Full opinion text
OPINION SUE L. ROBINSON, Chief Judge. I. INTRODUCTION On January 5, 1999, plaintiff United States of America through the Department of Justice (“DOJ”) filed this action against defendant Dentsply International, Inc. (“Dentsply”) alleging violations of the antitrust laws. (D.I.l) Specifically, the DOJ has asserted violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and section 3 of the Clayton Act, 15 U.S.C. § 14. (Id.) At issue are two aspects of Dentsply’s business policies: (1) its agreements with dealers that they will lose their Dentsply account if they add a competing brand of teeth; and (2) its agreements with new dealers to drop some, or all, competing tooth brands in order to obtain the Dentsply account in the first place. (D.I. 460 at 17) The court has jurisdiction over this matter pursuant to 15 U.S.C. §§ 4 and 25, and 28 U.S.C. §§ 1331, 2201 and 2202. The following are the court’s findings of fact and conclusions of law pursuant to Fed. R.Civ.P. 52(a). II. FINDINGS OF FACT A. Background 1. This case concerns the manufacture, distribution and sale of prefabricated artificial teeth in the United States. The relevant product market for purposes of this case is the sale of prefabricated artificial teeth in the United States. (GX 445 at 6-8) 2. Artificial teeth today are manufactured in either porcelain or plastic. In order to match the different characteristics of a person’s mouth, they are made in thousands of different shades and moulds (“mould” is the correct spelling within the tooth industry). Teeth are made in different grades of quality, commonly known as “premium,” “mid-line,” “economy,” and “sub-economy.” (D.I. 417 at 81-84; D.I. 432 at 2101) 3. The shade of an artificial tooth is the coloring of the tooth. The mould of an artificial tooth is the actual form or shape of the tooth. Choosing the correct tooth mould is critical to ensuring that the denture patient chews correctly and maintains his or her proper bite. (D.I. 432 at 2100-03) 4. The market broadly classifies artificial tooth moulds as either “European” or “American.” (Id. at 2125-26) 5. Premium artificial teeth combine superior aesthetics with extreme durability. Economy artificial teeth offer less wear resistance and aesthetics than premium artificial teeth and are priced significantly less. Sub-economy artificial teeth offer even less wear resistance and aesthetics. (Id. at 2105-06, 2115-16, 2250-51) 6. Artificial teeth are manufactured for use in dentures. A denture is a removable prosthetic device comprised of artificial teeth fixed in an acrylic or other base material to replace some or all of a person’s natural teeth. 7. “Removable” appliances are ones that patients can remove from their mouth themselves, clean them and place them back in. This can include either full and partial dentures. (D.I. 425 at 1206; D.I. 417 at 85) 8. “Fixed” appliances, by contrast, include crowns, bridges, and implants. A crown is a single, individual tooth restoration. A bridge is a restoration of at least three units bridging a gap of at least one missing tooth. An implant case is where a device is actually screwed into the bone. (D.I. 417 at 85-86) 9. The term “combination case” refers to the use of both fixed and removable appliances. (D.I. 425 at 1208) 10. Dental laboratories purchase almost all of the artificial teeth sold in the United States and use the teeth to make dentures. Labs buy artificial teeth on cards containing six (for anteriors) or eight (for posteriors) teeth. A full denture, i.e., one that replaces all natural teeth, requires 28 teeth from a total of four tooth cards. When fabricating a partial denture, a dental lab may only use a portion of the teeth on a card. The remaining teeth on the tooth cards are known as “broken sets.” (D.I. 368, Ex. 1, Stipulation ¶¶ 13-16) 11. Labs fabricate dentures according to the prescription, impression and any other information provided to the lab by the dentist. (D.I. 417 at 81; D.I. 425 at 1211-17) A denture prescription may contain a number of parameters, including a shade designation, a mould designation, a specific brand or a combination of these three items. (D.I. 432 at 2141; D.I. 448 at 2332-33) However, only 10% of dentists specify by name the brand of teeth to be used. (Id.) B. Distribution of Artificial Teeth 12. Participants in the artificial tooth market fall into one of four categories: (1) manufacturers; (2) dealers; (3) dental laboratories; and (4) dentists. (D.I. 417 at 80-81) 13. The manufacturers participating in the United States artificial tooth market historically have distributed their teeth into the market in one of three ways: (1) directly to dental labs; (2) through dental dealers; or (3) through a hybrid system combining manufacturer direct sales and dental dealers. 1. Manufacturers 14. There are currently 12-13 known foreign and domestic manufacturers of artificial teeth that sell their products in the United States. (D.I. 417 at 83; D.I. 432 at 2111-12) The manufacturers sell artificial teeth in some or all of the subeconomy, economy, mid-line and premium segménts. (D.I. 417 at 82-84) For purposes of this case, eight manufacturers are particularly relevant. a. Dentsply International 15. Dentsply International, Inc. (“Dentsply”) was founded in 1899 and is headquartered in York, Pennsylvania. (D.I. 368, Ex. 1, Stipulation ¶¶ 1-2) Dents-ply manufactures a range of professional dental products that are marketed, distributed and sold throughout the United States. (D.I. 368, Ex. 1, Stipulation ¶ 3) Dentsply’s total net sales in 2001 were approximately $1.1 billion. (D.I. 454 at 3447) 16. Dentsply’s artificial teeth are developed, designed, sold, and marketed by its Trubyte Division (“Trubyte”), located in York, Pennsylvania. Dentsply manufactures artificial teeth in the premium (under the names “Portrait,” “TruBlend,” “Biob-lend” and “Bioform”), mid-range (“Bio-tone”) and economy (“New Hue” and “Classic”) segments. (D.I. 368, Ex. 1, Stipulation ¶¶ 8-9; D.I. 432 at 2108, 2116-17) Dentsply does not compete in the sube-conomy tooth segment. (Id. at 2250-51) 17. Dentsply sells 14 different full lines of artificial teeth in the United States. (D.I. 432 at 2100) Dentsply currently offers 16,000 tooth Stock Keeping Units (“SKUs”). (Id. at 2093) 18. Through its Trubyte Division, Dentsply also manufactures and markets professional dental products used by dental labs to make dentures and other removable dental prosthetics. (D.I. 368, Ex. 1, Stipulation ¶ 6) These dental products include acrylics, dental equipment, gyp-sums and wax. (D.I. 432 at 2080, 2093-94) Dentsply’s complete Trubyte product offering currently totals 19,000 total SKUs. (Id. at 2093) 19. Dentsply manufactures 1.1 million individual teeth per week. (Id. at 2096-97) Dentsply manufactures approximately 10,-000 shade and mould combinations. (Id. at 2101; D.I. 368, Ex. 1, Stipulation ¶ 10) In total, Dentsply manufacturers 106,000 different types of tooth units. (D.I. 432 at 2101, 2114) 20. Dentsply sells its artificial teeth exclusively to independent dealers. Dents-ply does not own the dealers it has authorized to distribute Trubyte teeth. (D.I. 368, Ex. 1, Stipulation ¶¶ 17-18) 21. Dentsply has been the dominant tooth manufacturer in the United States market for a long time. (D.I. 454 at 3447) 22. In 2001, Dentsply’s gross tooth sales to dealers were $60.6 million. Net sales, taking into account broken sets and other tooth returns, totaled $40.4 million. (DX 1650; D.I. 432 at 2253-56) Dentsply also sells lab merchandise products through its Trubyte Division. Teeth, however, represent approximately 80% of the division’s revenue. (Id.) b. Ivoclar Vivadent, Inc. 23. Ivoclar Vivadent AG, headquartered in Liechtenstein, is a manufacturer and marketer of dental restorative materials, including artificial teeth. (D.I. 423 at 982-83) 24. Ivoclar Vivadent’s U.S. subsidiary, Ivoclar Vivadent, Inc. (“Ivoclar”), is based in Amherst, New York and is responsible for marketing Ivoclar teeth in the United States market. (Id.) Ivoelar’s president is Robert Ganley. He has been involved in the sale of Ivoclar teeth in the United States market since 1986. (Id.) 25. Ivoclar sells a number of different lines of artificial teeth. Among its premium plastic teeth are the Antaris and Postaris teeth, which were introduced by Ivoclar in the 1990s. (Id. at 984,1013) 26. Ivoclar is one of Dentsply’s two primary competitors in the tooth market. (D.I. 450 at 2683-84; D.I. 454 at 3461; D.I. 432 at 2249-50) 27. Ivoclar has sold teeth directly to dental labs since at least 1986. (D.I. 423 at 983, 991, 1006) Indeed, except for two brief periods during the late 1980s and early 1990s in which Ivoclar experimented with two geographically limited wholesale arrangements, Ivoclar has distributed teeth directly to dental labs since 1978. Similarly, Ivoclar sells its crown and bridge products and precious metals directly to dental labs. (Id. at 989) 28. Today, Ivoclar distributes its teeth to labs throughout the United States through a single distribution center located in Amherst, New York. (Id. at 1098) During the early 1990s, Ivoclar also distributed to labs from at least two other distribution centers in Sacramento, California and Atlanta, Georgia. (Id. at 1008) It consolidated its operation into Amherst after a couple of years. (Id. at 1009) 29. Ivoclar promotes and sells its artificial teeth through a company sales force of approximately 30 sales representatives. (Id. at 1079) Up to late 1998, the sales force handled Ivoclar’s entire product line of teeth and crown and bridge products. (Id. at 987) In November 1998, Ivoclar hired a former Dentsply representative as its first sales representative devoted to removable products. (D.I. 489 at 4350) Today Ivoclar has five representatives and a regional manager dedicated to artificial teeth. (D.I. 423 at 1078-79) Its main crown and bridge sales force still sells teeth as well. (Id. at 1079) 30. Dental labs that wish to order Ivoc-lar artificial teeth, whether to restock their inventory or buy an SKU that they do not stock, can either place the order when the Ivoclar sales representative calls on the lab or by calling Ivoclar’s toll free number. (Id. at 1085-86) 31. In 1994, Ivoclar sold and distributed artificial teeth to 3,700 different dental labs nationwide. (DX 752 at 2; DX 1435; DX 1436) In 1998, Ivoclar sold artificial teeth directly to approximately 2,886 dental labs. (DX 519-A) At the time of trial Ivoclar sold teeth and crown and bridge products to 6,000 labs on a direct basis. (D.I. 423 at 1082) 32. Ivoclar has consigned teeth to dental labs as an alternative to labs purchasing tooth stocks outright. (Id. at 1099) With a consignment, the lab gets a tooth inventory at no initial cost to the lab; instead, the lab pays for the teeth ordered to replenish the consigned teeth that it uses. (D.I. 419 at 345^46; D.I. 431 at 1985-86) c. Vita Zahnfabrik; Vident 33. Vita Zahnfabrik (“Vita”) is a German manufacturer of artificial teeth. (D.I. 419 at 221) Vita Zahnfabrik sells teeth in the United States through an affiliated importer and distributor named Vident. (Id. 288-89) Vident is a closely held California corporation owned, in part, by the same family that owns Vita. Vident’s president is Wayne Whitehill, who has been involved in the sale of Vita teeth since they were first imported into the United States market in the 1970s. (Id. at 221-23) 34. Vident sells both porcelain and plastic (or “resin”) teeth in the United States. The brand name of the resin teeth is “Vitapan.” (Id. at 225) Vita manufactures teeth only for the premium segment. (D.I. 419 at 226) Vita’s artificial teeth are the European mould style. (D.I. 432 at 2126; D.I. 452 at 2924) 35. Vident has been the entity responsible for marketing the Vita Classical Shade Guide in the United States market since 1984. A shade guide is used by dentists to match the shade of an artificial tooth (or crown, bridge, etc.) with the shade of a patient’s natural dentition. The Vita Classical Shade Guide is the most popular shade guide in the market, used by approximately 80-90% of the dentists in the United States. (Id. at 230-32) 36. Vita, through its importer Vident, is the other primary competitor to Dents-ply in the United States tooth market. (D.I. 450 at 2683-84; D.I. 454 at 3461, D.I. 432 at 2249-50) d. Myerson LLC 37. Myerson LLC (“Myerson”) is a tooth manufacturer based in Chicago, Illinois selling premium (Myerson, Universal, Swissedent), economy (Kenson), and mid-line teeth. At one time, Myerson was a free-standing division within the Austenal Corporation (“Austenal”). In January 2002, Dentsply acquired Austenal, and Myerson became a wholly separate company. Myerson’s president and chief operating officer is James Swartout, who has been with the company (and before that Austenal) since 1994. (D.I. 425 at 1291-95) 38. Myerson teeth have been sold in the United States market since the company was founded in Cambridge, Massachusetts in 1917. Dr. Myerson was a Professor of Dentistry at Harvard Dental School, and hand carved almost all of Myerson’s teeth. Myerson was a pioneer in cross-linked resin technology and in the move from using porcelain to plastic to manufacture artificial teeth. (Id. at 1293-95) 39. In fall 2001, Myerson acquired some select Universal Dental Company tooth lines, which Myerson now manufacturers and sells under the Universal brand. (Id. at 1295,1340-41) 40. Myerson distributes its artificial teeth both through dealers and directly to dental labs. (Id. at 1298-99) Dental labs place tooth orders via telephone. (Id. at 1301-02) Myerson ships its artificial teeth directly to dental labs nationwide from its Chicago, Illinois location. (Id. at 1343) Myerson also provides tooth consignments directly to labs. (Id. at 1351) Myerson also distributes its teeth through a network of 12 dealers. (Id. at 1298) These dealers include Dentsply’s largest dealer, Zahn. (Id.) 41. Austenal engaged in efforts to make it more convenient for dental labs to purchase artificial teeth directly. (Id. at 1355) By 1999, approximately 85% of Austenal’s artificial tooth sales were direct to lab customers. (Id. at 1351) Between 1990-1993, Austenal used no outside sales representatives to promote teeth. In 1994, Austenal used one or two representatives responsible for all product lines, including teeth. (Id. at 1359-60) Myerson’s national sales efforts are the responsibility of five sales representatives and one manager. (Id. at 1292) e. Other Manufacturers 42. American Tooth Industries (“ATI”) manufactures a brand of teeth called Justi. (D.I. 420 at 540) 43. American Tooth Industries distributes artificial teeth directly to dental labs such as National Dentex, one of the country’s largest lab chains, and through a network of Trubyte and non-Trubyte dealers. (D.I. 452 at 2899; DX 1599) ATI’s dealers include Dentsply’s largest Trubyte dealer, Zahn, another