                                                                                                                           Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-25-2003

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Precedential or Non-Precedential: Precedential

Docket 00-1368




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                                          Volume 1 of 2

                           PRECEDENTIAL

                                   Filed March 25, 2003

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT


              Nos. 00-1368 and 00-1473


 LEPAGE’S INCORPORATED; LEPAGE’S MANAGEMENT
                COMPANY, L.L.C.,
                       Appellees/Cross-Appellants
                          v.
   3M (MINNESOTA MINING AND MANUFACTURING
        COMPANY); KROLL ASSOCIATES, INC.
    Minnesota Mining and Manufacturing Company,
                          Appellant/Cross-Appellee

    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
         Reargued En Banc October 30, 2002
 BEFORE: BECKER, Chief Judge, SLOVITER, SCIRICA,
 NYGAARD, ALITO, McKEE, AMBRO, FUENTES, SMITH
         and GREENBERG, Circuit Judges

                (Filed: March 25, 2003)
       2


Barbara W. Mather
Jeremy Heep
Pepper Hamilton LLP
18th & Arch Street
3000 Two Logan Street
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, Rowe & Maw
1909 K. Street, N.W.
Washington, D.C. 20006-1101
Roy T. Englert, Jr. (Argued)
Robbins, Russell, Englert,
 Orseck & Untereiner
1801 K. Street, N.W.
Suite 411
Washington, D.C. 20006
  Attorneys for Appellees/Cross-
  Appellants
M. Laurence Popofsky (Argued)
Stephen V. Bomse
Paul Alexander
Marie L. Fiala
Heller Ehrman White & McAuliffe
333 Bush Street
Suite 3320
San Francisco, CA 94104
                                    3


                           John G. Harkins, Jr.
                           Harkins Cunningham
                           2005 Market Street
                           2800 One Commerce Square
                           Philadelphia, PA 19103
                             Attorneys for Appellant/Cross-
                             Appellee


                    OPINION OF THE COURT

SLOVITER, Circuit Judge, with whom Becker, Chief Judge,
Nygaard, McKee, Ambro, Fuentes, and Smith, Circuit
Judges, join:
   Minnesota Mining and Manufacturing Company (“3M”)
appeals from the District Court’s order entered March 14,
2000, declining to overturn the jury’s verdict for LePage’s in
its suit against 3M under Section 2 of the Sherman Act
(“§ 2”). 3M raises various objections to the trial court’s
decision but essentially its position is a legal one: it
contends that a plaintiff cannot succeed in a § 2
monopolization case unless it shows that the conceded
monopolist sold its product below cost. Because we
conclude that exclusionary conduct, such as the exclusive
dealing and bundled rebates proven here, can sustain a
verdict under § 2 against a monopolist and because we find
no other reversible error, we will affirm.

                                    I.

                    FACTUAL BACKGROUND
  3M, which manufactures Scotch tape for home and office
use, dominated the United States transparent tape market
with a market share above 90% until the early 1990s. It
has conceded that it has a monopoly in that market.
LePage’s,1 founded in 1876, has sold a variety of office

1. The plaintiffs in this action are LePage’s Incorporated and LePage’s
Management Company, L.L.C. Inasmuch as we can discern no
distinction between their interests, we refer to them jointly as LePage’s.
                                     4


products and, around 1980, decided to sell “second brand”
and private label transparent tape, i.e., tape sold under the
retailer’s name rather than under the name of the
manufacturer. By 1992, LePage’s sold 88% of private label
tape sales in the United States, which represented but a
small portion of the transparent tape market. Private label
tape sold at a lower price to the retailer and the customer
than branded tape.
  Distribution   patterns   and     consumer    acceptance
accounted for a shift of some tape sales from branded tape
to private label tape. With the rapid growth of office
superstores, such as Staples and Office Depot, and mass
merchandisers, such as Wal-Mart and Kmart, distribution
patterns for second brand and private label tape changed
as many of the large retailers wanted to use their “brand
names” to sell stationery products, including transparent
tape. 3M also entered the private label business during the
early 1990s and sold its own second brand under the name
“Highland.”
   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.2 LePage’s claims
that it barely was surviving at the time of trial and that it
suffered large operating losses from 1996 through 1999.
  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,

2. 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 but they did not play a significant role
in the domestic market and 3M does not contend otherwise.
                                  5


which offered higher rebates when customers purchased
products in a number of 3M’s different product lines.
LePage’s also alleges that 3M offered to some of 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.
   LePage’s asserted claims for unlawful agreements in
restraint of trade under § 1 of the Sherman Act,
monopolization and attempted monopolization under § 2 of
the Sherman Act, and exclusive dealing under § 3 of the
Clayton Act. After a nine week trial, the jury returned its
verdict for LePage’s on both its monopolization and
attempted monopolization claims under § 2 of the Sherman
Act, and assessed damages of $22,828,899 on each. It
found in 3M’s favor on LePage’s claims under § 1 of the
Sherman Act and § 3 of the Clayton Act. 3M filed its
motions for judgment as a matter of law and for a new trial,
arguing that its rebate and discount programs and the
other 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 damages proof was
speculative.3 The District Court granted 3M’s motion for
judgment as a matter of law on LePage’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. LePage’s Inc. v. 3M, No.
CIV. A.97-3983, 2000 WL 280350 (E.D. Pa. Mar. 14, 2000).
The Court subsequently entered a judgment for trebled
damages of $68,486,697 to which interest was to be added.
LePage’s filed a cross appeal on the District Court’s
judgment dismissing its attempted maintenance of
monopoly power claim.
  On appeal, the panel of this court before which this case
was originally argued reversed the District Court’s
judgment on LePage’s § 2 claim by a divided vote. LePage’s
Inc. v. 3M, Nos. 00-1368 and 00-1473 (3d Cir. Jan. 14,
2002). This court granted LePage’s motion for rehearing en

3. 3M unsuccessfully had moved for a judgment as a matter of law at the
close of LePage’s case and after the close of the entire case.
                             6


banc and, pursuant to its practice, vacated the panel
opinion. LePage’s Inc. v. 3M, Nos. 00-1368 and 00-1473 (3d
Cir. Feb. 25, 2002) (order vacating panel opinion). The
appeal was then orally argued before the court en banc.

                            II.

     JURISDICTION AND STANDARD OF REVIEW
  The District Court had jurisdiction over this case
pursuant to 28 U.S.C. §§ 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. § 1291.
   We exercise plenary review over an order granting or
denying a motion for judgment as a matter of law. Shade v.
Great Lakes Dredge & Dock Co., 154 F.3d 143, 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., 4 F.3d
1153, 1166 (3d Cir. 1993). Thus, we review the evidence on
the appeal in the light most favorable to LePage’s. As the
historical facts are not in sharp dispute, and our opinion
turns largely on legal determinations, we review questions
of law underlying the jury verdict on a plenary basis. Bloom
v. Consolidated Rail Corp., 41 F.3d 911, 913 (3d Cir. 1994).
   Our review of a jury’s verdict is limited to determining
whether some evidence in the record supports the jury’s
verdict. See Swineford v. Snyder County, 15 F.3d 1258,
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.”).
                                  7


                                 III.

MONOPOLIZATION — APPLICABLE LEGAL PRINCIPLES
  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, and, on
     conviction thereof, shall be punished by fine not
     exceeding $10,000,000 if a corporation, or, if any other
     person, $350,000, or by imprisonment not exceeding
     three years, or by both said punishments, in the
     discretion of the court.
15 U.S.C. § 2 (2002). A private party may sue for damages
for violation of this provision and recover threefold the
damages and counsel fees. Id. § 15.
   Because this section is in sweeping language, suggesting
the breadth of its coverage, we look to the Supreme Court
decisions for elucidation of the standard to be used in cases
alleging monopolization. Elucidation came in United States
v. Grinnell Corp., 384 U.S. 563 (1966), where the Court
declared that a defendant company which possesses
monopoly power in the relevant market will be found in
violation of § 2 of the Sherman Act if the defendant willfully
acquired or maintained that power. Id. at 570-71.
  In this case, the parties agreed that the relevant product
market is transparent tape and the relevant geographic
market is the United States.4 Moreover, as to the issue of
monopoly power, as we noted above, 3M concedes it
possesses monopoly power in the United States transparent
tape market, with a 90% market share. In fact, the evidence
showed that the household penetration of 3M’s Scotch-

4. Although 3M originally challenged LePage’s selection of the United
States as the relevant geographic market, 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.
                                8


brand tape is virtually 100%. Therefore we need not dwell
on the oft-contested issue of market power. See 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.”).
  The sole remaining issue and our focus on this appeal is
whether 3M took steps to maintain that power in a manner
that violated § 2 of the Sherman Act. A monopolist willfully
acquires or maintains monopoly power when it competes on
some basis other than the merits. See Aspen Skiing Co. v.
Aspen Highlands Skiing Corp., 472 U.S. 585, 605 n.32
(1985).
   LePage’s argues that 3M willfully maintained its
monopoly in the transparent tape market through
exclusionary conduct, primarily by bundling its rebates and
entering into contracts that expressly or effectively required
dealing virtually exclusively with 3M, which LePage’s
characterizes as de facto exclusive. 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, although it argues that only the few contracts
that are expressly exclusive may be considered as such.
Instead, 3M argues that its conduct was legal as a matter
of law because it never priced its transparent tape below its
cost.5
   This is the most significant legal issue in this case
because it underlies 3M’s argument. In its brief, 3M states
“[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.” Appellant’s Br. at 30. For this
proposition it relies on the Supreme Court’s decision in
Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.,
509 U.S. 209, 222 (1993). It is an argument 3M repeated
frequently during its oral argument before the en banc

