Full opinion text
ORDER IN CASE NUMBER 93-40521 ACCEPTING (1) REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE PEPE ON DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT (III); (2) REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE PEPE ON PLAINTIFFS’ MOTION TO AMEND THIS COURT’S AUGUST 7, 1995 ORDER; and (3) REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE PEPE ON PLAINTIFFS’ MOTION TO AMEND THE MARCH 31, 1997, CLASS CERTIFICATION ORDER GADOLA, District Judge. Before the court are three separate reports and recommendations filed on March 31, 1998 by Magistrate Judge Steven D. Pepe. All three reports concern motions in case number 93-40521, in which plaintiffs are a class of approximately 400 franchisees of defendant, Little Caesar Enterprises, Inc. (“LCE”). This court, pursuant to 28 U.S.C. § 636(b)(1)(B), Fed.R.Civ.P. 72(b), and L.R. 72.1(d)(2) (E.D.Mich. Jan. 1, 1992), has conducted an extensive review of each report and recommendation, as well as the objections and responses submitted by the parties and the authority cited both by the parties and by the magistrate judge. After conducting a de novo review, the court accepts each report and recommendation as the court’s findings and conclusions. While the exhaustive analysis of the magistrate judge obviates the need for a further recitation of the facts and legal issues implicated in the instant motions, this court does wish to specifically address one objection filed by plaintiffs to the report and recommendation on defendant’s motion for partial summary judgment (III). The lynchpin of the magistrate judge’s recommendation that defendant’s motion for summary judgment be granted as to the issue of market power in the tying market is the magistrate judge’s conclusion that the plaintiffs are not entitled to a narrowed market definition of the type discussed in Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992), and its progeny. In turn, the key to that conclusion was the magistrate judge’s finding that “the evidence does not show that during the limitations period for this lawsuit the defendant used its restrictive policy on the availability of logoed goods to alternate distributors to exclude any potential distributor from the market. Nor during the limitations period has any potential alternate distributor been precluded from entering the market to compete with Blue Line because of LCE’s restriction on the availability of logoed goods.” (Rep. & Rec. at 100(emphasis in original).) Plaintiffs’ primary contention with respect to the substance of this analysis is that the magistrate judge relied on an incorrect reading of the Sixth Circuit’s decision in PSI Repair Servs., Inc. v. Honeywell, Inc., 104 F.3d 811 (6th Cir.1997). Plaintiffs contend that the PSI court would have allowed a Kodak-type market definition to be submitted to a jury in that case if the antitrust plaintiff had submitted substantial evidence that the defendant had either changed its pricing structure and service policies after locking the plaintiff in or merely concealed material information prior to sale about its pricing structure and service policies. Accordingly, plaintiffs in this case contend that the magistrate judge erred when he read PSI and Kodak as requiring plaintiffs to produce evidence that LCE actually implemented its policy to exclude any potential alternate distributor from the market. Under plaintiffs’ reading of PSI, the fact that the magistrate judge found that there was substantial evidence that LCE concealed information related to the ability of alternate distributors to compete without access to lo-goed goods is sufficient, in and of itself, to justify a narrowed market definition under Kodak. However, this court agrees with the magistrate judge’s interpretation of the holding of the PSI court. In PSI, the court held specifically that: [i]f there were any evidence in the record that Honeywell took advantage of its customers’ imperfect information in order to reap supracompetitive profits in the aftermarkets for its equipment, we would not hesitate to allow a Kodak-type theory to be submitted to the jury. However, we can find nothing in the record or PSI’s brief that alleges that Honeywell engaged in such activities. PSI, 104 F.3d at 821 (emphasis added). This language seems to imply that an antitrust plaintiff must show that the defendant took some action in an attempt to capitalize on the antitrust plaintiffs imperfect information after the plaintiff became locked in relying on that imperfect information. Accordingly, this court agrees with the magistrate judge’s conclusion that one requirement for a narrowed market definition under Kodak and PSI is that plaintiff must show that, “after a substantial number of customers have sunk significant costs that are not recoverable and face other switching costs, the seller takes some action changing its policy (or acting on a prior undisclosed policy) that takes advantage of its locked in customers’ lack of information in order ‘to reap supracompetitive profits’ by imposing a burdensome tie-in.” (Rep. & Rec. at 50.) Moreover, this court agrees with the conclusion of the magistrate judge that, in this case, “no reasonable jury could find that during the limitations period LCE used its