large Trubyte dealer, Atlanta Dental Supply (“Atlanta Dental”), and Arnold Dental Supply. (D.I. 420 at 620; DX 1599) 44. Universal Dental Company (“Universal”) is a diminishing competitor in the market. (D.I. 432 at 2250) In the fall of 2001, it sold some of its tooth lines to Myerson. (D.I. 425 at 1295,1340-42) 45. Universal distributes artificial teeth directly to dental labs from one location in Montgomeryville, Pennsylvania. (D.I. 489 at 4342) Universal also distributes artificial teeth to dental labs through a network of dealers. (DX 1599) Universal’s direct sales represented 30% of Universal’s total annual tooth sales. (Id. at 4340^1) 46. Heraeus Kulzer GmbH, a German company, manufactures artificial teeth. (D.I. 429 at 1834-35) Heraeus Kulzer GmbH generates approximately $7 billion in annual revenue. (Id. at 1870) Heraeus Kulzer GmbH has sold its artificial teeth in Europe since the 1960s. (Id. at 1835) These teeth are made utilizing European moulds. (Id. at 1839) In January 2000, Heraeus Kulzer GmbH introduced in the United States, through its subsidiary Her-aeus Kulzer, Inc. (“Heraeus”), a mid-range tooth. (Id. at 1817-18) In recognition of the differences between European and American style artificial teeth, Heraeus Kulzer GmbH specifically designed and manufactured its JelDent tooth line based on U.S. preferences in moulds and shades. (Id. at 1837-39) In February 2002, Her-aeus Kulzer GmbH introduced into the U.S. market its JelDent Premium tooth line, which it positioned as a premium tooth based on those same preferences. (Id. at 1841-42) 47. Heraeus Kulzer GmbH sells and distributes its JelDent tooth lines directly from its Armonk, New York location through Heraeus. (D.I. 429 at 1843) Her-aeus entered the U.S. market with direct distribution in January 2000. (Id. at 1817, 1823) Prior to entry, Heraeus was fully aware of the functions tooth dealers perform in the U.S. market, and was unable to obtain distribution through Trubyte dealers. (Id. at 1818-23) 48. Heraeus sells and promotes its artificial teeth through a sales force of 15 sales representatives. (Id. at 1832) These sales representatives are also responsible for selling and promoting the entire line of Heraeus’s lab products, including porcelain and precious metal alloys. (Id. at 1832-33) 49. Heraeus has approximately 800 different lab customers for JelDent artificial teeth. (Id. at 1852-53) Dental labs that want to buy Heraeus Kulzer artificial teeth can place the order when the Heraeus sales representative calls on the lab, by calling Heraeus’s telephone number or even using a Palm Pilot scanner. (Id. at 1844) Generally, the company will ship its artificial teeth overnight for next day delivery depending on when the order initially was received. (Id. at 1867-68) 50. In 2000, Heraeus’ actual sales were $470,000. (Id. at 1858-59) In 2001, Her-aeus achieved U.S. tooth sales over $730,000. (Id. at 1853) Heraeus’ goal is to become the second leading tooth company in the United States. (Id. at 1869) 51. Heraeus also consigns its teeth to dental labs. In its first year in the U.S. tooth market, Heraeus placed 102 tooth consignments in dental labs. (Id. at 1859-60) 52. Davis Schottlander & Davis Ltd. is an English company that sells a premium, Vita-shaded tooth under the brand name “Enigma.” It is distributed in the United States by Dillon Company, Inc, which is also referred to as Leach & Dillon. (D.I. 457 at 4079-88) Leach & Dillon began marketing teeth in the United States in January 2001. (D.I. 457 at 4079) 2. Dealers 53. Dental dealers fall into two major categories: laboratory dealers, which carry products for dental labs and primarily service that customer, and operatory dealers, which carry products for dentists exclusively or in combination with dental lab products. (D.I. 425 at 1313, 1373-74; D.I. 423 at 1138; D.I. 417 at 72; D.I. 432 at 2179-86) Both operatory dealers and lab dealers may carry and sell artificial teeth. (D.I. 432 at 2179-86; DX 1665.) 54. There are currently hundreds of dental dealers operating in the United States. (D.I. 425 at 1313) Over the past ten years, the market has experienced significant consolidation resulting in several large dealers and the geographic expansion of dealer territories as a result of the development of lower-cost, reliable overnight shipping, as well as the collateral emergence of mail order dealers. (D.I. 448 at 2577-78, 2597; D.I. 432 at 2186-87) 55. Dental laboratory dealers, like the ones to which Dentsply sells its teeth, are dealers carrying the full range of products that dental labs use. (D.I. 417 at 101-02; D.I. 427 at 1482-83) These products can include artificial teeth, metals, porcelains, acrylics, waxes, and anything else necessary to fabricate fixed or removable restorations. (D.I. 417 at 93) 56. Lab dealers that sell artificial teeth vary in the size and scope of their operations. In general, there are three main types of tooth dealers — national, regional, and local. (a) National tooth dealers, such as Zahn Dental Supply (“Zahn”) and Patterson Dental (“Patterson”), sell teeth nationwide through a network of tooth stock inventories scattered throughout the country. (D.I. 417 at 244-45) ' (b) Regional tooth dealers are those that are particularly strong in certain regions of the country and have multiple tooth stocks scattered throughout the states in which they sell. (Id. at 245) (c) Local, specialty tooth dealers typically operate within a single state or single city. They almost always have just one tooth stock. They are much smaller organizations than national or regional dealers, carry a narrower range of products, and have fewer resources such as cata-logues and sales representatives. (Id. at 245-46) 57. Due to the thousands of mould and shade combinations of artificial teeth, most tooth dealers carry large inventories of teeth. (D.I. 417 at 82) A dealer’s “tooth counter” is a separate part of a laboratory dealer dedicated almost entirely to handling teeth. (Id. at 104-05) Tooth counters are extremely labor-intensive operations, requiring the employment of friendly, detail-oriented customer service personnel. (Id. at 126-27) 3. Dental Laboratories 58. There are approximately 16,000 labs that perform fixed and/or removable work in the United States. Of these, approximately 7,000 fabricate dentures. (Id. at 86; D.I. 432 at 2247) 59. The 7,000 labs that fabricate dentures are a very heterogeneous group. (D.I. 432 at 2247) About 5,000 are full-service labs, while approximately 2,000-3,000 labs only fabricate dentures. (D.I. 420 at 511) The number of denture labs in the United States has decreased steadily over the past ten years, largely as a result of consolidation and the emergence of large lab chains. (D.I. 448 at 2597-98) (a) The large labs are those employing 25 or more denture technicians. There are only approximately 500 labs of this size (or only 7% of the total) in the country. (D.I. 417 at 88) (b) The mid-size labs employ between four and 25 technicians. There are approximately 700-800 mid-size labs (or 11% of the total) in the country. (Id.) (c) The remaining 82% are small labs, defined as labs employing four or fewer technicians. (Id.) 60. Denture labs compete with each other on the basis of price and service. (Id. at 89) Patients and dentists value fast service, particularly in the case of lost or damaged dentures. (Id. at 89-90) 61. Labs are the relevant consumer for prefabricated artificial teeth