5. 3M states that its pricing was above its costs however costs are
calculated, and LePage’s has not contested 3M’s assertion.
                                  9


court. Counsel stated, “if the big guy is selling above cost,
it has done nothing which offends the Sherman Act . . . .”
Tr. of Oral Argument, Oct. 30, 2002, at 11. This was the
theory upon which 3M’s counsel responded to all the
questions from the court. When asked whether its theory is
that because no one contended that 3M sold below its cost,
that is “the end of the story,” its counsel responded, “[w]ith
the exception of the inconsequential express contract,
absolutely.” Id.
  It is therefore necessary for us, at the outset, to examine
whether we must accept 3M’s legal theory that after Brooke
Group, no conduct by a monopolist who sells its product
above cost — no matter how exclusionary the conduct —
can constitute monopolization in violation of § 2 of the
Sherman Act. The history of the interpretation of § 2 of the
Sherman Act demonstrates the lack of foundation for 3M’s
premise.
  Although § 2 of the Sherman Act may have received less
judicial and scholarly attention than several of the other
more frequently invoked antitrust provisions, the Supreme
Court, in a series of decisions, has made clear the type of
conduct that will be held to constitute monopolization in
violation of § 2.
  The modern era begins with the decision by Judge
Learned Hand in United States v. Aluminum Co. of America,
148 F.2d 416 (2d Cir. 1945) (“Alcoa”). Because four
members of the Supreme Court were disqualified, the
Supreme Court was required to apply the provision of the
Expediting Act, Section 29 of Title 15, U.S.C., 1940 ed.,
currently 28 U.S.C. § 2109, to certify the case to the three
most senior judges of the relevant circuit.6 Under the
statute, the decision of that court was “final and
conclusive,” thus equating it to a decision of the Supreme
Court.
  At the time in question, Alcoa was the sole domestic
producer of aluminum and thus had a monopoly that the

6. The three most senior judges of the circuit were, fortuitously, the
legendary panel of Judges Learned Hand, Thomas Swan, and Augustus
Hand.
                             10


Government sought to disband. In the opinion on liability,
the court enunciated certain principles that remain fully
applicable today. One such principle is that it does not
follow that a company that has a monopoly has
“monopolized” the market because “it may not have
achieved monopoly; monopoly may have been thrust upon
it.” Id. at 429. As the court explained, “persons may
unwittingly find themselves in possession of a monopoly,
automatically so to say: that is, without having intended
either to put an end to existing competition, or to prevent
competition from arising when none had existed; they may
become monopolists by force of accident.” Id. at 429-30. On
the other hand, the court then quoted Justice Cardozo’s
statement in United States v. Swift & Co., 286 U.S. 106,
116 (1932), that “size carries with it an opportunity for
abuse that is not to be ignored when the opportunity is
proved to have been utilized in the past.” Alcoa, 148 F.2d
at 430.
   The court determined that Alcoa, which controlled over
90% of the aluminum market, had utilized its size for
abuse. The court, noting that there had been at least “one
or two abortive attempts” by others to enter the industry,
concluded that Alcoa “effectively anticipated and forestalled
all competition, and succeeded in holding the field alone.”
Id. at 430. Finding Alcoa in violation of § 2, the court
continued:
    Nothing compelled it to keep doubling and redoubling
    its capacity before others entered the field. It insists
    that it never excluded competitors; but we can think of
    no more effective exclusion than progressively to
    embrace each new opportunity as it opened, and to
    face every newcomer with new capacity already geared
    into a great organization, having the advantage of
    experience, trade connections and the elite of
    personnel.
Id. at 431.
  One year later, in American Tobacco Co. v. United States,
328 U.S. 781 (1946), the Supreme Court endorsed the
Alcoa decision when upholding a jury verdict finding a § 2
violation. The government brought a criminal action against
                              11


various tobacco companies that between 1931 and 1939
accounted at all times for more than 68%, and usually for
more than 75%, of the nation’s domestic cigarette
production. Defendants were convicted and fined after the
jury found they had violated §§ 1 and 2 of the Sherman Act
by conspiring to control the price of leaf tobacco, to acquire
less expensive supplies of tobacco they did not need in
order to deprive rival manufacturers of cheaper brands, to
control cigarette prices, and to force cigarette distributors
to treat rival brands less favorably.
   The court of appeals affirmed, finding the verdicts to be
supported by sufficient evidence. The Supreme Court
granted the tobacco companies’ petitions for certiorari only
as to their § 2 claims, seeking to answer the specific
question “whether actual exclusion of competitors is
necessary to the crime of monopolization under § 2 of the
Sherman Act.” Id. at 784. Answering that question in the
negative, the Court stated that “[n]either proof of exertion of
the power to exclude nor proof of actual exclusion of
existing or potential competitors is essential to sustain a
charge of monopolization under the Sherman Act.” Id. at
810. Furthermore, and importantly, the Court explicitly
“welcome[d] this opportunity to endorse” certain passages
from Judge Hand’s opinion. Id. at 813.
    Of particular relevance, the American Tobacco Court
endorsed Judge Hand’s understanding of the Sherman Act,
namely that the Act contemplated the notion that
“ ‘unchallenged economic power deadens initiative’ ” and
“ ‘that immunity from competition is a narcotic, and rivalry
is a stimulant, to industrial progress.’ ” Id. (quoting Alcoa,
148 F.2d at 427). It further quoted Alcoa for the previously
mentioned propositions that monopolies can be “thrust”
upon entities rather than achieved and that specific intent
under § 2 was not required “ ‘for no monopolist monopolizes
unconscious of what he is doing.’ ” Id. at 813-14 (quoting
Alcoa, 148 F.2d at 432).
  Section 2 of the Sherman Act was next considered by the
Supreme Court in Lorain Journal Co. v. United States, 342
U.S. 143 (1951). The United States had brought a civil suit
against the publisher of the Lorain Journal, the only
business disseminating news and advertising in the town of
                             12


Lorain, Ohio, alleging that it attempted to monopolize in
violation of § 2 of the Sherman Act because it refused to sell
advertising to persons that patronized the small radio
station that was established in a nearby community. The
Supreme Court held that although a trader has discretion
as to the parties with whom he will deal “[i]n the absence
of any purpose to create or maintain a monopoly,” id. at
155 (quoting United States v. Colgate & Co., 250 U.S. 300,
307 (1919)), the action of the Journal constituted a
purposeful means of regaining its previous monopoly over
the mass dissemination of news and advertising. Id.
Because this was an attempt to monopolize in violation of
§ 2, the Court approved the entry of an injunction ordering
the Journal to print the advertisements of the customers of
the radio station.
  Thereafter, in United States v. Grinnell Corp., 384 U.S.
563 (1966), the Supreme Court reiterated that monopoly
power alone is not necessarily unlawful. The Court
summarized its prior cases, stating that § 2 of the Sherman
Act required two elements: “(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.” 384 U.S. at 570-71.
   In Grinnell, the United States filed a civil suit against
several companies that offered central station protective
services, such as fire and burglary protective devices,
alleging violations of §§ 1 and 2 of the Sherman Act.
Referring to the two-pronged test under § 2, the Court
found that both prongs had been satisfied. Not only did the
companies have monopoly power (87% of the accredited
central station service business), but also they largely
achieved this power through the aid of pricing practices,
acquisitions of competitors, and noncompetition covenants,
all of which were deemed to be “unlawful and exclusionary
practices.” Id. at 576.
  The Court’s later decision in Aspen Skiing Co. v. Aspen
Highlands Skiing Corp., 472 U.S. 585 (1985), is even more
pertinent to the case before us. In Aspen Skiing, a case that
also reached the Court only on the § 2 violation, Ski Co.,
the owner of three of the four major downhill skiing
                              13


facilities in Aspen, Colorado, discontinued its prior practice
of cooperating with the owner of the fourth facility by
issuing an interchangeable 6-day pass that could be used
on any of the four facilities. It replaced that pass with a 3-
area, 6-day ticket featuring only its mountains. It offered
the plaintiff, Highlands, owner of the fourth facility,
reinstatement of the 4-area ticket only if Highlands would
accept a fixed percentage of the revenue that was
considerably below Highlands’ historical average based on
usage. Ski Co. took additional actions that made it
extremely difficult for Highlands to market its own
multiarea package to replace the joint offering, and
Highlands’ share of the market declined along with its
revenues from associated skiing services. The jury found
that Ski Co. possessed monopoly power and awarded
Highlands a substantial money judgment as treble
damages. The court of appeals affirmed, holding there was
sufficient basis in Ski Co.’s actions to demonstrate an
abuse of its monopoly power.
   In the Supreme Court, Ski Co. argued “that even a firm
with monopoly power has no duty to engage in joint
marketing with a competitor, that a violation of § 2 cannot
be established without evidence of substantial exclusionary
conduct, and that none of its activities can be characterized
as exclusionary.” Aspen Skiing, 472 U.S. at 600. The
Supreme Court agreed with the legal proposition, but
referred to its earlier opinion in Lorain Journal where it held
that a monopolist’s right to refuse to deal was not
unqualified. Id. at 600-01. After reviewing all the
circumstances, it affirmed the judgment for Highlands in a
unanimous opinion. It held that the jury had ample basis
to reject Ski Co.’s business justification defense and noted
that Ski Co. failed to offer any efficiency justification
whatever for its pattern of conduct. Id. at 608. The Court
stated, “[a]lthough Ski Co.’s pattern of conduct may not
have been as ‘bold, relentless, and predatory’ as the
publisher’s actions in Lorain Journal, the record in this case
comfortably supports an inference that the monopolist
made a deliberate effort to discourage its customers from
doing business with its smaller rival.” Id. at 610 (quoting
Lorain Journal, 342 U.S. at 149 (citation omitted)).
                             14