power to deny access to logoed goods to alternate distributors to handicap or exclude any rival distributors.” (Rep. & Rec. at 101.) Accordingly, this court having reviewed the submissions of the parties and being fully advised in the premises, It is hereby ORDERED that the magistrate judge’s March 31, 1998 report and recommendation on defendant’s motion for partial summary judgment (III) is ADOPTED. It is further ORDERED that defendant’s motion for partial summary judgment is DENIED on the issue of there being one product and not two, and GRANTED on the issue that plaintiffs have insufficient proof of market power in the tying product market. It is further ORDERED that the magistrate judge’s March 31, 1998 report and recommendation on plaintiffs’ motion to amend this court’s August 7, 1995 order is ADOPTED. It is further ORDERED that plaintiffs’ motion pursuant to Rule 54(b) is DENIED. It is further ORDERED that the magistrate judge’s March 31, 1998 report and recommendation on plaintiffs’ motion to amend the March 31, 1997, class certification order is ADOPTED. It is further ORDERED that plaintiffs’ motion to amend the March 31, 1997, class certification order is DENIED. SO ORDERED. REPORT AND RECOMMENDATION ON DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT PEPE, United States Magistrate Judge. I. BACKGROUND FACTS.463 II. DEFENDANT’S MOTION FOR PARTIAL Summary Judgement.466 III. Is the Purchase and Operation of a LCE Franchise a Separate Product from the Logoed Products or Other Products Necessary to Operate Suoh a Franchise? .467 A. Can A Franchise Be a Tying Product?.467 B. Are the Products Associated with a Franchise Trademark Separate From the Franchise Itself?.468 IV. Can the Class Plaintiffs Prove LCE has Sufficient MarKet Power in the Tying PRODUCT MARKET TO INVOKE THE Per Se Rule Maxing a Tie-In Illegal?.470 A. Substantial Market Power in Tying Market After Fortner II and Jefferson Parish.472 B. Kodak and Narrowed Market Definition .477 C. PSI Repair Services v. Honeywell, Inc.482 D. Areeda, Hovenkamp and Elhauge on Kodak.486 1. The Kodak Analysis .486 2. Kodak and Franchises ... 487 V. Analysis.490 A. Facts Known to Franchisees Signing the mid-1990 Franchise Agreement.490 B. Other Facts Relevant to Kodak Lock-in Market.492 C. Testimony of Plaintiffs’ Experts.500 D. Legal and Factual Analysis and Conclusion.505 V. RECOMMENDATION.513 Defendant Little Caesar Enterprises, Inc. (“LCE”) has filed a motion for partial summary judgment which has been referred for Report and Recommendation under 28 U.S.C. § 636(b)(1)(B). I. Background Facts: The current motion involves only the antitrust tie-in class certified by this Court in its March 31, 1997, order. Little Caesar Enterprises, Inc. v. Smith, 172 F.R.D. 236 (E.D.Mich.1997). Plaintiffs are approximately 400 franchisees of LCE throughout most of the nation who own and operate carry-out-only Little Caesar restaurant franchises under a mid-1990 Franchise Agreement. These franchisees purchase their supplies needed to operate from Blue Line Distributing, Inc. (“Blue Line”), formerly a wholly owned subsidiary that has now merged with LCE. The class plaintiffs seek damages, declaratory and injunctive relief for alleged antitrust tie-in violations by defendant. During the relevant class period, Blue Line, in areas where it had a warehouse, sold to LCE franchises virtually all goods necessary to operate their Little Caesar restaurants. Little Caesar was founded in Michigan in 1959 by Michael Ilitch, who began to franchise his “Little Caesar” restaurants in 1962. As noted in this Court’s earlier opinion, as of June 1, 1995, there were 536 franchisees nationwide operating 2,867 carryout-type restaurants. Little Caesar Enterprises, Inc. v. Smith, 895 F.Supp. 884, 887 (E.D.Mich.1995). The majority of these are class plaintiffs. LCE also has over 1,000 company-owned outlets comprising approximately 25% of the carryout units and over 500 Little Caesar restaurants in Kmart stores. Blue Line purchases all of the items used in Little Caesar restaurants from producers and suppliers and then re-sells them to LCE franchisees making a single delivery of the multiple goods. Most of these items are produced to meet LCE specifications. These items include foodstuffs, beverage products, sign equipment, paper products, salad dressing, other condiments with LCE’s proprietary symbols and marks, and other items. Blue Line initially had only one warehouse in Farmington Hills, Michigan, and thus was limited in the number of midwestern franchisees to whom it could distribute goods. Other associate distributors, not affiliated with defendant, were approved by LCE in various regions throughout the country to service its other franchisees and LCE’s company owned carryout facilities. In the middle 1980’s, Blue Line began to expand the number of its distribution warehouses throughout the country. LCE replaced the other associate distributors with its Blue Line distribution warehouses. By August 1989, defendant had eliminated the majority of third party distributors servicing Little Caesar franchisees and thereafter eliminated virtually all of the remaining distributors in the continental United States, except for two remote areas in Idaho that were not economically feasible