because they choose the brand of tooth used in a denture in the majority of cases. (D.I. 431 at 1911) Dental labs represent the last purchaser of artificial teeth as teeth standing alone. (D.I. 448 at 2514; D.I. 432 at 2163; D.I. 452 at 2937-40) All of the manufacturers who testified at trial agreed that dental labs are the primary customers. (D.I. 448 at 2514; D.I. 423 at 987-88; D.I. 419 at 228, 241 — 42; D.I. 425 at 1351) 62. Dental labs maintain artificial tooth inventories for use in fabricating dentures. (D.I. 431 at 1970, 1979; D.I. 448 at 2336; D.I. 450 at 2827; D.I. 453 at 3256-57) If a lab has the brand of teeth in stock it needs to fabricate a denture, it will pull the tooth cards from the inventory. (D.I. 431 at 1970; D.I. 431 at 2038) If a lab does not have the teeth required in stock, it must place an order from a dealer or manufacturer. (D.I. 431 at 1970; D.I. 450 at 2865) Labs will also place periodic orders for teeth to replenish their tooth inventories. (D.I. 448 at 2336) 63. Generally, the dentist only prescribes the tooth shade and rarely specifies the tooth brand. (D.I. 425 at 1215-16; D.I. 448 at 2332-33) 64. Through a labor intensive process, dental labs transform the teeth into an integral component of a new product. Denture fabrication comprises three stages: bite rim and tray stage (2-3 working days); try-in or setup stage (3-5 working days); and the finishing stage (3 working days). (D.I. 431 at 1963-76) Artificial teeth enter the process during the setup stage. Dental labs generally do not set artificial teeth during the first three days of this process. (Id. at 1977-78) 65. On average a dental lab exchanges a denture case with a dentist 3-4 times and dental labs require about 8-9 working days to fabricate a denture, excluding shipping time. With the shipping time included, dental labs will fabricate a new denture within 14 days. (Id' at 1976-77) 4. Dentists 66. There are approximately 140,000 dentists in the United States. (D.I. 417 at 91) Of these, 40,000 work with dentures. (D.I. 432 at 2144) Dentists receive their initial training on dentures during dental school. (Id. at 2136) As the demand for dentures has declined over the past 30 years, the demand for that training has diminished. (GX 101 at DPLY-A 37304-05; DX 1659 at DPLY-[ A XXXXXX-XX ]) C. Dentsply’s Dealer Network Is Characterized By Intra-Brand Competition 67. Dealers compete with one another to sell Trubyte teeth to dental labs. (D.I. 417 at 94, 129, 137-38; D.I. 432 at 2189-90) Intra-brand competition is “common in the industry.” (D.I. 425 at 1398-99) Dentsply dealers engage in price competition to gain dental labs’ tooth business. (D.I. 432 at 2189-90) As a result of this competition, most dealers discount Dent-ply’s suggested lab price for artificial teeth. (Id. at 2189) 68. Thomas Cavanagh of Frink Dental Supply (“Frink”) testified that labs are “price sensitive,” and Frink faced price competition from other Dentsply dealers. (D.I. 489 at 4365) As Mr. Cavanagh testified, these Dentsply dealers were “driving prices down on teeth” in the market. (Id. at 4367) Frink either had to match the price discounts offered by competitive Dentsply dealers or lose its lab customers’ business. (Id. at 4366-67) 69. In addition to Frink, other market participants elaborated on the intra-brand competition that occurs among Dentsply dealers. Regis Vetrano of Dental Laboratory Discount Supply (“DLDS”) testified that DLDS competes against multiple Tru-byte dealers. (D.I. 425 at 1430-31) Sidney Nordhauser of Darby Dental Supply (“Darby”) testified that “[e]very supply house that is out there is Our competitor.” (D.I. 453 at 3429-30) Gerry Mariacher of National Dentex testified that 33 of the 34 National Dentex labs across the country historically purchased their Trubyte teeth from four or five different Dentsply dealers until National Dentex reached a favorable agreement with Zahn to supply all of their teeth. (D.I. 452 at 2951-52) 70. Price is one of the reasons that labs utilize more than one dealer. (D.I. 425 at 1432-33; D.I. 431 at 2005; D.I. 420 at 656-57; D.I. 453 at 3277-78, 3286; D.I. 489 at 4174-75, 4177, 4369, 4373-74) DLDS sells teeth to Lord’s Dental Studio at a 20% margin in order to get that business. (D.I. 425 at 1433) Mr. Vetrano testified that if DLDS did not sell to Lord’s at that price, he believes that Lord’s would look to another dealer for its tooth purchases. (Id.) Price also constitutes a factor in Darby losing business to competitors. (D.I. 453 at 3427-28) Darby’s competitors discount off Dentsply’s suggested lab rate for artificial teeth; “to beat competition,” Darby “discount[s] almost everything [it] sell[s].” (Id. at 3430) Atlanta Dental lost the tooth business of labs due to price competition from Darby and Thompson Dental Supply. (D.I. 420 at 654-55, 657) By offering National Dentex a 20% discount below Zahn’s catalog price, Zahn was able to win all of National Dentex’s Trubyte business, with the exception of one lab. (D.I. 452 at 2951-53) D. Alternative Channels of Distribution 1. Selling Direct Is A Viable Method For The Distribution Of Artificial Teeth 71. The DOJ’s expert economist, Dr. Reitman, concedes that direct distribution is a “viable” method of distributing artificial teeth. (D.I. 427 at 1650) Dr. Reitman agreed that Dentsply’s rivals are “not foreclosed completely” from the U.S. market for artificial teeth. (Id. at 1573) Dr. Reit-man further conceded that Dentsply’s rivals are “not foreclosed from a substantial share of those labs” which, he acknowledged, are the “immediate customers” in the artificial tooth market. (Id. at 1649-50) 72. Labs have expressed an interest in obtaining Trubyte teeth directly from Dentsply and not through dealers. (D.I. 448 at 2541-43) Dentsply held a total of seven lab advisory meetings between 1993-1999. (Id.) According to Dentsply’s lab advisory groups, dealers did not provide sufficient services to warrant their profit margin. Additionally, the labs viewed themselves as Dentsply’s primary customers — not the dealer. The labs also believed they could purchase Trubyte teeth at a cheaper price if they purchased directly rather than through a dealer. (Id. at 2532-33; DX653) 73. Many of the lab witnesses who testified at trial and who were deposed in this case testified that they either prefer to purchase teeth directly from manufacturers because of the potential cost savings over purchasing through dealers or would consider purchasing direct if cost savings were available. (D.I. 448 at 2341, 2356-57; D.I. 431 at 2004; D.I. 450 at 2731-33, 2857; D.I. 452 at 2957-58; D.I. 453 at 3280-81; D.I. 489 at 4175-76, 4184-85, 4190-93, 4213, 4219, 4224-24, 4232-33, 4246-47, 4257-58, 4266-67, 4277, 4279, 4281, 4287, 4296-97, 4304-05, 4314) 74. Some labs prefer to buy direct to avoid dealer “error” and “back orders,” while others appreciate the technical assistance manufacturers provide. (D.I. 448 at 2356-57; D.I. 453 at 3280-81) a. Tooth Manufacturers Do Not Require A Network Of Tooth Stocks To Sell Teeth To Labs 75. During the past 10 years, dealers have consolidated the number of tooth stocks from which they fill orders for teeth. (D.I. 432 at 2187, 2194; D.I. 448 at 2427-28, 2577; D.I. 417 at 105, 127-28; D.I. 420 at 492) Zahn has reduced the number of company tooth stocks it uses to service its nationwide customer base. (D.I. 420 at 477 — 478, 492; D.I. 432 at 2258-60) Darby has had eight different tooth stocks since 1990. At