   In a significant passage about the conduct that
constitutes monopolization in violation of § 2, the Court
stated that when the issue is monopolization rather than
an attempt to monopolize, “evidence of intent is merely
relevant to the question whether the challenged conduct is
fairly characterized as ‘exclusionary’ or ‘anticompetitive’ —
to use the words in the trial court’s instructions — or
‘predatory,’ to use a word that scholars seem to favor.” Id.
at 602. The Court continued, “[w]hichever label is used,
there is agreement on the proposition that ‘no monopolist
monopolizes unconscious of what he is doing.’ ” Id. (quoting
Alcoa, 148 F.2d at 432).
   In Eastman Kodak Co. v. Image Technical Servs., Inc., 504
U.S. 451(1992), 18 independent service organizations
(“ISO’s”) that serviced Kodak copying and micrographic
equipment brought an antitrust action against Kodak for its
policies that sought to limit the availability of Kodak parts
to ISO’s. They alleged Kodak’s policies were unlawful under
both §§ 1 and 2 of the Sherman Act. The Supreme Court
considered the issues under the two provisions separately.
In its analysis under § 2, the Court first held that Kodak’s
control of nearly 100% of the parts market and 80% to 95%
of the service market was sufficient to support a claim of
monopoly power (an issue that is conceded here). As to the
issue whether Kodak adopted its parts and service policies
as part of a scheme of willful acquisition or maintenance of
monopoly power, the Court stated that there was evidence
that Kodak “took exclusionary action to maintain its parts
monopoly and used its control over parts to strengthen its
monopoly share of the Kodak service market.” Id. at 483.
Thus, Kodak could escape liability under § 2 only if it could
explain its actions on the basis of valid business reasons,
an issue as to which there were factual questions which
made the district court’s grant of summary judgment for
Kodak inappropriate. Id.
  This extensive review of the Supreme Court’s § 2
decisions is set forth to provide the background under
which we must evaluate 3M’s contention that it was
entitled to judgment as a matter of law on the basis of the
decision in Brooke Group Ltd. v. Brown & Williamson
Tobacco Corp., 509 U.S. 209 (1993), a decision that was
                                    15


primarily concerned with the Robinson-Patman Act, not § 2
of the Sherman Act. 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].” Brooke Group, 509 U.S. at 212.
It filed a Robinson-Patman action on the basis of these
allegations. Brown & Williamson’s deep price discounts or
rebates were concededly discriminatory, not cost justified,
and resulted in substantial loss to it. The Supreme Court
majority held that the defendant was entitled to judgment
as a matter of law because there was no evidence of injury
to competition. Id. at 243. 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.” Id.7
   Unlike 3M, Brown & Williamson was part of an oligopoly,
six manufacturers whose prices for cigarettes “increased in
lockstep” and who “reaped the benefits of prices above a
competitive level.” Id. at 213. Brown & Williamson had 12%
of the oligopolistic market. Its conduct and pricing were at
all times necessarily constrained by the presence of
competitors who could, and did, react to its conduct by
undertaking similar price cuts or pricing behavior.8

7. 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, 2000 WL 280350, at *7 (quoting Defendant’s
Mem. at 30).
8. 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. Id. at 239-40; id. at 247-48 (Stevens, J.,
dissenting).
                                  16


  Assuming arguendo that Brooke Group should be read for
the proposition that a company’s pricing action is legal if its
prices are not below its costs, nothing in the decision
suggests that its discussion of the issue is applicable to a
monopolist with its unconstrained market power. Moreover,
LePage’s, unlike the plaintiff in Brooke Group, does not
make a predatory pricing claim. 3M is a monopolist; a
monopolist is not free to take certain actions that a
company in a competitive (or even oligopolistic) market may
take, because there is no market constraint on a
monopolist’s behavior. See, e.g., Aspen Skiing, 472 U.S. at
601-04.
   Nothing in any of the Supreme Court’s opinions in the
decade since the Brooke Group decision suggested that the
opinion overturned decades of Supreme Court precedent
that evaluated a monopolist’s liability under § 2 by
examining its exclusionary, i.e., predatory, conduct. Brooke
Group has been cited only four times by the Supreme
Court, three times in cases that were not even antitrust
cases for propositions patently inapplicable here.9 In the
only antitrust case of the four, NYNEX Corp. v. Discon, Inc.,
525 U.S. 128, 137 (1998), the Court considered whether
the per se rule applicable to group boycotts under § 1 of the
Sherman Act should be applied “where a single buyer
favors one seller over another, albeit for an improper
reason.” Id. at 133. Holding that the rule of reason applies,
the Court quoted Brooke Group for the proposition that
“[e]ven an act of pure malice by one business competitor
against another does not, without more, state a claim
under the federal anti-trust laws.” Id. at 137 (quoting
Brooke Group, 509 U.S. at 225). The opinion does not
discuss, much less adopt, the proposition that a monopolist
does not violate § 2 unless it sells below cost. Thus, nothing

9. Brooke Group is cited in Gustafson v. Alloyd Co., 513 U.S. 561, 570
(1995), for the statutory construction rule that identical words used in
different parts of the same act are intended to have the same meaning;
in Strickler v. Greene, 527 U.S. 263, 300 n.3 (1999), a federal habeas
case, by Justice Souter in his partial concurrence/partial dissent, in
discussing the term “reasonable probability;” and in Weisgram v. Marley
Co., 528 U.S. 440, 454 (2000), in connection with discussing the weight
to be given an expert opinion.
                              17


that the Supreme Court has written since Brooke Group
dilutes the Court’s consistent holdings that a monopolist
will be found to violate § 2 of the Sherman Act if it engages
in exclusionary or predatory conduct without a valid
business justification.

                             IV.

    MONOPOLIZATION — EXCLUSIONARY CONDUCT

                              A.

                     Illustrative Cases
  Before turning to consider LePage’s allegation that 3M
engaged in exclusionary or anticompetitive conduct and the
evidence it produced, we consider the type of conduct § 2
encompasses.
  As one court of appeals has stated: “ ‘Anticompetitive
conduct’ can come in too many different forms, and is too
dependent upon context, for any court or commentator ever
to have enumerated all the varieties.” Caribbean Broad.
Sys., Ltd. v. Cable & Wireless PLC, 148 F.3d 1080, 1087
(D.C. Cir. 1998) (reversing in part the district court’s
dismissal of complaint and holding that radio station’s
claim that defendants made misrepresentations to
advertisers and the government in order to protect its
monopoly stated § 2 Sherman Act claim).
  Numerous cases hold that the enforcement of the legal
monopoly provided by a patent procured through fraud may
violate § 2. Walker Process Equip., Inc. v. Food Mach. &
Chem. Corp., 382 U.S. 172, 174 (1965); see also Medtronic
AVE, Inc. v. Boston Scientific Corp., No. CIV. A. 98-478-SLR,
2001 WL 652016 (D. Del. Mar. 30, 2001) (patentee could
have violated § 2 by bringing infringement action on patent
procured by fraud). Predatory pricing by a monopolist can
provide a basis for § 2 liability. See U.S. Philips Corp. v.
Windmere Corp., 861 F.2d 695 (Fed. Cir. 1988) (reversing
district court’s directed verdict and ordering new trial on § 2
claims due to evidence that company had 90% of rotary
                              18


electric shaver market, existence of substantial entry
barriers, and company had drastically reduced prices to
eliminate potential competitors). A monopolist’s denial to
competitors of access to its “essential” goods, services or
resources has been held to violate § 2. See Otter Tail Power
Co. v. United States, 410 U.S. 366 (1973) (finding § 2
violation where monopolist utility company refused to sell
wholesale to municipalities and refused to transfer
competitors’ power over its lines); see also Fishman v.
Estate of Wirtz, 807 F.2d 520 (7th Cir. 1986) (finding
corporation liable under § 2 for refusing to lease Chicago
Stadium to plaintiff, a potential buyer of the Chicago Bulls
basketball team, after determining Stadium to be essential
to professional basketball in Chicago area). An arbitrary
refusal to deal by a monopolist may constitute a § 2
violation. See Byars v. Bluff City News Co., Inc., 609 F.2d
843 (6th Cir. 1979) (remanding case to district court for
fact-finding to determine whether defendant possessed
monopoly power and unlawfully refused to deal in violation
of § 2). Even unfair tortious conduct unrelated to a
monopolist’s pricing policies has been held to violate § 2.
See Int’l Travel Arrangers, Inc. v. Western Airlines, Inc., 623
F.2d 1255 (8th Cir. 1980) (upholding treble damages
antitrust award against airline with monopoly power after
finding sufficient evidence that airline placed false,
deceptive, and misleading advertisements discouraging
public patronage of travel group charters).
   A recent decision of the United States Court of Appeals
for the Sixth Circuit, Conwood Co., L.P. v. U.S. Tobacco Co.,
290 F.3d 768 (6th Cir. 2002), cert. denied, 123 S. Ct. 876,
154 L.Ed. 2d 850 (2003), presents a good illustration of the
type of exclusionary conduct that will support a § 2
violation. That court upheld the jury’s award to plaintiff
Conwood of $350 million, which trebled was $1.05 billion,
against United States Tobacco Company (“USTC”) because
of USTC’s monopolization. USTC was the sole manufacturer
of moist snuff until the 1970’s when Conwood, Swisher,
and Swedish Match, other moist snuff manufacturers,
entered the moist snuff market. Not unexpectedly, USTC’s
100% market share declined and it took the action that
formed the basis of Conwood’s complaint against USTC
                             19


alleging, inter alia, unlawful monopolization in violation of
§ 2 of the Sherman Act.
  The evidence that the district court and the court of
appeals held proved that USTC systematically tried to
exclude competition from the moist snuff market included
the following: USTC (1) removed and destroyed or discarded
racks that displayed moist snuff products in the stores
while placing Conwood products in USTC racks in an
attempt to bury Conwood’s products; (2) trained its
“operatives to take advantage of inattentive store clerks
with various ‘ruses’ such as obtaining nominal permission
to reorganize or neaten the moist snuff section” in an effort
to destroy Conwood racks; (3) misused its position as
category manager (manages product groups and business
units and customizes them on a store by store basis) by
providing misleading information to retailers in an effort to
dupe them into carrying USTC products and to discontinue
carrying Conwood products; and (4) entered into exclusive
agreements with retailers in an effort to exclude rivals’
products. Id. at 783.
   On appeal, USTC — like 3M — did not challenge that it
had monopoly power and agreed that the relevant product
was moist snuff and the geographic market was nationwide.
Id. at 782-83. Instead, USTC contended that Conwood had
failed to establish that USTC’s power was acquired or
maintained by exclusionary practices rather than by its
legitimate business practices and superior product. Id. at
783. Both the district court and the court of appeals
rejected USTC’s argument, finding that there was sufficient
evidence for a jury to find willful maintenance by USTC of
monopoly power by engaging in exclusionary practices in
violation of § 2 of the Sherman Act. Id. at 788.
   Similarly, 3M sought to meet the competition that
LePage’s threatened by exclusionary conduct that consisted
of rebate programs and exclusive dealing arrangements
designed to drive LePage’s and any other viable competitor
from the transparent tape market.
                             20


                             B.

