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Applied Economic Consultants

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Case Studies

Image Technical Services (ITS) v. Kodak

Antitrust liability for plaintiffs

Plaintiffs included 17 small independent service organizations who alleged Kodak had illegally monopolized the aftermarket for maintenance services on Kodak high volume copiers and micrographics (microfilm) equipment. Plaintiffs alleged Kodak used its control of repair parts to harm competition in the aftermarket for maintenance services. The plaintiffs were all competitors to Kodak in the provision of aftermarket maintenance services on Kodak equipment.

applEcon provided expert economic analysis and both deposition and jury trial testimony for the plaintiffs. applEcon addressed antitrust liability issues of market definition, market power and harm to competition. applEcon provided testimony on the state of competition in the foremarkets, the role of information problems in disconnecting the aftermarkets from the foremarkets, the state of competition in the aftermarkets, and the impact of Kodak's actions on aftermarket competition.

Due to our command of the facts of the case, the lawyers requested that applEcon staff attend the entire District Court trial. applEcon helped prepare the lawyers for trial on a daily basis and provided immediate evidentiary support during trial.

ITS v. Kodak is one of the most significant antitrust cases of the last couple decades, setting several important precedents. Specifically, the Supreme Court clarified the importance of connecting real-world factual analysis to economic theory rather than relying on theory alone; the court also established that a single brand can be a relevant market for antitrust analysis, as can brand-specific aftermarkets.

After having gone to the US Supreme Court on summary judgment appeal, the case was tried before a jury in U.S. District Court. The jury found in favor the plaintiffs, awarding them $72 million (after trebling) plus fees. On appeal to the Ninth Circuit Court of Appeals, the liability portion of the District Court decision was held up in its entirety (the case was remanded for re-hearing on part of the damages).

For more description and analysis of this case, please see “Links Between Vertically Related Markets: Kodak,” in The Antitrust Revolution, 3rd ed., J. Kwoka and L. White, eds., 1999. Revised for Kwoka and White, 4th ed., 2002.