "inherently
illogical." Le Page's Inc. v. 3M, No. 97-3783, 

, at *2. The District Court reasoned that:

       [a]ny "attempt claim" rests on the underlying theory
       that the defendant has failed to achieve its goal, which
       in this case is maintenance of monopoly power. But, if
       the defendant has failed to achieve its goal of
       maintaining monopoly power, then it follows that the
       defendant lacks monopoly power. Lacking any
       monopoly power to maintain, the defendant cannot be
       held liable for "attempted maintenance of monopoly
       power."

holds that the District Court's reasoning
was erroneous but nonetheless affirms.

I agree that the District Court erred in this respect.
Courts and commentators have repeatedly found that
defendants can be guilty of both monopolization and
attempted monopolization claims arising out of the same
conduct. See, e.g., Am. Tobacco Co. v. United States, 

, 783 (1946) (affirming judgment that defendants
were guilty of monopolization and attempted
monopolization); Earl Kintner, 2 Federal Antitrust Law
S 13.1 n.5 (1980). 3M does not dispute this point.

The elements of a S 2 attempted monopolization claim
are: (1) predatory or anticompetitive conduct; (2) specific
intent to monopolize; and (3) dangerous probability of
achieving monopoly power. See Ideal Dairy Farms, Inc. v.
John Labatt, Ltd., 

, 750 (3d Cir. 1996). The law
is clear that a defendant possessing monopoly power can be
found liable under S 2 for attempted monopolization where
that defendant either has failed in its attempt to maintain
its monopoly or has not yet succeeded in its attempt to
maintain its monopoly. As I have discussed above, 3M (1)
engaged in anticompetitive conduct, (2) specifically intended
to monopolize and (3) had a dangerous likelihood of
success.

The analysis by the Supreme Court of the S 2 attempted
monopolization claim in Lorain Journal Co. v. United States,

(1951), is precisely applicable here. In that

                                65
case, the defendant newspaper had monopoly power and
sought to use exclusive dealing contracts with advertiser-
customers to destroy its budding rival, a local radio station.
Although the defendant had not actually accomplished its
objective, the Court held that "a single newspaper, already
enjoying a substantial monopoly in its area, violates the
`attempt to monopolize' clause of S 2 when it uses its
monopoly to destroy threatened competition." 

Similar analysis was applied in the Fifth Circuit decision
in Multiflex, Inc. v. Samuel Moore & Co., 

(5th
Cir. 1983), where the court characterized plaintiff 's S 2
claim as charging defendant with "an unsuccessful attempt
to maintain monopoly power through anticompetitive acts."

The court held that "[s]uch a claim could
constitute the offense of actual monopolization under
section 2 [but that] [i]t fails as actual monopolization only
because [defendant's] efforts were unsuccessful." 

charged defendant 3M with the same conduct,
i.e. "attempted maintenance of monopoly power."
The majority's efforts to distinguish these cases are
unpersuasive.

There appears to be some division in the courts as to
whether an attempted monopolization claim merges into a
monopolization claim when the defendant has been
successful. The distinction is merely a semantic one. The
key issue is whether a company with market power has
taken steps, whether successful or unsuccessful, to destroy
incipient competition. If it has, it violated S 2. That a
competitor need not demonstrate actual effect on itself, but
only show the danger of that effect, is seminal toS 2
jurisprudence. As the Supreme Court observed over half a
century ago, "[i]t is . . . unreasonable, per se, to foreclose
competitors from any substantial market. . . . The antitrust
laws are as much violated by the prevention of competition
as by its destruction. . . . It follows a fortiori that the use
of monopoly power, however lawfully acquired, to foreclose
competition, to gain a competitive advantage, or to destroy
a competitor, is unlawful." United States v. Griffith, 

, 107 (1948) (quotations and citations omitted).

I understand the majority's rejection of LePage's
attempted monopolization claim to follow its rejection of

                               66
LePage's monopolization claim because the majority
concludes that the rebates and exclusive dealing contracts
were not predatory and anticompetitive. Because I disagree
with the majority on this central issue, I also disagree with
its disposition of LePage's attempted monopolization claim.

IV.

CONCLUSION

The majority fails to look to 3M's conduct as a whole,
imposes hurdles for plaintiffs in antitrust actions to the
detriment of consumers and competition generally, and fails
to acknowledge that sufficient evidence underlies the jury's
verdict based on 3M's conduct. I would reinstate the jury's
verdict on both LePage's monopolization and attempted
monopolization claims.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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