for Blue Line to service. Plaintiffs accuse defendant of unlawfully tying sales of the above-noted goods from Blue Line to the sale and continued operation of the Little Caesar franchises. They allege that the defendant LCE has used its inherent monopoly power derived from its copyrights, trademark, service names, and trade names to impose contractual and other uniform restrictions on the distribution of the various goods to franchisees, thereby eliminating the possibility of renewed competition with Blue Line by other food distributors. Plaintiffs also allege that because LCE franchisees have invested substantial funds and effort in their restaurants and goodwill, and have signed long-term franchise agreements with a continuing two year non-compete clause in the pizza, pasta and submarine sandwich markets, they are effectively “locked in” to the LCE franchise system. Section VII of the relevant mid-1990 Franchise Agreement specifically grants franchisees the right to purchase supplies, including logoed goods (but excluding proprietary spice and dough mixes) from “any source of its choosing ... previously approved as a supplier by LITTLE CAESAR.” While the franchise agreements provide to each franchisee the right to request that LCE approve an alternate supplier of products made to LCE specifications, the mid-1990 Franchise Agreement — unlike earlier franchise agreements and the more recent 1995 Franchise Agreement — excluded logoed goods needed to operate a Little Caesar franchise. LCE in June 1989 entered into a licensing agreement that gave Blue Line the exclusive right to distribute logoed products to franchisees. This Court has determined that the “logoed products” involved in this 1989 Licensing Agreement as well as in the mid-1990 Franchise Agreement applied only to those items bearing the Little Caesar registered mark, which a Little Caesar franchise provides its customers in the sale of its food products. These include items such as lo-goed paper products (bags, cups, napkins), packaging, and condiments such as salad dressing. 895 F.Supp. at 890-92. Defendant asserts that these logoed products comprise only about 6% of the food products and other items sold by Blue Line to a franchisee and needed to operate a franchise. While plaintiffs dispute these figures, they offer no substantial counter proofs. For purposes of this motion the logoed products will be considered less than 10% of the entire “market basket” of goods a franchisee needs to purchase in order to operate a Little Caesar carryout restaurant. Plaintiffs contend that because the profit margin for a distributor on logoed products is greater than other items, and because of the preference of many franchisees to obtain all their needed supplies from one source, other potential distributors cannot effectively compete with Blue Line if they are not given access to these logoed products. This 1989 Exclusive Licensing Agreement with Blue Line was not initially disclosed to the franchisees and only came to light several years later. Franchisees renewing their franchises on existing outlets or those entering into franchises for a new outlet after the middle of 1990, would sign the Franchise Agreement that contained the restrictive language not permitting them to seek an alternate source of logoed products. Because the evidence would support such a finding and because disputed issues on a motion for summary judgment must be resolved in favor of the non-moving party, this Report will assume none of those franchisees who signed the mid-1990 Franchise Agreement were aware of the June 1989 Exclusive Licensing-Agreement between LCE and Blue Line before signing the mid-1990 Franchise Agreement. The logoed products are essential to the operation of a Little Caesar franchise and their usage is required. Under the Franchise Agreement plaintiffs contend that defendant is using this 1989 exclusive Blue Line licensing right on logoed paper, combined with the new 1990 contractual limits on franchisees seeking alternate distributors of lo-goed products, to preclude alternate sources of supply and competition on these logoed items. Plaintiffs assert that the defendant’s denial of access to these logoed products is also intended to make it less profitable or more burdensome for alternate distributors of franchise supplies to enter the market. Plaintiffs argue that the tying arrangement is not limited to logoed products. They assert that the practical economic effect of the exclusive licensing agreement for logoed products is to effect a tie-in of the entire “market basket” of goods needed to operate a Little Caesar franchise. Plaintiffs’ experts also argue that the tied product is the market basket of goods, supplies and distribution services, not merely logoed products because “it is uneconomic to operate as a distributor without access to logoed products.” Siwek and Nelson December 22, 1996, Declaration at ¶¶ 4-10. Plaintiffs also contend that the forced tie-in of the entire “market basket” of goods is burdensome because Blue Line is charging supracompetitive prices. Because discovery on the pricing structure is not complete, this Report will accept the premise that plaintiffs by trial would have sufficient evidence to get to a jury on “supracompetitive” prices for the entire “market basket” of goods. In addition to the arguments that franchisees in the class are forced to purchase the entire “market basket” of goods from Blue Line, because LCE/Blue Line uses the exclusive licensing agreement and the resulting market leverage over logoed goods to exclude rival distributors of the non-logoed items needed to operate a Little Caesar franchise, plaintiffs continue to accuse defendant of a pattern of wrongfully refusing requests for approval of alternative distributors other than Blue Line. Plaintiffs argue that until this litigation was commenced, it was “futile” for any franchisee to seek an alternate distributor to Blue Line because such a request would be denied. In its earlier opinion denying a nationwide class of franchisees, including those with pre-1990 Franchise Agreements, this Court granted summary judgment on the tying claims of plaintiffs Hennessy and Fields, and Gary Smith before April 1992, because they did not exercise their contract rights to request an alternate distributor to Blue Line, and because they could not prove they did not make such a request because they knew it would be futile to do so. Thus, in the absence of an express tying arrangement (or a defense admission) these plaintiffs could not prove they were “forced” or “coerced” to buy all goods from Blue Line as those terms are used in the antitrust cases to show there was an illegal tie. 895 F.Supp. at 894-96. Plaintiffs have filed a motion under Fed.R.Civ.P. 54(b) to reconsider that ruling, which is analyzed in a separate report and recommendation. This case involves the certified class of franchisees who signed the mid-1990 Franchise Agreement that did not provide an express contract right to seek an alternate supplier of logoed products. That class was certified to determine whether there was an illegal tie between the continued operation of a Little Caesar franchise and the purchase of logoed products from Blue Line. This case also involves the plaintiffs’ contention that the practical economic effects of the tying of logoed goods also tied in the purchase of the entire “market basket” of goods needed to operate a Little Caesar franchise by raising rival distributors’ entry barriers and costs of operation. This Report’s analysis will involve both the question of (1) whether there were any refusals by LCE/Blue Line to allow potential rivals access to logoed goods and whether the refusal made it economically infeasible for rivals to enter the market to compete with Blue Line; and (2) whether the knowledge of the unavailability of logoed goods to alternate distributors dissuaded any distributor from considering seeking LCE approval to become an alternate distributor. Yet, this post-mid-1990 Franchise Agreement class was not certified to revisit the issue of whether LCE wrongfully refused to approve alternate distributors or the issue of whether it was futile and/or known to be futile for an alternate distributor to apply. That issue is addressed in the Report and Recommendation on plaintiffs’ Rule 54(b) motion. II. DEFENDANT’S MOTION FOR PARTIAL SUMMARY Judgment.- LCE has moved for partial summary judgment, raising numerous issues. Because I recommend summary judgment be granted to defendant on an issue that involves the per se tying claims of all the class plaintiffs, this Court need only consider two of the issues. First, LCE claims that the franchise agreement and the logo paper products that Blue Line sells are not separable and therefore are not products that can be tied together. For reasons stated below, these are two products that can be tied for antitrust purposes. LCE’s most forceful argument with respect to the tie-in class is that the plaintiffs cannot demonstrate that LCE has sufficient market power in the relevant tying market to appreciably restrain competition in the tied market. Defendant argues that the relevant tying market in the present case is the market for either carryout pizza franchises or, alternatively, a larger market of all fast food franchises, and not the market comprised solely of Little Caesar franchises. Defendant contends that it has no significant market power based on their market share of either of these markets. Thus, plaintiffs cannot prove a critical element necessary to prevail on their per se tie-in claim. III. Is THE PURCHASE AND OPERATION OF A LCE FRANCHISE A SEPARATE PRODUCT FROM the Logoed Products or Other Products Necessary to Operate Such a Franchise? A. Can a Franchise Be a Tying Product? In a subsequent motion, the defendant questions whether a franchise and its continued operation can be a tying “product.” Many courts, without question, treat a franchise as such. As noted by the Seventh Circuit in Photovest Corp. v. Fotomat Corp., 606 F.2d 704, 722 (7th Cir.1979): The law is well-settled that a franchise license itself can be the tying product. In Northern v. McGraw-Edison Co., 542 F.2d 1336, 1345 (8th Cir.1976), [c]ert denied, 429 U.S. 1097, 97 S.Ct. 1115, 51 L.Ed.2d 544 (1977), the court stated: A franchise license constitutes a separate and distinct marketable item. The weight of judicial authority supports the proposition that if prospective franchisees are compelled to purchase equipment or other tied products