the time of trial, it had approximately 6 stocking locations, but primarily serviced the entire United States from one stock. (D.I. 489 at 4374-77; DX 25 at IVC 023966; D.I. 457 at 4107-08; D.I. 432 at 2180) 76. Dr. Reitman agreed that “with the current widespread availability of overnight express mail ... dental labs can generally get teeth delivered the next day after placing an order with the manufacturer or a dealer, regardless of where the shipper is located.” (D.I. 427 at 1687) 77. The advent of Federal Express and other similar delivery services facilitated this market consolidation. These types of delivery services have made a card of teeth a very transportable item, one that can be shipped over broad geographies relatively cheaply and quickly. (D.I. 448 at 2429-30, 2577-78; D.I. 450 at 2775; D.I. 423 at 1099; D.I. 419 at 250; D.I. 489 at 4321-22; D.I. 425 at 1289-90; D.I. 453 at 3267) These tools empowered dealers to service their lab customers’ needs from strategically placed stocks. (D.I. 448 at 2577-78; D.I. 454 at 3490) 78. Dealers can service the tooth needs of their lab customers effectively throughout the United States with a limited number of tooth stocks, in many instances just one. (D.I. 420 at 504; D.I. 450 at 2770-71; D.I. 448 at 2426-27; D.I. 432 at 2276; D.I. 457 at 4107-08; D.I. 431 at 2070) Norman Weinstock — the President of Zahn, Dents-ply’s largest tooth dealer — testified that a dealer “can deliver anywhere in the United States out of one facility.” (D.I. 420 at 503-04) 79. It makes financial sense for dealers to consolidate tooth stocks. The consolidation reduces expenses for overhead and labor (trained tooth counter specialists) associated with a tooth stock. (D.I. 448 at 2577-78) When Darby purchased Dental Technician’s Supply (“DTS”), it consolidated DTS’s New York stock with the existing Darby tooth stock in New York. (D.I. 489 at 4375-76) Zahn concluded that having multiple tooth stocks was inefficient. (D.I. 420 at 501; DX 1549 at ZD00015) Mr. Weinstock testified that he believes the consolidation of tooth stocks was a smart business decision because it allowed Zahn to reduce its inventory and increase the number of inventory turns annually. (D.I. 420 at 488-495) Zahn made acquisitions of several competitive tooth dealers during the recent past. (Id. at 495-501) In each instance, Zahn closed the acquired dealer’s tooth stock and elected to service those new lab customers from Zahn’s remote tooth distribution centers. (Id.) 80. With drop shipments, the lab places the tooth order with the dealer. The dealer, in turn, submits the order to Dentsply with the request to ship the order directly to the lab. The dealer bills the lab at the price set by the dealer, and Dentsply bills the dealer at the price set by Dentsply. The teeth used to fill the order, however, come from Dentsply’s York, Pennsylvania facility, not the particular dealer’s inventory. The number of tooth orders Dentsply drop-ships to labs has grown steadily during the relevant time period. (D.I. 432 at 2194-2195) Today, approximately 60% of orders for Tru-byte teeth that Dentsply dealers place are drop shipped. (Id.; DX 1638) Patterson, which has more local tooth stocks than any Dentsply dealer, represents upward of 70% of Dentsply’s drop shipments. (D.I. 432 at 2187, 2196-97) 81. Even labs that purchase through dealers testified that they would rather purchase teeth directly from manufacturers if they could obtain a price discount. (D.I. 489 at 4175-76, 4213, 4257-58, 4279, 4297, 4281, 4325-26) Labs prefer to buy direct because of potential cost savings attributable to elimination of the dealer middleman. (D.I. 448 at 2341, 2356-57; D.I. 431 at 2003-04; D.I. 450 at 2857; D.I. 452 at 2957-58; D.I. 453 at 3280-81) Betsy Harris of Atlanta Dental testified that “the majority” of labs that receive a better price from direct selling manufacturers will choose to buy direct instead of through a dealer. (D.I. 420 at 626-28) For that very reason, Atlanta Dental does not like to compete with ATI for the sale of ATI artificial teeth to labs. (Id.) b. Manufacturers Have Replicated Or Could Replicate The Dealer Function 82. One perceived benefit of dealers the DOJ cites is local availability of teeth. (D.I. 460 at ¶¶ 63-64) Lab witnesses testified that they do not necessarily purchase teeth from the nearest dealer. (D.I. 425 at 1260, 1267-68; D.I. 452 at 2954) Dentsply tracks for each of its dealers the dollar value of tooth shipments from a particular dealer tooth stock in a report called “zip-to-ship.” (D.I. 432 at 2187-2188; DX 1589) The data shows that there is no direct relation in terms of sales of artificial teeth between where a dealer maintains a tooth stock and where it does not have a tooth stock. (Id. at 2188) Zahn testified that it sells $829,000 worth of teeth in Pittsburgh, where it does not have a tooth stock. (D.I. 420 at 486) This is higher than the tooth sales for either Patterson or Benco Dental, two Trubyte dealers that do have tooth stocks near Pittsburgh. (Id. at 486-87; DX 1589 at 9-10) 83. Dentsply obtains monthly reports from its dealers reflecting the dealers’ sales into each state where the dealers sold teeth. (DX 1674) Dentsply dealers make substantial sales in geographic areas remote from their tooth stock locations. (Id.) Zahn and Darby, Dentsply’s fastest growing dealers, make substantial sales in states where they have no stocks. (D.I. 420 at 482, 506) 84. The DOJ also cites “one-stop shopping” as a purported benefit that dealers provide to dental labs. (D.I. 460 at ¶ 76) The benefit the DOJ identifies is reducing the number of vendors labs use (not eliminating all but one) by purchasing multiple products from vendors. (Id.) Other manufacturers offer this sort of one-stop shopping to their lab customers. With just one phone call, a lab can order from Ivoclar all materials necessary for crown and bridge and denture construction (including artificial teeth, porcelain, ceramics, precious metals, gypsum, waxes, stone, supplies and equipment). (D.I. 423 at 1084-85; D.I. 420 at 522; D.I. 453 at 3281) A lab also can call Vident directly and purchase porcelains, metals, equipment, artificial teeth and implant accessories. (D.I. 419 at 221, 224) Similarly, Heraeus offers one-stop for labs to purchase precious metals, teeth, porcelain, gypsum and investment. (D.I. 429 at 1851) 85. In any case, labs tend to purchase their dental products from multiple dealers and multiple direct selling manufacturers. (D.I. 431 at 2008-10; D.I. 448 at 2357-58; D.I. 453 at 3262-63, 3267, 3284-85; D.I. 450 at 2831; D.I. 452 at 2955-57; D.I. 420 at 511-12; D.I. 425 at 1270-72) Additionally, a Zahn-sponsored focus group revealed that Zahris lab customers purchase from several other dealers. (D.I. 420 at 512-13) 86. Another service performed by dealers is handling accounts receivable. (D.I. 460 at ¶ 84) Some tooth dealers manage the accounts receivable for lab tooth purchases. (D.I. 417 at 134-35; D.I. 423 at 1134) The accounts receivable function involves invoicing the lab customer for teeth purchased, collecting payment, providing credit and at times extending credit terms. (D.I. 417 at 134-35) 87. Manufacturers already manage the accounts receivable for lab non-tooth purchases, i.e., crown and bridge materials and precious metal alloys. Ivoclar manages the receivables on all of its products for nearly 6,000 labs. (D.I. 423 at 1081-83) Until the creation of Myerson in 2002, Austenal sold crown and bridge materials directly to thousands of dental labs. (DX 1301; DX 1302; D.I. 425 at 1298-99, 1369-70) Heraeus also sells precious metals and porcelains directly to labs. (D.I. 429 at 1833, 1836) These manufacturers, therefore, already are responsible for managing voluminous accounts receivable. 