LePage's v. 3M Antitrust Case

IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF PENNSYLVANIACIVIL ACTIONLEPAGE'S INCORPORATED and LEPAGE'S MANAGEMENT COMPANY,Plaintiffsv.3M (MINNESOTA MINING AND MANUFACTURING COMPANY), DefendantNo. 97-3983M E M O R A N D U MPadova, J. May , 1999LePage's Incorporated and LePage's Management Company ("LePage's") brought this action against Minnesota Mining and Manufacturing Company ("3M"), alleging that 3M engaged and is engaging in a number of anticompetitive practices in violation of antitrust laws. 3M has filed a Motion for Summary Judgment. For reasons that follow, the Motion will be denied.I. LEPAGE'S STATEMENT OF CLAIMS:(1)The following is taken from LePage's Statement of Claims: For over sixty years, 3M has enjoyed a monopoly in the market for invisible and transparent tape for home and office use in the United States. Until recently, there were three major suppliers in the market: 3M, LePage's, and Tesa Tuck, Inc. ("Tesa"). After this lawsuit was filed, Tesa withdrew from the market, leaving only 3M and LePage's. 3M has a market share of over 90%, making it a monopolist, which 3M concedes for purposes of this Motion.For decades, LePage's has marketed its own brand of tape and other products, including its well-known children's glue. 3M has marketed its premium Scotch brand tape and a second tier tape, Highland brand, as well as a host of other products that LePage's does not make. Starting in the early 1980's, LePage's developed private label tape programs. LePage's private label tapes sold at prices well below the price of 3M's Scotch tape, and LePage's private label tape business began to erode 3M's monopoly. From 1982 to 1992, LePage's tape business had a compound annual growth rate of 11.8%, its sales increased from $12 million to $37.2 million, and its market share grew to nearly 12%. 3M's market share declined, but it maintained its monopoly. Until 1992, 3M did not attempt to compete in the private label segment of the market.Office "superstore" chains such as Office Depot, OfficeMax, and Staples, which developed in the 1980's and 90's, were in a position to use private label tape that would compete with 3M's Scotch tape, and they did so. 3M perceived LePage's own brand, and especially LePage's private label brands, as a threat to 3M's monopoly and to the high profits that Scotch tape generated.Faced with this threat, 3M set out to protect the dominance in the market of Scotch tape by crippling its competitors and limiting the ability of consumers to buy tape other than Scotch tape. It did this in three ways: by creating "bundled rebate" programs which discouraged competition on the merits; by offering its customers direct financial incentives forexclusivity; and by stifling the growth of private label and second tier brand sales of transparent tape.LePage's contends that, to a large extent, 3M has succeeded. In response, 3M asserts that the practices of which LePage's complains were not only lawful, they were procompetitive.Editor's Note:On March 25, 2003, the Court of Appeals for the Third District issued an en banc decision in favor of LePage's complaint, thereby reversing an earlier decision in favor of 3M. The court ruled that 3M's package discounts were exclusionary conduct resulting in unlawful monopolization, because a potential competitor that doesn't manufacture an equally diverse group of products could not make a comparable offer. 3M has petitioned the U.S. Supreme Court to review the decision.A full copy of the appeals court's opinion, as well as the earlier decision of a U.S District Court in favor of LePage's excerpted above, is attached at right.

LePage's v. 3M Antitrust Case

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