                     Bundled Rebates
  In considering LePage’s conduct that led to the jury’s
ultimate verdict, we note that the jury had before it
evidence of the full panoply of 3M’s exclusionary conduct,
including both the exclusive dealing arrangements and the
bundled rebates which could reasonably have been viewed
as effectuating exclusive dealing arrangements because of
the way in which they were structured.
   Through a program denominated Executive Growth Fund
(“EGF ”) and thereafter Partnership Growth Fund (“PGF ”),
3M offered many of LePage’s major customers substantial
rebates to induce them to eliminate or reduce their
purchases of tape from LePage’s. Rather than competing by
offering volume discounts which are concededly legal and
often reflect cost savings, 3M’s rebate programs offered
discounts to certain customers conditioned on purchases
spanning six of 3M’s diverse product lines. The product
lines 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. In addition to bundling the rebates, 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. If a customer
failed to meet the target for any one product, its failure
would cause it to lose the rebate across the line. This
created a substantial incentive for each customer to meet
the targets across all product lines to maximize its rebates.
  The rebates were considerable, not “modest” as 3M
states. Appellant’s Br. at 15. For example, Kmart, which
had constituted 10% of LePage’s business, 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. Just as significant as the amounts received is the
                              21


powerful incentive they provided to customers to purchase
3M tape rather than LePage’s in order not to forego the
maximum rebate 3M offered. The penalty would have been
$264,000 for Sam’s Club, $450,000 for Kmart, and
$200,000 to $310,000 for American Stores.
  3M does not deny that it offered these programs although
it gives different reasons for the discounts to each
customer. Instead it argues that they were no more
exclusive than procompetitive lawful discount programs.
And, as it responds to each of LePage’s allegations, it
returns to its central premise “that it is not unlawful to
lower one’s prices so long as they remain above cost.”
Appellant’s Br. at 36 (citing Brooke Group, 509 U.S. at 222).
  However, one of the leading treatises discussing the
inherent anticompetitive effect of bundled rebates, even if
they are priced above cost, notes that “the great majority of
bundled rebate programs yield aggregate prices above cost.
Rather than analogizing them to predatory pricing, they are
best compared with tying, whose foreclosure effects are
similar. Indeed, the ‘package discount’ is often a close
analogy.” Phillip E. Areeda & Herbert Hovenkamp, Antitrust
Law ¶ 794, at 83 (Supp. 2002).
   The treatise then discusses the anticompetitive effect as
follows:
      The anticompetitive feature of package discounting is
      the strong incentive it gives buyers to take increasing
      amounts or even all of a product in order to take
      advantage of a discount aggregated across multiple
      products. In the anticompetitive case, which we
      presume is in the minority, the defendant rewards the
      customer for buying its product B rather than the
      plaintiff ’s B, not because defendant’s B is better or
      even cheaper. Rather, the customer buys the
      defendant’s B in order to receive a greater discount on
      A, which the plaintiff does not produce. In that case
      the rival can compete in B only by giving the customer
      a price that compensates it for the foregone A discount.
Id.
  The authors then conclude:
                              22


    Depending on       the number of products that are
    aggregated and     the customer’s relative purchases of
    each, even an       equally efficient rival may find it
    impossible to      compensate for lost discounts on
    products that it   does not produce.
Id. at 83-84.
   The principal anticompetitive effect of bundled rebates as
offered by 3M is that when offered by a monopolist they
may foreclose portions of the market to a potential
competitor who does not manufacture an equally diverse
group of products and who therefore cannot make a
comparable offer. We recognized this in our decision in
SmithKline Corp. v. Eli Lilly & Co., 575 F.2d 1056 (3d Cir.
1978), where we held that conduct substantially identical to
3M’s was anticompetitive and sustained the finding of a
violation of § 2. SmithKline is of interest not because the
panel decision is binding on the en banc court but because
the reasoning regarding the practice of bundled rebates is
equally applicable here. The defendant in SmithKline, Eli
Lilly & Company, the pharmaceutical manufacturer, sold
three of its cephalosporins to hospitals under the trade
names Kefzol, Keflin and Keflex. Cephalosporins are broad
spectrum antibiotics that 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 plaintiff
SmithKline sold under the trade name Ancef.
   Lilly’s profits on the patented Keflin were far higher than
those it received from its sales of Kefzol where its pricing
was constrained by the existence of SmithKline. To preserve
its market position in Keflin and discourage sales of Ancef
and even of its own Kefzol, id. at 1061, 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 § 2
monopolization claim, alleging that Lilly used these multi-
line volume rebates to maintain its monopoly over the
hospital market for cephalosporins.
 The district court (Judge A. Leon Higginbotham, later a
member of this court) found that Lilly’s pricing policy
                              23


violated § 2. SmithKline Corp. v. Eli Lilly & Co., 427 F. Supp.
1089 (E.D. Pa. 1976). We affirmed by a unanimous
decision. Although customers were not forced to select
which cephalosporins they purchased from Lilly, 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.” SmithKline, 575
F.2d at 1061. 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.” Id. The gravamen of Lilly’s § 2
violation was that Lilly linked a product on which it faced
competition with products on which it faced no
competition. Id. at 1065.
  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
hospitals of average size, and 35% to larger volume
hospitals.” Id. at 1062. Lilly’s rebate structure combining
Kefzol with Keflin and Keflex “insulat[ed] Kefzol from true
price competition with [its competitor] Ancef.” Id. at 1065.
  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 other
products it sold 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, the evidence in this case
                             24


shows that Scotch-brand tape is indispensable to any
retailer in the transparent tape market.
  Our analysis of § 2 of the Sherman Act in SmithKline is
instructive here where the facts are comparable. 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
    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 § 2 of the Sherman Act.
Id. at 1065.
  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 Club was $666,620. Similarly, LePage’s
1992 sales to Kmart were $2,482,756; 3M’s 1997 rebate to
Kmart was $926,287. The jury could reasonably find that
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 § 2 in SmithKline.
                                   25


                                   C.

                         Exclusive Dealing
  The second prong of LePage’s claim of exclusionary
conduct by 3M was its actions in entering into exclusive
dealing contracts with large customers. 3M acknowledges
only the expressly exclusive dealing contracts with Venture
and Pamida which conditioned discounts on exclusivity. It
minimizes these because they represent only a small
portion of the market. However, LePage’s claims that 3M
made payments to many of the larger customers that were
designed to achieve sole-source supplier status.
  3M argues that because the jury found for it on LePage’s
claims under § 1 of the Sherman Act and § 3 of the Clayton
Act, these payments should not be relevant to the § 2
analysis. The law is to the contrary.10 Even though
exclusivity arrangements are often analyzed under § 1, such
exclusionary conduct may also be an element in a § 2
claim. U.S. Healthcare, Inc. v. Healthsource, Inc., 986 F.2d
589, 593 (1st Cir. 1993) (observing that exclusivity may
also “play a role . . . as an element in attempted or actual
monopolization”).
  3M also disclaims as exclusive dealing any arrangement
that contained no express exclusivity requirement. Once
again the law is to the contrary. No less an authority than
the United States Supreme Court has so stated. In Tampa
Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961), a
case that dealt with § 3 of the Clayton Act rather than § 2
of the Sherman Act, the Court took cognizance of

10. The jury’s finding against LePage’s on its exclusive dealing claim
under § 1 of the Sherman Act and § 3 of the Clayton Act does not
preclude the application of evidence of 3M’s exclusive dealing to support
LePage’s § 2 claim. See, e.g., Barr Labs., Inc. v. Abbott Labs., 978 F.2d
98, 110-12 (3d Cir. 1992) (considering § 2 of the Sherman Act claims
after rejecting claims based on the same evidence under § 1 of the
Sherman Act and § 3 of the Clayton Act); SmithKline, 427 F. Supp. at
1092, aff ’d, 575 F.2d 1056 (imposing § 2 Sherman Act liability for
exclusionary conduct, after rejecting an exclusive dealing claim under § 3
of the Clayton Act).
                                     26


arrangements which, albeit not expressly exclusive,
effectively foreclosed the business of competitors.11
   LePage’s introduced powerful evidence that could have
led the jury to believe that rebates and discounts to Kmart,
Staples, Sam’s Club, National Office Buyers and “UDI” were
designed to induce them to award business to 3M to the
exclusion of LePage’s. Many of LePage’s former customers
refused even to meet with LePage’s sales representatives. A
buyer for Kmart, LePage’s largest customer which
accounted for 10% 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 302-03,
964. 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 1% bonus rebate if
it gave LePage’s business to 3M. 3M argues that LePage’s
did not try hard enough to retain Kmart, its customer for
20 years, but there was evidence to the contrary.12 In any