88. The evidence shows that even the biggest tooth dealers do not carry precious metals because of the accounts receivable issue. (D.I. 420 at 509) 89. The DOJ also touts the management of dental lab inventories as a valuable dealer service. (D.I. 460 at ¶¶ 71-73) Some tooth dealers help manage the tooth inventories that labs keep on site. (D.I. 425 at 1309) 90. Many labs prefer to manage their tooth inventories in-house. (D.I. 429 at 1843; D.I. 453 at 3277-78, 3314-15) The labs that testified at trial on this issue all managed their own tooth inventories. (D.I. 453 at 3264, 3269, 3279-80, 3314-15; D.I. 452 at 2962; D.I. 450 at 2836-37; D.I. 431 at 1987-89,1996-98; D.I. 448 at 2340-44) 91. Dentsply’s largest dealer, Zahn, calls upon just 40% of its active accounts with 18 sales representatives. (D.I. 420 at 474-75) There is no evidence that the Zahn sales representatives service the tooth inventories of any of these accounts, much less the other 60% of Zahn’s lab customers they do not call on. Darby manages approximately 28% of its lab customers’ inventories. (D.I. 453 at 3422-23) 92. The DOJ also claims dealers offer “same day” delivery of artificial teeth. (D.I. 460 at ¶¶ 66-69) The evidence shows that labs generally do not require same day receipt of teeth. (D.I. 431 at 2015, 2061; D.I. 448 at 2394; D.I. 450 at 2774, 2834, 2866; D.I. 452 at 2953-54; D.I. 453 at 3325-26, 3288; D.I. 425 at 1284, 1439; D.I. 423 at 1171) 93. Mr. Weinstock testified that dental labs have a “mistaken perception” of the need to have local tooth stocks and that Zahn successfully has demonstrated that it can “deliver anywhere in the United States out of one facility.” (D.I. 420 at 504) Many of Zahn’s tooth customers receive teeth the day after they place the order. (Id. at 504-06) Zahn is unable to provide much of the country with same day delivery. (Id. at 479-81) 94. Tooth consignments placed in dental labs constitute a tooth stock from which labs can fulfill their daily tooth needs. (Id. at 488, 566-67) Many manufacturers offer tooth consignments to labs. 95. In “emergency” situations, when labs absolutely must have a tooth on a same-day basis, they sometimes choose to order their teeth from a dealer and pick those teeth up from a walk-up counter. (D.I. 457 at 4143; D.I. 425 at 1381) The only example provided at trial of an emergency-type situation was the repair of a denture. (D.I. 453 at 3288, 3311; D.I. 457 at 4096) In these situations, however, labs commonly find that they can repair dentures with the teeth that they keep in stock. (D.I. 453 at 3326; D.I. 431 at 2012) 96. Labs pick up teeth a very small percentage of the time. (D.I. 450 at 2772-73; D.I. 420 at 479-80, 539; D.I. 453 at 3289, 3322-23, 3429) 97. The DOJ identifies the handling of tooth returns as another dealer service. (D.I. 460 at ¶ 79) Approximately 30% of all lab tooth purchases are returned for exchange/credit, either in full cards (for less popular SKUs) or partial cards called “broken sets” (where the lab fabricates a partial denture and does not use all the teeth on a particular card). (D.I. 452 at 2168; D.I. 419 at 366; D.I. 417 at 81) Although the terms of their respective policies vary, all manufacturers except Vita accept tooth returns. (D.I. 432 at 2167-68, D.I. 431 at 1941-42; D.I. 423 at 998; D.I. 425 at 1298; D.I. 419 at 366-67) Vita does not permit Vident to return teeth that it accepts from labs and its sub-dealers. (Id. at 366) 98. The DOJ notes that dealers offer prompt, accurate and reliable delivery. (D.I. 460 at ¶¶ 74-75) Direct-selling manufacturers currently offer overnight delivery on tooth orders. (D.I. 419 at 250; D.I. 423 at 1099; D.I. 429 at 1867-68; D.I. 457 at 4094) c. Ivoclar And Vident Have Made Business Decisions To Sell Directly To Labs i. Ivoclar 99. Ivoclar acknowledges that selling directly to dental labs is an effective method of distribution that provides Ivoclar with “some advantages” versus dealer distribution. (D.I. 423 at 1006-07, 1119-20) 100. The dental lab owners who testified at trial purchase artificial teeth directly from Ivoclar and generally indicated that they are satisfied with this method. (D.I. 453 at 3319-20, 3325; D.I. 452 at 2913, 2959; D.I. 448 at 2344) 101. Ivoclar, for a brief period, appointed Frink Dental as an Ivoclar dealer. (a) At the time, Ivoclar was selling its teeth to labs at one price. Contemporaneously with its appointment of Frink as a tooth distributor, Ivoclar “instituted a price increase” across all of its tooth lines. (DX 17 at 27, D.I. 423 at 1032) Ivoclar recognized that it would need to share its profit margin with Frink and, thus, in order to maintain profitability, Ivoclar needed to increase its prices for artificial teeth. (Id. at 1032-34; DX 17 at 27) (b) On January 26, 1989, Ivoclar representatives met with Tom Cavanagh, President of Frink, to discuss Mr. Cavanagh’s concerns regarding Frink’s agreement with Ivoclar. (DX 9 at 1; D.I. 423 at 1039-40) Mr. Cavanagh was concerned that promises made three months earlier (when Ivoclar appointed Frink) by Mr. Kevin Dillon, President of Ivoclar NA at the time, would not be honored now that Mr. Dillon had left Ivoclar. (DX 9 at 1; D.I. 423 at 1040) (c) Ivoclar had made a number of promises to Mr. Cavanagh in order to commit Frink to taking on the Ivoclar line of teeth. Ivoclar had promised Frink that Ivoclar would, among other things: (1) advertise heavily and include the Frink name and telephone numbers in a byline in the advertisements; (2) provide Frink with various advertising and promotional materials; (3) send twenty Williams (Ivoclar’s precious metals and removable products company) and Ivoclar sales representatives to Frink’s tri-state area to support the promotion of Ivoclar teeth; (4) hire a technical representative for the Chicago area; (5) provide free unlimited shade guides; (6) invite Frink’s sales force to Liechtenstein for one week if Ivoclar sales in the first year exceeded $1 million; (7) provide a battery-powered hand piece for demonstrating the grinding qualities of Ivoclar teeth; (8) expand Ivoclar’s dealer network through other regional dealers; (9) offer clinics and seminars; (10) pay legal fees relating to Frink’s investigation of “the Dentsply antitrust situation”; (11) pay for local and regional advertisements; and (12) guarantee payment if a customer’s credit failed. (DX 9 at 1-3) Ivoclar believed it was necessary to make these commitments in order to help Frink build and promote Ivoclar’s artificial tooth business. (D.I. 423 at 1041; DX 9) (d) Ivoclar recognized that it lacked enough employees to fulfill the commitments made to Frink. (DX 15) Mr. Gan-ley shared that view and attributed some of Ivoclar’s problems to a lack of personnel and a sales organization dedicated to artificial teeth. (D.I. 423 at 1047-48; DX 17 at 41) (e) Ivoclar recognized that the “effectiveness of Frink” as a dealer “is largely dependent upon the support which Ivoclar USA provides.” (DX 17 at 41) Nevertheless, after the January 1989 meeting, Ivoc-lar did not commit expressly to Frink that it would provide the requested support. (DX 9 at 3; D.I. 423 at 1042) At