Static Control Components, Inc. v. Lexmark International, Inc.

Lexmark International, Inc. (Lexmark) (defendant) was a manufacturer of laser printers and controlled approximately 10 to 15 percent of the market. In comparison, Hewlett-Packard controlled between 50 and 75 percent of the market. Lexmark also manufactured toner cartridges and sold them under the Lexmark brand or to resellers under other companies’ labels. Lexmark had a resale agreement with IBM as part of a multinational procurement contract. Under the Lexmark-IBM contract, if IBM sold non-Lexmark printer cartridges that were compatible with Lexmark’s printers, IBM would face a contractual penalty in the form of lost consideration or a terminated contract. Several companies that manufactured compatible printer cartridges (the remanufacturers) (plaintiffs) sued Lexmark for antitrust violations, including violations of §§ 1 and 2 of the Sherman Act. Lexmark moved for summary judgment, arguing that it did not possess market or monopoly power or engage in any anticompetitive conduct. The remanufacturers presented evidence that Lexmark had sufficient market power to cause an increase in overall cartridge prices through postsale anticompetitive practices. For instance, the record supported that consumers could not readily determine the life-cycle cost of a printer, that consumers were led to believe that Lexmark would always provide discounted cartridges, that Lexmark did not always provide them, and that Lexmark caused an increase in the overall price of cartridges.