11. If the dissent’s citation to FTC v. Motion Picture Advertising Serv. Co.,
344 U.S. 392 (1953), suggests that a one year exclusive dealing contract
should be considered as per se legal under § 2, that is not supported by
a reading of the decision. In that case, the FTC had appealed from a
decision of the Fifth Circuit holding that exclusive contracts are not
unfair methods of competition. The Supreme Court reversed, supporting
the FTC’s decision that the exclusive contracts of the respondent (a
producer and distributor of advertising motion pictures), unreasonably
restrain competition and tend to monopoly. It was the respondent who
argued that exclusive contracts of a duration in excess of a year are
necessary for the conduct of the business of the distributors. This
argument was rejected by the Supreme Court. The Supreme Court’s
decision did not suggest that exclusive dealing arrangements entered
into by a monopolist (which the respondent in that case was not),
together with other exclusionary action, did not violate § 2 of the
Sherman Act.
12. 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 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.”).
                               27


event, the purpose and effect of 3M’s payments to the
retailers were issues for the jury which, by its verdict,
rejected 3M’s arguments.
  The foreclosure of markets through exclusive dealing
contracts is of concern under the antitrust laws. As one of
the leading treatises states:
    unilaterally imposed quantity discounts can foreclose
    the opportunities of rivals when a dealer can obtain its
    best discount only by dealing exclusively with the
    dominant firm. For example, discounts might be
    cumulated over lengthy periods of time, such as a
    calendar year, when no obvious economies result.
3A Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law
¶ 768b2, at 148 (2d Ed. 2002); see also 11 Herbert
Hovenkamp, Antitrust Law ¶ 1807a, at 115-16 (1998)
(quantity discounts may foreclose a substantial portion of
the market). 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.” Id. at 117 n.7 (citing LePage’s, 1997 WL 734005
(E.D. Pa. 1997)).
  The Court of Appeals for the District of Columbia relied
on the evidence of foreclosure of markets in reaching its
decision on liability in United States v. Microsoft Corp., 253
F.3d 34, 69 (D.C. Cir. 2001). In that case, the court of
appeals concluded that Microsoft, a monopolist in the
operating system market, 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. Id. at 70-71.
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.” Id. at 71. 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.
Id. at 70-71. Significantly, the Microsoft court observed that
Microsoft’s exclusionary conduct violated § 2 “even though
the contracts foreclose less than the roughly 40% or 50%
                             28


share usually required in order to establish a § 1 violation.”
Id. at 70.
  One noted antitrust scholar has written:
      We might thus interpret the Microsoft holding as
    follows: Conduct that intentionally, significantly, and
    without business justification excludes a potential
    competitor from outlets (even though not in the
    relevant market), where access to those outlets is a
    necessary though not sufficient condition to waging a
    challenge to a monopolist and fear of the challenge
    prompts the conduct, is “anticompetitive.”
Eleanor M. Fox, What Is Harm to Competition? Exclusionary
Practices and Anticompetitive Effect, 70 Antitrust L. J. 371,
390 (2002).
   LePage’s produced evidence that the foreclosure caused
by exclusive dealing practices was magnified by 3M’s
discount practices, as some of 3M’s rebates were “all-or-
nothing” discounts, leading customers to maximize their
discounts by dealing exclusively with the dominant market
player, 3M, to avoid being 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.
Accordingly, the jury could reasonably find that 3M’s
exclusionary conduct violated § 2.

                             V.

               ANTICOMPETITIVE EFFECT
  It has been LePage’s position in pursuing its § 2 claim
that 3M’s exclusionary “tactics foreclosed the competitive
process by preventing rivals from competing to gain (or
maintain) a presence in the market.” Appellee’s Br. at 45-
46. When a monopolist’s actions are designed to prevent
one or more new or potential competitors from gaining a
foothold in the market by exclusionary, i.e. predatory,
conduct, its success in that goal is not only injurious to the
potential competitor but also to competition in general. It
has been recognized, albeit in a somewhat different context,
                                   29


that even the foreclosure of “one significant competitor”
from the market may lead to higher prices and reduced
output. Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d
380, 394 (7th Cir. 1984).
  The Microsoft court treated exclusionary conduct by a
monopolist as more likely to be anticompetitive than
ordinary § 1 exclusionary conduct. The inquiry in Microsoft
was whether the monopolist’s conduct excluded a
competitor (Netscape) from the essential facilities that
would permit it to achieve the efficiencies of scale necessary
to threaten the monopoly. 253 F.3d at 70-71.13 In Microsoft,
the court of appeals determined that Microsoft had
foreclosed enough distribution links to undermine the
survival of Netscape as a viable competitor. Id. at 71.
  Similarly, in this case, the jury could have reasonably
found that 3M’s exclusionary conduct cut LePage’s off from
key retail pipelines necessary to permit it to compete
profitably.14 It was only after LePage’s entry into the market
that 3M introduced the bundled rebates programs. If 3M
were successful in eliminating competition from LePage’s
second-tier or private-label tape, 3M could exercise its
monopoly power unchallenged, as Tesa Tuck was no longer
in the market.
  The District Court, recognizing that “this case presents a
unique bundled rebate program that the jury found had an

13. In one of the two distribution channels available for browsers,
Microsoft had locked up almost all the high volume distributors.
Microsoft, 253 F.3d at 70-71. In the 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, 224 U.S. 383 (1912). The Supreme Court
determined that the defendant’s agreement to provide access to the
bridge to other railroads on discriminatory terms violated § 1 of the
Sherman Act.
14. 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 that superstores provide, namely, cheap, high volume supply
lines.
                             30


anti-competitive effect,” Le Page’s, 2000 WL 280350, at *5,
denied 3M’s motion for judgment as a matter of law
(“JMOL”), stating:
    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
                             31


    customers were forced to forego purchasing Le Page’s
    private label tape in order to obtain the rebates on
    Scotch tape.
Id. (emphasis added).
   In the same opinion, the District Court found that
“[LePage’s] introduced substantial evidence that the anti-
competitive effects of 3M’s rebate programs caused Le
Page’s losses.” Id. at *7. 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. 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, the effect of
3M’s rebates on LePage’s earnings, if LePage’s had
attempted to match 3M’s discounts, can be calculated by
comparing the discount that LePage’s would have been
required to provide. That amount would represent the
impact of 3M’s bundled rebates on LePage’s ability to
compete, and that is what is relevant under § 2 of the
Sherman Act.
   The impact of 3M’s discounts was apparent from the
chart introduced by LePage’s showing that LePage’s
earnings as a percentage of sales plummeted to below zero
—to negative 10%—during 3M’s rebate program. App. at
7037; see also App. at 7044 (documenting LePage’s 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. Many
distributors dropped LePage’s entirely.
  Prior to the introduction of 3M’s rebate program, LePage’s
                                   32


sales had been skyrocketing. Its sales to Staples increased
by 440% from 1990 to 1993. 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 1997.15 LePage’s in turn lost
a proportional amount of sales. It lost key large volume
customers, such as Kmart, Staples, American Drugstores,
Office Max, and Sam’s Club. Other large customers, like
Wal-Mart, drastically cut back their purchases.
   As a result, LePage’s manufacturing process became less
efficient and its profit margins declined. In transparent tape
manufacturing, large volume customers are essential to
achieving efficiencies of scale. As 3M concedes, “ ‘large
customers were extremely important to [LePage’s], to
everyone.’ . . . Large volumes . . . permitted ‘long runs,’
making the manufacturing process more economical and
predictable.” Appellant Br. at 10 (quoting trial testimony of
Les Baggett, LePage’s former president and CEO) (citation
omitted).
   There was a comparable effect on LePage’s share of the
transparent tape market. In the agreed upon relevant
market for transparent tape in the United States, 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 had
fallen to 9.35%. Sealed App. at 489. Finally, in March of
1997, LePage’s was forced to close one of its two plants.
That same year, the only other domestic transparent tape
manufacturer, Tesa Tuck, Inc., bowed out of the
transparent tape business entirely in the United States.
Had 3M continued with its program it could have
eventually forced LePage’s out of the market.
  The relevant inquiry is the anticompetitive effect of 3M’s
exclusionary practices considered together. As the Supreme
Court recognized in Cont’l Ore Co. v. Union Carbide &
Carbon Corp., 370 U.S. 690, 699 (1962), the courts must
look to the monopolist’s conduct taken as a whole rather
than considering each aspect in isolation. The Court stated,

15. 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.
                             33


“ ‘in a case like the one before us [alleging § 1 and § 2
violations], the duty of the jury was to look at the whole
picture and not merely at the individual figures in it.’ ” Id.
(citation omitted). See also City of Anaheim v. S. Cal. Edison
Co., 955 F.2d 1373, 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.”)
(emphasis added). This court, when considering the
anticompetitive effect of a defendant’s conduct under the
Sherman Act, 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. Barr, 978 F.2d at 110-11.
   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. The anticompetitive effect of 3M’s
exclusive dealing arrangements, whether explicit or
inferred, cannot be separated from the effect of its bundled
rebates. 3M’s bundling of its products via its rebate
programs reinforced the exclusionary effect of those
programs.
  3M’s exclusionary conduct not only impeded LePage’s
ability to compete, but also it harmed competition itself, a
sine qua non for a § 2 violation. LePage’s presented powerful
evidence that competition itself was harmed by 3M’s
actions. 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
                              34


    label tape segment when 3M abandoned that part of
    the market to sell only higher-priced Scotch tape.”
Le Page’s, 2000 WL 280350, at *7.
   3M could effectuate such a plan because there was no
ease of entry. See Advo, Inc. v. Phila. Newspapers, Inc., 51
F.3d 1191, 1200 (3d Cir. 1995) (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, 90 Mich. L. Rev. 551, 564 (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,
2000 WL 280350, 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.
  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, Aspen
Skiing, 472 U.S. at 602, and attempt to monopolize, Lorain
Journal, 342 U.S. at 154-55.
  3M’s interest in raising prices is well-documented in the
record. 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. See 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”). LePage’s expert testified that the price
                             35


of Scotch-brand tape increased since 1994, after 3M
instituted its rebate program. App. at 3246-47. 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, 2000 WL 280350, at *7.
  As the foregoing review of the evidence makes clear, there
was sufficient evidence for the jury to conclude the long-
term effects of 3M’s conduct were anticompetitive. We must
therefore uphold its verdict on liability unless 3M has
shown adequate business justification for its practices.