trial, Mr. Ganley could not recall whether many of the items promised to Frink, in fact, were implemented. (D.I. 423 at 1042-44) 102. In July 1989, Ivoclar commissioned a task force to establish a strategic marketing plan for its denture products. (Id. at 1026-27) The task force found that Ivoclar unit sales were “steadily decreasing” and had taken a “regressive” position in the U.S. marketplace due to the lack of a General Manager and sales representatives in the field. (DX 17 at 3-4; D.I. 423 at 1027) In fact, Ivoclar had “no sales representatives in the field.” (DX 17 at 14) Further, it lacked the “customer service to support growth.” (Id.) Ivoclar recognized that “customers do not receive their orders in a timely fashion.” (DX 17 at 11) 103. In 1995, Ivoclar had a business relationship with DTS. (D.I. 453 at 3385) DTS, at the time, did not carry Trubyte teeth. (Id. at 3397-98) 104. Ultimately, the business relationship between DTS and Ivoclar deteriorated and ended by the mid-1990s. (D.I. 453 at 3388-98) 105. DTS was the only non-Dentsply dealer that Ivoclar contacted regarding the distribution of its artificial teeth between 1990 and 2002. (D.I. 423 at 1058) Ivoclar concluded as early as 1989 that “dealers do not really provide sales support, but only act as a distribution center and service to tooth stocks.” (Id. at 1031; DX 17 at 12) 106. In 1990, less than a year following the Frink experiment, Darby sought to become an Ivoclar dealer. Darby proposed adding four distribution points to the stocking locations that Ivoclar already had at the time. These points were located in New York, Boca Raton, Dallas and Chicago. In its analysis of Darby’s proposal, Ivoclar determined that it was more profitable to sell directly to dental labs. (D.I. 423 at 1101-03; DX 25 at IVC 023970) By selling directly to the customer, Ivoclar concluded that it would “guarantee continuity and distribution methods.” (Id.) Ivoclar ultimately rejected Darby’s proposal and chose instead to continue with direct distribution. (Id.; D.I. 423 at 1061-65) ii. Yident 107. In 1997, Vident analyzed the feasibility of adding a large dealer, specifically Patterson, as a sub-dealer. Vident’s calculations took into account the need to give Patterson the support that a national dealer requires, including “at least” a 30% margin on Vita teeth that Patterson would re-sell, marketing support, technical support and educational programs. (D.I. 419 at 339-40, 350) All of these programs would have been in addition to what Vident was currently offering its distribution network. (Id.) Vident took into account the added expenses associated with this incremental support. (Id.) Vident determined that it would not sell teeth directly to dental labs if it distributed Vita teeth through Patterson. As a result, its gross profit margin would decrease due to the additional layer of dealer margin. (D.I. 423 at 340-42) 108. Vident also determined that it would need to offer a large dealer like Patterson a volume discount year-end bonus. (Id.) Because Vident would offer a bonus to Patterson and do away with direct sales, it expected its gross profit margin on artificial teeth to decrease if it sold teeth through a national dealer like Patterson. (Id.) 2. Very Few Tooth Manufacturers Distribute Their Teeth Exclusively Through Tooth Dealers a. Dentsply 109. During the early to mid 1990s, Dentsply sold artificial teeth through 35 to 40 dealers. Some of these dealers had one location, while others had multiple locations. (D.I. 448 at 2576-77) Today there are 23 authorized dealers. (D.I. 432 at 2178-79; DX 1665) 110. Dentsply does not have a contractual arrangement with its authorized tooth dealers. (D.I. 423 at 1184-85; D.I. 448 at 2585; D.I. 450 at 2631) If Dentsply’s dealers do decide to take on the teeth of a rival, they can either sell their Dentsply tooth inventory or send it back to Dentsply for full credit. (D.I. 420 at 700; D.I. 489 at 4346) 111. There is no dispute that when Dentsply authorizes a dealer to carry its teeth, that relationship operates on a purchase order basis. Thus, an authorized Dentsply dealer is free to stop buying Trubyte teeth at any time without penalty from Dentsply. (D.I. 448 at 2585; D.I. 423 at 1184) Mr. Weinstock acknowledged that Zahn could “stop selling Trubyte teeth altogether ... tomorrow.” (D.I. 420 at 543) 112. Dentsply has analyzed the advisability and feasibility of selling its Trubyte teeth directly to labs. (D.I. 448 at 2534; D.I. 454 at 3471) 113. In 1996, there were market factors that caused Dentsply to question whether its Trubyte business could continue to “grow or be stable long term.” (D.I. 448 at 2593) Christopher Clark analyzed these market factors, and the Trubyte Division’s Strategic Options, in the 1996 Tru-byte Division Long Range Plan. Mr. Clark authored and submitted the Long Range Plan to Dentsply’s senior management in spring 1996. (Id. at 2592; GX 101) 114. Mr. Clark’s Long Range Plan identified five “key trends” that were “negatively impacting” the Trubyte Division’s “ability to protect [its] business long term.” (GX 101 at DPLY-A 37304-05) First, Dentsply faced price pressure from direct selling manufacturers “whose distribution system does not require a 35% dealer margin.” (Id.) As a result of this price pressure, larger labs sought to purchase Trubyte teeth at lower prices. (D.I. 448 at 2595) Second, dentists exhibited a reduced interest in dentures due, in part, to “decreased denture training in schools” and “lack of perceived profitability.” (GX 101 at DPLY-A 37304; D.I. 448 at 2595) Third, dealers showed a declining interest in the tooth business “due to low perceived profitability.” (GX 101 at DPLY-A 37305; D.I. 448 at 2596) Dealer disinterest represented a “significant business risk” to Dentsply because dealers potentially could return the estimated $15 million in dealer tooth inventories to Dentsply, which would mean negative sales and negative gross margin. (Id.) Fourth, there was increasing consolidation in the market among dealers and labs. (GX 101 at DPLY-A 37305) As a result of the lab consolidation, Dentsply “felt the competitive pressure” from its larger lab customers. (Id.; D.I. 448 at 2597) Fifth, denture patients held a “negative view” of dentists and of dentures. (GX 101 at DPLY-A 37305; D.I. 448 at 2597) Dentsply’s research showed over 60% of denture wearers experienced problems with their dentures. (GX 101 at DPLY-A 37305) Yet, these patients exhibited “little to no interest in ongoing dental care” and did not seek to replace their dentures. (Id.) 115. In his 1996 Trubyte Division Long Range Plan, Mr. Clark considered and analyzed strategic options for the Trubyte Division in light of these market factors. (GX 101) 116. The first strategic choice was to maintain the status quo. (GX 101 at DPLY-A 37305-06) The Long Range Plan recommended against this strategy and recognized it as a “SIGNIFICANT BUSINESS RISK TO DENTSPLY.” (Id.) The Plan concluded that if Dentsply did not address the market conditions and invest in the future, the Trubyte business would “begin trending down.” (Id.; D.I. 450 at 2605) 117. The second strategic choice was to protect, defend, and enhance the Trubyte Division. (GX 101 at DPLY-A 37306-13; D.I. 450 at 2610) The second choice was actually a combination of various strategies, all designed to ensure “the long-term health of the tooth business.” (Id.) This option included Dentsply ultimately moving to a “[d]irect-[s]elling” relationship with its lab customers. (GX 101 at DPLY-A 37310) 118. The Long Range Plan further concluded that the services dealers provided to labs “certainly [were] replicable.” (D.I. 450 at 2611) The Plan acknowledged that in switching to a direct-selling distribution system, Dentsply would have to overcome five hurdles by: a) writing-off $15 million in dealer inventory; b) learning more about its lab customers and creating a database of this information; c) examining sufficiency of field sales coverage and likely increasing the size of the sales force; d) addressing the impact of increased accounts receivable;' and e) anticipating competitive reaction from tooth companies who would approach Dentsply’s dealer network. (GX 101 at DPLY-A 37344; D.I. 450 at 2611-14) The potential dealer backlash Dentsply’s other divisions would face if it opted to sell teeth direct served as another “significant concern.” (D.I. 450 at 2614-15) 119. Notwithstanding these hurdles, the Long Range Plan concluded that it would “ultimately be necessary to take the business direct.” (GX 101 at DPLY-A 37343) 120. Upon review of the 1996 Long Range Plan, Dentsply’s senior management commissioned a more detailed analysis of whether Dentsply should take its tooth business direct. (D.I. 454 at 3472; D.I. 450 at 2615) This analysis, which Mr. Clark also managed, was called Project Black Jack. (D.I. 450 at 2616; D.I. 454 at 3472; DX 460-A) Project Black Jack studied the feasibility and advisability of taking all Trubyte’s business (teeth and merchandise) direct. (DX 460-A; D.I. 450 at 2616-17; D.I. 454 at 3476) 121. Project Black Jack confirmed the action points in the 1996 Long Range Plan, i.e., the, necessary infrastructure for distribution, accounting and sales, and better information about the labs and their tooth needs. (D.I. 454 at 3476-78) Project Black Jack also analyzed in detail the financial viability of going direct. It determined that after the initial $15 million write-off of returned inventory, selling direct would be very profitable and provide for a good return on investment for Dentsply. (D.I. 450 at 2612, 2618) Assuming a price reduction of 10% below its suggested lab rate (which would come from the 35 margin points that Dentsply would regain from its dealers), Dentsply could lose nearly 14% of its tooth volume and still.maintain its current profitability on tooth sales. (Id. at 2618-20; D.I. 454 at 3519-20; DX 460-A at DPLY 107402) 122. Dentsply’s Chris Clark testified that Dentsply “did not expect to lose market share by going direct.” (D.I. 450 at 2708) If anything, he agreed, Dentsply would “gain market share by being able to sell directly and satisfy the needs of [Dentsply’s] customers directly.” (Id.) 123. Project Black Jack also identified dealer retaliation as an additional risk underlying a change to a direct distribution system. Retaliation would come in the form of dealers converting lab customers to non-Dentsply dental consumable products. In 1996, Dentsply sold through its dealers approximately $300 million in dental consumables manufactured by Dents-ply’s divisions other than Trubyte. (D.I. 454 at 3479) Dentsply feared that dealers would do everything possible to convert this business in retaliation for Dentsply competing against them for tooth sales. (Id. at 3479-80) 124. Dentsply’s concern reflects the experience of other manufacturers that have distributed one product through dealers and competed against those dealers with another product. Kevin Dillon, president of Leach & Dillon, testified that, based on his prior experiences, he faced this exact concern in selling Enigma teeth directly. (D.I. 457 at 4092-93) 125. In light of these risks and the needed infrastructure improvements, Dentsply management concluded that the Trubyte Division was not prepared to go direct in 1996-1997. (D.I. 454 at 3478, 3480) 126. Dentsply’s largest dealer, Zahn Dental, has for years recognized the possibility of Dentsply taking its business direct. (D.I. 420 at 554) Several times Zahn has asked for assurances from Dentsply’s senior management that it would not take the business direct. (Id. at 555-57; DX 1590) “[E]ven today” Zahn recognizes the “possibility” that Dentsply might take the tooth business direct. (D.I. 420 at 557, 559; D.I. 455 at 3826-27) 127. Dealers like Zahn consider direct selling manufacturers as competitors. (D.I. 420 at 553) Zahn will not distribute a manufacturer’s teeth and also compete with that manufacturer for tooth sales. (Id. at 549-53) 128. Although most of the risks associated with taking Trubyte teeth direct have been resolved, Dentsply believes one major issue remains. Dealer retaliation is still a real threat. (D.I. 454 at 3484, 3504) Dealer retaliation on the dental consumables side has become more daunting because now Dentsply sells approximately $400 million in non-Dentsply dental consumables through its dealers, instead of $300 million. (Id.) Mr. Miles testified that the threat of dealer retaliation requires that a decision on direct sales involve all of Dentsply’s Divisions, not just Trubyte. (Id. at 3485) b. Vit a/Vi dent 129. Vita has distributed its teeth exclusively through a national dealer since at least 1968 by way of a contractual arrangement — first with Unitech from 1963-1984 and then Vident since 1984. (D.I. 419 at 289-93) In its contract with Vident, Vita committed that it will not appoint any other distributor for Vita artificial teeth in the United States. (Id. at 290-91) In consideration for this commitment, Vident agreed that it would not distribute any products that compete with Vita products. (Id.) 130. Vident’s President considers the exclusivity agreement Vident has with Vita beneficial because it permits Vident’s sales representatives to focus completely on the Vita line of products. (Id. at 291-92) 131. Vident carries a large inventory of Vita teeth. (Id. at 329) Vident sells and distributes artificial teeth directly to dental labs from its Brea, California location. (Id. at 241-42, 248, 254, 288, 375-76; D.I. 453 at 3361-62) Vident offers overnight delivery from this single stock. (D.I. 419 at 329, 376) Like other dealers, Vident has a “long-standing relationship” with dental labs. (Id. at 342) 132. Vident sells artificial teeth through a sales force of 15-16 people and a telemarketing department whose responsibilities include Vita teeth. (Id. at 229-30, 296-98, 328) Vident also consigns teeth to dental labs. (Id. at 253, 346) 133. Vident differs from other tooth distributors in that Vident has appointed a number of sub-distributors, in effect creating a network of sub-dealers. (Id. at 302-03) These firms purchase Vita teeth through Vident at prices established by Vident. (Id. at 327) None are permitted to buy teeth directly from Vita. (Id. at 302) According to Vident’s President, Wayne Whitehill, this network currently encompasses 18 sub-dealers each with its own inventory of Vita teeth. (Id. at 303) From 1985 until 1990 Vident did not utilize sub-dealers. (Id. at 301-02) 134. Vident reserves the right in agreements with sub-dealers to sell to dental labs directly in the dealers’ sales areas. These sub-dealers encounter direct competition from Vident for the sale of Vita artificial teeth. (Id. at 247, 348) Vident has a reputation for taking its sub-dealers’ customers, and selling to them directly. (D.I. 457 at 4089-90) By doing so, Vident effectively has precluded its sub-dealers from selling to certain l