                             VI.

          BUSINESS REASONS JUSTIFICATION
  It remains to consider whether defendant’s actions were
carried out for “valid business reasons,” the only recognized
justification for monopolizing. See, e.g., Eastman Kodak,
504 U.S. at 483. However, a defendant’s assertion that it
acted in furtherance of its economic interests does not
constitute the type of business justification that is an
acceptable defense to § 2 monopolization. Paraphrasing one
corporate executive’s well publicized statement, whatever is
good for 3M is not necessarily permissible under § 2 of the
Sherman Act. As one court of appeals has explained:
    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., 36 F.3d
1147, 1183 (1st Cir. 1994) (citing Eastman Kodak, 504 U.S.
at 483; Aspen Skiing, 472 U.S. at 608-11).
  It can be assumed that a monopolist seeks to further its
economic interests and does so when it engages in
                             36


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: An Economic Perspective 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 § 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.” Aspen Skiing, 472 U.S. at 608. Although 3M
alludes to its customers’ desire to have single invoices and
single shipments in defense of its bundled rebates, 3M cites
to no testimony or evidence in the 55 volume appendix that
would support any actual economic efficiencies in having
single invoices and/or single shipments. It is highly
unlikely that 3M shipped transparent tape along with retail
auto products or home improvement products to customers
such as Staples or that, if it did, the savings stemming from
the joint shipment approaches the millions of 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”). That is
precisely what § 2 of the Sherman Act prohibits by covering
conduct that maintains a monopoly. Maintaining a
monopoly is not the type of valid business reason that will
excuse exclusionary conduct. 3M’s business justification
defense was presented to the jury, and it rejected the claim.
The jury’s verdict reflects its view that 3M’s exclusionary
conduct, which made it difficult for LePage’s to compete on
the merits, had no legitimate business justification.
                                   37


                                  VII.

                              DAMAGES
  As an alternative to its argument that it is entitled to
JMOL on liability, 3M claims that it is entitled to a new trial
due to the District Court’s error in sustaining LePage’s
damages award. It gives two reasons. First, it contends that
the damage theory proffered by Terry Musika, LePage’s
damages expert, was based on improper assumptions and
should have been excluded.16 Second, 3M argues that
Musika’s theory failed to disaggregate the damages based
on lawful versus unlawful conduct by 3M.
   We review the District Court’s decision to admit or
exclude expert testimony for abuse of discretion. Kumho
Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999).
Furthermore, we review de novo LePage’s damages evidence
to determine whether as a matter of law it can support the
jury’s verdict. Stelwagon Mfg. Co. v. Tarmac Roofing Sys.,
Inc., 63 F.3d 1267, 1271 (3d Cir. 1995).
  To determine the amount of profits LePage’s lost between
1993 and 2000 due to 3M’s antitrust violations, Musika
constructed a “lost market share” model. Appellant’s Br. at
72. Musika first calculated the total United States
transparent tape sales during the damages period, using
actual financial data from 1992 to 1997 and projecting total
sales from 1998 to 2000. Next, he determined how those
sales would be divided between branded and private-label
parts of the market, projecting a 1% shift each year from
branded to private-label tape sales. In arriving at 1%,
Musika considered the actual growth in private-label tape
sales, the actual growth rate of all private-label products

16. 3M does not challenge Musika’s expert qualifications. Nonetheless,
we note that he holds a master’s degree in public finance, is a former
partner at a major accounting firm, and at the time of trial was President
and CEO of a business consulting firm. Furthermore, Musika frequently
has served as a court-appointed bankruptcy trustee, as an expert for
various government agencies, including the Department of Justice and
Securities and Exchange Commission, and as an expert witness in
complex cases, including five antitrust cases.
                             38


(i.e. not just tape), the growth rate of large customers, and
3M’s internal projections.
   After determining the size of both segments of the
market, Musika estimated LePage’s share of the market,
predicting that LePage’s would have retained its 3.5% share
of the branded-label segment and its 88% share of the
private-label segment. He opined that LePage’s share of the
overall market for transparent tape would have increased
from 14.44% in 1992 to 21.2% in 2000 but for 3M’s
unlawful conduct. Finally, Musika subtracted LePage’s
actual sales from his projected sales to determine LePage’s
lost sales due to 3M’s unlawful conduct. He calculated
LePage’s projected profit margin by looking at LePage’s
actual profit margin for each year and adjusting it to show
declining prices and LePage’s consequential decreasing
efficiency due to decreasing sales. Based on those
adjustments, LePage’s profit margin decreased every year
during the damages period. Musika concluded that but for
3M’s unlawful conduct, LePage’s would have earned an
extra $36 million dollars.
  Importantly, 3M does not challenge Musika’s basic
approach to calculating damages, conceding that “an expert
may construct a reasonable offense-free world as a
yardstick for measuring what, hypothetically, would have
happened ‘but for’ the defendant’s unlawful activities.”
Appellant’s Reply Br. at 37(citing Callahan v. A.E.V., Inc.,
182 F.3d 237, 254-58 (3d Cir. 1999); Rossi v. Standard
Roofing, Inc., 156 F.3d 452, 484-87 (3d Cir. 1998)).
  Instead, 3M’s motion for judgment as a matter of law
attacked Musika’s underlying assumptions, the primary
assumption being that 3M did not want to succeed in the
private-label segment as it did not want to harm its high-
margin sales of Scotch brand. The District Court rejected
3M’s objections to LePage’s damages claims, stating that
“the record . . . demonstrates that Mr. Musika’s
assumptions were grounded in the past performances of
Scotch, Highland and Le Page’s tapes, as well as 3M’s own
internal projections for future growth.” LePage’s, 2000 WL
280350, at *8.
  The credibility of LePage’s and 3M’s experts was for the
jury to determine. Inter Med. Supplies, Ltd. v. EBI Med.
                              39


Sys., Inc., 181 F.3d 446, 462-63 (3d Cir. 1999). Musika was
extensively cross-examined and 3M presented testimony
from its own damages expert who predicted more
conservative losses to LePage’s. In the end, the jury found
Musika to be credible. 3M’s disappointment as to the jury’s
finding of credibility does not constitute an abuse of
discretion by the District Court in allowing Musika’s
testimony.
  3M next argues that Musika improperly failed to
disaggregate damages, thereby providing the jury with no
mechanism to discern damages arising from 3M’s lawful
conduct or other facts from damages arising from 3M’s
unlawful conduct. According to 3M, this resulted in
impermissible guesswork and speculation on the part of the
jury.
  In Bonjorno v. Kaiser Aluminum & Chem. Corp., 752 F.2d
802, 812 (3d Cir. 1984), this court stated that “[i]n
constructing a hypothetical world free of the defendants’
exclusionary activities, the plaintiffs are given some latitude
in calculating damages, so long as their theory is not wholly
speculative.” Id. 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 the
injury, as long as the damages are not based on
speculation or guesswork. Id. at 813. The Bonjorno court
noted that it would be extremely difficult, if not impossible,
to segregate and attribute a fixed amount of damages to
any one act as the theory was not that any one act in itself
was unlawful, but that all the acts taken together showed
a § 2 violation. Id.
   Similarly, 3M’s actions, taken as a whole, were found to
violate § 2, thus making the disaggregation that 3M speaks
of to be unnecessary, if not impossible. In any event, we fail
to see how the jury engaged in speculation or guesswork.
The District Court clearly charged the jury to disregard
losses not caused by 3M: “You may not calculate damages
based only on speculation or guessing . . . . You may not
award damages for injuries or losses caused by other
factors.” App. at 5689. We find no evidence that the jury
failed reasonably to follow these instructions.
                             40


  For the foregoing reasons, we will not disturb the jury’s
damages award to LePage’s.

                            VIII.

                   JURY INSTRUCTIONS
   3M also argues that it should be awarded a new trial
because of allegedly improper jury instructions. In the
absence of a misstatement of law, jury instructions are
reviewed for abuse of discretion. Bhaya v. Westinghouse
Electric Corp., 922 F.2d 184, 191 (3d Cir. 1990). Because
the District Court provided the jury with meticulous
instructions, methodically explaining this area of the law in
a manner understandable to lay persons, we conclude that
it did not abuse its discretion.
 The District Court, in instructing the jury on Count I,
which   encompassed     LePage’s   claim    of  unlawful
maintenance of monopoly power under § 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. . . .
      And thirdly, that LePage’s was injured in its business
    or property because of 3M’s restrictive or exclusionary
    conduct.
App. at 5663-64.
  3M complains that the District Court failed to provide
guidance that would instruct the jury how to distinguish
                              41


between unlawful predation and lawful conduct. However,
in explaining LePage’s maintenance of monopoly claim, the
District Court told the jury that in order to find for
LePage’s, it would have to find by a preponderance of the
evidence that 3M willfully maintained its monopoly power
through exclusionary or predatory conduct. App. at 5663.
It then summarized those of 3M’s actions that LePage’s
contended were unlawfully exclusionary or predatory,
including 3M’s rebate program, market development fund,
its efforts to control, reduce or eliminate private-label tape,
and its efforts to raise the price consumers pay for Scotch
tape. Thereafter, the judge provided the jury with the
following factors to determine whether 3M’s conduct was
either exclusionary or predatory: “its effect on its
competitors, such as LePage’s, its impact on consumers,
and whether it has impaired competition, in an
unnecessarily restrictive way.” App. at 5670.
  Relevant portions of the charge were as follows:
    The law directs itself not against conduct which is
    competitive, even severely so, but rather against
    conduct which tends to destroy competition itself.
App. at 5655.
    LePage’s must prove that 3M willfully maintained
    monopoly power by predatory or exclusionary conduct,
    rather than by supplying better products or services, or
    by exercising superior business judgment, or just by
    chance. So willful maintenance of monopoly power,
    that’s an element LePage’s has to prove.
App. at 5668.
    To prove that 3M acted willfully, LePage’s must prove
    either that 3M engaged in predatory or exclusionary
    acts or practices, with the conscious objective of
    furthering the dominance of 3M in the relevant market,
    or that this was the necessary direct consequence of
    3M’s conduct or business arrangement.
App. at 5668.
    I’m now giving you what LePage’s contentions are as to
    what 3M did or did not do, that constituted predatory
                             42


    or exclusionary conduct. Number one, 3M’s rebate
    program, such as the EGF, executive growth fund, or
    the PGF, the partnership growth fund, and the brand
    mix program. Number two, 3M’s market development
    fund called the MDS in some of the testimony, and
    other payments to customers conditioned on customers
    achieving certain sales goals or growth targets. Third,
    3M’s efforts to control, or reduce, or eliminate private
    label tape. Four, 3M’s efforts to switch customers to
    3M’s more expensive branded tape, and Five, 3M’s
    efforts to raise the price consumers pay for Scotch
    tape. LePage’s claims that all of these things that I’ve
    just gone through was predatory or exclusionary
    conduct. Now, 3M denies in every respect that these
    actions were predatory or exclusionary. 3M contends
    that these actions were, in fact, pro-competitive.
App. at 5668-69.
    Exclusionary    conduct    and     predatory      conduct
    comprehends, at the most, behavior that not only, one,
    tends to impair the opportunities of its rivals, but also,
    number two, either does not further competition on the
    merits, or does so in an unnecessarily restrictive way.
    If 3M has been attempting to exclude rivals on some
    basis other than efficiency, you may characterize the
    behavior as predatory.
App. at 5670.
    However, you may not find that a competent, willfully
    maintained monopoly power, if that company has
    maintained that power, solely through the exercise of
    superior foresight or skill in industry, or because of
    economic or technological efficiencies, or because of
    size, or because of changes in customer and consumer
    preferences, or simply because the market is so limited
    that it is impossible to efficiently produce the product,
    except by a plan large enough to supply the whole
    demand.
App. at 5670-71.
    Now with respect to Count 1, unlawfully maintaining
    monopoly power, mere possession of monopoly power,
    if lawfully acquired, does not violate the antitrust laws.
                             43


App. at 5671.
    In determining whether there has been an unlawful
    exercise of monopoly power, you must bear in mind
    that a company has not acted unlawfully simply
    because it has engaged in ordinary competitive
    behavior that would have been an effective means of
    competition if it were engaged in by a firm without
    monopoly power, or simply because it is a large
    company and a very efficient one.
App. at 5672.
  The trial court further noted that if the jury found the
evidence to be insufficient to prove any of the elements, it
had to find for 3M and against LePage’s. It was careful to
note that intense business competition was not considered
predatory or exclusionary, explaining:
    The acts or practices that result in the maintenance of
    monopoly power must represent something other than
    the conduct of business that is part of the normal
    competitive process or even extraordinary commercial
    success. [3M] must represent conduct that has made it
    very difficult or impossible for competitors to engage in
    fair competition.
App. at 5671.
  The District Court closely followed the ABA sample
instructions when instructing the jury as to predatory and
exclusionary    conduct,    including    its   instructions
distinguishing between procompetitive and anticompetitive
conduct. See ABA, Sample Jury Instructions in Civil
Antitrust Cases C-20 to C-21 (1999 Ed.). Furthermore, the
jury instructions were a modified version of those given in
Aspen Skiing, which the Supreme Court did not find
objectionable. 472 U.S. at 596-97.
   3M contends that the District Court was obligated to take
into account the decision in Brooke Group when crafting its
jury instructions. As we have explained, Brooke Group
involved claims of predatory pricing, a claim LePage’s never
alleged against 3M. It follows that the District Court need
not have, indeed should not have, instructed the jury as to
claims not at issue in the case.
                             44


  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]
    (2.1) 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.
  The District Court gave the jury a thorough, clear charge
as to the § 2 claim. Based on its sound instructions, the
jury decided that LePage’s had met its evidentiary burden
as to its § 2 claim. Nothing in the jury charge constitutes
reversible error.

                             IX.

                      CROSS APPEAL

             ATTEMPTED MONOPOLIZATION
   LePage’s cross appeals from the District Court’s order
granting judgment as a matter of law to 3M on LePage’s
claim that 3M illegally attempted to maintain its monopoly.
In overturning the jury’s verdict for LePage’s on this claim,
the District Court stated that “ ‘an attempted maintenance
of monopoly power’ ” is “inherently illogical.” LePage’s, 2000
WL 280350, at *2.
  LePage’s argues that the courts and commentators have
repeatedly found that defendants can be guilty of both
                             45


monopolization and attempted monopolization claims
arising out of the same conduct. See, e.g., Am. Tobacco Co.,
328 U.S. at 783 (affirming judgment that defendants were
guilty of monopolization and attempted monopolization);
Earl Kintner, 2 Federal Antitrust Law § 13.1 n.5 (1980). It
emphasizes that in Lorain Journal, the Supreme Court
upheld a § 2 attempted monopolization judgment against
the defendant newspaper, holding that “a single newspaper,
already enjoying a substantial monopoly in its area, violates
the ‘attempt to monopolize’ clause of § 2 when it uses its
monopoly to destroy threatened competition.” 342 U.S. at
154.
   We need not consider the correctness of the District
Court’s ruling on the attempted monopolization claim
because we uphold its decision on the monopolization
claim. The jury returned the same amount of damages on
both claims and LePage’s concedes that under those
circumstances discussion of the attempted monopolization
is unnecessary.

                             X.

                       CONCLUSION
   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 jury heard the evidence and the contentions of the
parties, accepting some and rejecting others. There was
ample evidence that 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, in violation of § 2 of
the Sherman Act. We find no reversible error. Accordingly,
we will affirm the judgment of the District Court.
46


     Volume 2 of 2
                             48


GREENBERG, Circuit Judge, dissenting:
   I respectfully dissent as I would reverse the district
court’s order denying the motion for judgment as a matter
of law on the monopolization claim but affirm on LePage’s’s
cross-appeal from the motion granting 3M a judgment as a
matter of law on the attempted maintenance of monopoly
claim. While I recognize that the majority opinion describes
the factual background of this case, I nevertheless also will
set forth its background as I believe that a more specific
exposition of the facts leads to a conclusion that LePage’s’s
case should not have survived 3M’s motion for a judgment
as a matter of law.
  As the majority indicates, 3M dominated the United
States transparent tape market with a market share above
90% until the early 1990s. LePage’s 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,
an endeavor successful to the extent that LePage’s captured
88% of private label tape sales in the United States by
1992. Moreover, growth of “second brand” and private label
tape accounted for a shift of some tape sales from branded
tape to private label tape so the size of the private label
tape business expanded. In the circumstances, not
surprisingly, during the early 1990s, 3M also entered the
private label tape business.
  As the majority notes, 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. In particular, it asserts 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. LePage’s barely was
surviving at the time of trial and suffered large operating
losses from 1996 through 1999.
  This case centers on 3M’s rebate programs that,
beginning in 1993, involved offers by 3M of “package” or
                             49


“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 sold by
3M’s stationery division, such as Post-It Notes and
packaging products. There is no doubt but that these
programs created incentives for retailers to purchase more
3M products and enabled them to have single invoices,
single shipments and uniform pricing programs for various
3M products. 3M linked the size of the rebates to the
number of product lines in which the customers met the
targets, an aggregate number that determined the rebate
percentage the customer would receive on all of its 3M
purchases across all product lines. Therefore, if customers
failed to meet growth targets in multiple categories, they did
not receive any 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 it as a supplier of
transparent tape.
   In practice, as 3M’s rebate program evolved, it offered
three different types of rebates: Executive Growth Fund,
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
                             50


customer increased its purchases and the total volume of
purchases.
   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.
  The evidence at trial focused on the parties’ dealings with
a limited number of customers and demonstrated that
LePage’s’s problems were attributed to a number of factors,
not merely 3M’s rebate programs. Thus, I describe this
evidence 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
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 it 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 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
                             51


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 its 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, 3M would decrease the
rebate accordingly, e.g., a $400,000 rebate for $13,000,000
of sales. LePage’s claims that, as a practical 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.

                           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
                            52


LePage’s as a supplier (a “growth” rebate that only could be
met by converting all of Staple’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.

                        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.

                        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
                             53


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
imported 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.

           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
                            54


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
certain buying groups 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. 3M
argues that LePage’s could have offered its own discount or
rebate but instead refused in one instance to pay the
standard promotional fee charged suppliers for inclusion in
a catalog.
   Notwithstanding the evidence which demonstrates that
LePage’s lost business for reasons that could not possibly
be attributable to any unlawful conduct by 3M, it argues
that 3M willfully maintained its monopoly through a
“monopoly broth” of anticompetitive and predatory conduct.
I would reject LePage’s’s argument as I 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 (a point that is not in dispute) and, in the
absence of such proof, the record does not supply any other
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., 384 U.S. 563, 570-71, 86 S.Ct.
1698, 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., 504 U.S. 451, 482-83,
112 S.Ct. 2072, 2090 (1992) (internal quotation marks
omitted). LePage’s contends that 3M’s bundled rebates were
                             55


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. I discuss these claims in the order I have stated
them.
  LePage’s primarily complains of 3M’s use of bundled
rebates. While, as the majority recognizes, we have held
that rebates on volume purchases are lawful, see Advo, Inc.
v. Philadelphia Newspapers, Inc., 51 F.3d 1191, 1203 (3d
Cir. 1995), LePage’s seeks to avoid that principle by
pointing out that 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.
Br. of Appellee at 40.
  In making its argument LePage’s relies in part on
SmithKline Corp. v. Eli Lilly & Co., 575 F.2d 1056 (3d Cir.
1978), which, as the majority notes, does not bind this en
banc court but nevertheless can have precedential value. In
SmithKline, 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 id. at 1061. 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
                                    56


cephalosporin products. See id. “Although hospitals were
free to purchase SmithKline’s Ancef with their Keflin and
Keflex orders with Lilly, thus avoiding the penalties of a tie-
in sale,[1] the practical effect of that decision would be to
deny the Ancef purchaser the 3% bonus rebate on all its
cephalosporin products.” Id. at 1061-62 (internal footnote
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 id. at 1062.
   We concluded that Lilly willfully acquired and maintained
monopoly power by linking products on which it 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 id. at
1065. 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 id. Expert
testimony and the evidence on pricing showed that in the
circumstances SmithKline’s prospects for continuing in the
Ancef market were poor.
   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 contends 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

1. 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, 356 U.S. 1, 6, 78 S.Ct. 514, 518
(1958).
                             57


how long it would take 3M to foreclose the rival from
obtaining the volume of business necessary to survive. See
id. “Competition is harmed just the same by the loss of the
only existing competitive constraints on 3M in a market
with high entry barriers.” Id. The district court stated that
LePage’s introduced substantial evidence that the
anticompetitive effects of 3M’s rebate program caused its
losses. See LePage’s Inc. v. 3M, No. Civ. A. 97-3983, 2000
WL 280350, at *7-8 (E.D. Pa. Mar. 14, 2000). The majority
finds that “3M’s conduct was at least as anticompetitive as
the conduct which [we] held violated § 2 in SmithKline.”
Maj. Op. at 24.
  I disagree with the majority’s use of SmithKline.
SmithKline showed that it could not compete by explaining
how much it would have 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.
   While I recognize that it is obvious from the size of 3M’s
rebates as compared to LePage’s’s sales that Lepage’s would
have had to make substantial reductions in prices to match
the rebates 3M paid to particular customers, Lepage’s 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. 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.
Furthermore, it is critically important to recognize that
LePage’s had 67% of the private label business at the time
of the trial. Thus, notwithstanding 3M’s rebates, LePage’s
was able to retain most of the private label business. In the
circumstances, it is ironical that LePage’s complains of
3M’s use of monopoly power as the undisputed fact is that
                                  58


LePage’s, not 3M, was the dominant supplier of private
label tape both before and after 3M initiated its rebate
programs. Indeed, the record suggests that inasmuch as
LePage’s could not make a profit with a 67% share of the
private label sales, it must have needed to be essentially the
exclusive supplier of such tape for its business to be
profitable as it in fact was when it had an 88% share of the
private label tape sales business.
   Although I am not evaluating the expert’s method of
calculating damages as I would not reach the damages
issue, I emphasize that 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 for them.” Brooke Group Ltd. v. Brown &
Williamson Tobacco Corp., 509 U.S. 209, 242, 113 S.Ct.
2578, 2598 (1993); see also Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 594 n.19, 106 S.Ct.
1348, 1360 n.19 (1986); Advo, 51 F.3d at 1198-99; Virgin
Atlantic Airways Ltd. v. British Airways PLC, 69 F. Supp. 2d
571, 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, 257 F.3d 256 (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. In fact, the evidence that I
described above conclusively demonstrates that LePage’s
lost private sale tape business for reasons not related to
3M’s rebates. Furthermore, some experts have questioned
the validity of attributing all the rebates to the one
competitive product in situations such as these.2 I do not

2. 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., 920 F. Supp. 455, 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
                                   59


need, however, to decide the validity of that method of
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.3
   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. Abbott 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

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 id. at 467-69. Commentators, however, suggests that this
analysis is incorrect. See III PHILLIP E. AREEDA & HERBERT HOVENKAMP,
ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND THEIR APPLICATION
¶ 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.
3. 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. Of course, Lepage’s’s prices
overall were low enough for it to have 67% of the private label business.
                             60


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 id. at
458. 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.” Id. at 469.
  Holding that the discount package pricing did not violate
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 id. at 469-70 (“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, as the majority acknowledges, 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 Advo, 51 F.3d at 1198-99.
Moreover, LePage’s’s economist conceded that LePage’s is
not as efficient a tape producer as 3M. Thus, in this case
section 2 of the Sherman Act is being used to protect an
inefficient producer from a competitor not using predatory
pricing but rather selling above cost. While the majority
contends that Brooke Group, a case on which 3M heavily
relies, is distinguishable as none of the defendants there
                              61


had a monopoly in the market, the fact remains that the
Court in describing section 2 of the Sherman Act said flat
out in Brooke Group 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.” Brooke Group, 509 U.S. at 222, 113
S.Ct. at 2587. LePage’s simply did not do this.
   I realize that the majority indicates that “LePage’s unlike
the plaintiff in Brooke Group, does not make a predatory
pricing claim.” Maj. Op. at 16. But that circumstance
weakens rather than strengthens LePage’s’s position as it
merely confirms the lawfulness of 3M’s conduct.
Furthermore, the circumstance that 3M is not dealing in an
oligopolistic market should not matter as the harm that
LePage’s claims to have suffered from the bundled rebates
would be no less if inflicted by multiple competitors.
Moreover, monopolist or not, 3M, even in the absence of
LePage’s and Tesa from the private label business, would
not be the only supplier of private lable tape for there are
foreign suppliers as is demonstrated plainly by the evidence
that both Walgreens and Dollar General dealt with such
suppliers.
   Contrary to the majority’s view, this is not a situation in
which there is no business justification for 3M’s actions.
This point is important inasmuch as it is difficult to
distinguish legitimate competition from exclusionary
conduct that harms competition, see United States v.
Microsoft Corp., 253 F.3d 34, 58 (D.C. Cir.), cert. denied,
534 U.S. 952, 122 S.Ct. 350 (2001), and 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., 472 U.S. 585, 608, 105 S.Ct. 2847, 2860 (1985),
discussed by the majority, 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
                              62


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 id. at 608, 105 S.Ct. at 2860; see also
Eastman Kodak, 504 U.S. at 483, 112 S.Ct. at 2091
(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
asserted purpose would be served fully by less restrictive
means).
  On the other hand, in Concord Boat Corp. v. Brunswick
Corp., 207 F.3d 1039, 1043, 1063 (8th Cir.), cert. denied,
531 U.S. 979, 121 S.Ct. 428 (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 id. at 1044, 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, 1997 WL 734005 (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 Brooke Group. In Concord Boat, the
“strings” attached were the exclusivity provisions. See
Concord Boat Corp. v. Brunswick Corp., 21 F. Supp. 2d 923,
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 appeals 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 Boat,
                             63


207 F.3d at 1061. More importantly, the court perceived
that Brooke Group should be considered even with claims
based on pricing with strings. See id. “If a 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.” Id. (citing Morgan
v. Ponder, 892 F.2d 1355, 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 id. at 1062.
The court distinguished cases such as SmithKline and
Ortho where products were bundled since they involved two
markets. See id. Of course, here we are dealing with a
single market.
   Unlike the situation of the defendant in Aspen, 3M’s
pricing structure and bundled rebates were not contrary to
its economic interests, as they likely increased its sales. In
fact, that is exactly what LePage’s is complaining about.
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. 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.
Furthermore, overall LePage’s was quite successful in
holding its share of the private label sales as it had 67% of
the business at the time of the trial.
  In sum, I conclude that as a matter of law 3M did not
violate section 2 of the Sherman Act by reason of its
bundled rebates even though its practices harmed its
competitors. The majority decision which upholds the
contrary verdict risks curtailing price competition and a
                             64


method of pricing beneficial to customers because the
bundled rebates effectively lowered their costs. I regard this
result as a significant mistake which cannot be justified by
a fear that somehow 3M will raise prices unreasonably
later. In this regard I reiterate that in addition to LePage’s
there are foreign suppliers of transparent tape so that with
or without LePage’s there will be constraints on 3M’s
pricing.
   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.
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. I recognize, however,
that although most of 3M’s contracts with customers were
not conditioned on exclusivity, 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, 258 U.S. 451, 458, 42
S.Ct. 363, 365 (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 Fed. Trade Comm’n v. Motion Picture Adver.
Serv. Co., 344 U.S. 392, 395-96, 73 S.Ct. 361, 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 Advo, 51 F.3d at 1204. In Tampa
Electric Co. v. Nashville Coal Co., 365 U.S. 320, 327, 81
S.Ct. 623, 627-28 (1961), the Court stated that even if in
practical application a contract is found to be an exclusive-
                                    65


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 is 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.4
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.” Microsoft,
253 F.3d at 69. 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 id. at 69-70. 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
record to be due to quality or service consistency concerns,
as well as foreign competition, rather than to 3M’s tactics.

4. 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.,
978 F.2d 98, 110 (3d Cir. 1992).
                             66


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. As I 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, I am
satisfied 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 Group, 509 U.S. at 215, 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 id. at 216, 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 id. at
216-17, 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 id. at 243, 113 S.Ct.
at 2598. In this case, however, 3M did not use below
average variable cost pricing (LePage’s does not charge
predatory pricing) and therefore 3M did not have predatory
costs to recoup.
                                 67


   I 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 I nevertheless cannot
accept 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 id. Moreover, though 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. I am 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., 170
F.3d 518, 523 (5th Cir. 1999). Thus, we should not uphold
the verdict on that basis.
  Accordingly, I conclude 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.5 Thus, I would
reverse the judgment of the district court and remand the
case for entry of judgment in favor of 3M. Judge Scirica and
Judge Alito join in this opinion.

A True Copy:
        Teste:

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




5. While I do not discuss the point I agree with the district court’s
disposition of the attempted maintenance of monopoly claim.