in order to obtain the franchise and trademark, an illegal tying arrangement exists. Accord, Milsen Co. v. Southland Corp., 454 F.2d 363 (7th Cir.1971); Siegel v. Chicken Delight, Inc., 448 F.2d 43 (9th Cir.1971), [c]ert denied, 405 U.S. 955, 92 S.Ct. 1172, 31 L.Ed.2d 232 (1972). See also, Wilson v. Mobil Oil Corp., 984 F.Supp. 450 (E.D.La.1997); Collins v. International Dairy Queen, Inc., 168 F.R.D. 668 (M.D.Ga.1996). Grappone v. Subaru, 858 F.2d 792, 797 (1st Cir.1988), notes that a product distribution dealership is a franchise when privately owned, and one dealer can operate multiple franchises from a single location. The record shows that Subaru was but one of many automobile franchisors, and that Grappone itself held not only Subaru, but also AMC, Pontiac, Jeep, Toyota, and Peugeot franchises. Professors Areeda, Hovenkamp and Elhauge cite Chicken Delight and Krehl v. Baskin-Robbins Ice Cream Co., 664 F.2d 1348 (9th Cir.1982), to note that at least in the “business format” franchise where the franchisee makes the product or service sold to the public: The trademark has been deemed the standard tying product for many franchises where the typical tied product was the equipment or ingredients used by the franchisee to make the final product. Areeda, et al„ Antitrust Law (1996) at 14, ¶ 1733 (footnote omitted). The Areeda authors in considering when a single-brand tying market can be allowed under the Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992), “lock-in” theory specifically use franchises and dealerships with their trademarks as examples of a potential tying product. Areeda at p. 139, ¶ 1740; pp. 145-48, ¶ 1740c2. Also, in discussing single-brand products such as machines that can be a tying product, the authors note: “[t]o simplify we will not say much more about franchisees or dealers in this subparagraph. Most of what is said about the machine buyer also applies to them.” Id. at p. 155 n. 47, ¶ 1740. Plaintiffs’ expert economists have also provided their opinion and economic explanation why the continued right to operate a franchise is an economic commodity for which a market exists for economic and antitrust purposes. Siwek and Nelson Dec. 1997 Declaration. Thus, substantial authority suggests that a franchise and its continued operation can be a tying product. B. Are the Products Associated with a Franchise Trademark Separate From the Franchise Itself ? In the Chicken Delight case, portions of which have recently come under criticism, the Ninth Circuit held that a Chicken Delight franchise was a separate product from the various “commonplace articles” that needed to be sold to a franchisee in order to operate a Chicken Delight franchise. 448 F.2d at 47-49. In Krehl, the Ninth Circuit distinguished between a business format franchise such as the one involved in Chicken Delight and a product distribution franchise. 664 F.2d at 1353. The Krehl case noted that in contrast to a business format franchise, in a product distribution franchise where the trademark identifies the actual end product consumed — the ice cream sold by Baskin-Robbins — there are not two separate products but only one, and thus there could not be an illegal tie-in. Defendant argues, however, that the lo-goed products — including the paper goods and condiments bearing the LCE Roman man and other distinctive marks — that are allegedly being tied would not have any market value and could not be sold anywhere or used anywhere separate from a LCE franchise. LCE cites Casey v. Diet Center, Inc., 590 F.Supp. 1561, 1563-66 (N.D.Cal.1984), that suggests that no tying can exist in a franchise context where the products and services allegedly tied have “no market distinct from that of the franchise itself.” Id. at 1566. Defendant argues there is no separate market for the LCE logoed paper goods apart from a Little Caesar franchise. The Supreme Court in Jefferson Parish Hospital v. Hyde, 466 U.S. 2, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984), noted that “the answer to the question whether one or two products are involved turns not on the functional relation between them, but rather on the character of the demand for the two items.” Id. at 19, 104 S.Ct. 1551. Jefferson Parish involved the market for anesthesiologists and the market for hospitals. The Court found that even though these were used together and functionally related, they were two separate products that could be selected and marketed separately. Since the date defendant filed its motion, the Sixth Circuit in PSI Repair Servs., Inc. v. Honeywell, Inc., 104 F.3d 811 (6th Cir.), cert. denied, — U.S. -, 117 S.Ct. 2434, 138 L.Ed.2d 195 (1997) (hereafter “PSI”), reiterated the Jefferson Parish standard for determining whether there are two products for a tie-in claim. According to PSI, the issue is not whether the items provide a “functionally integrated package,” but rather the “character of the demand for the two items.” Id. at 815 (quoting 466 U.S. at 19, 104 S.Ct. 1551). In PSI, Honeywell manufactured and sold industrial control equipment ranging in price from $250 to $800,000 per unit. These devices were dependent on internal printed circuit boards. Ninety-five percent of the components on the circuit board were “generic components” that could be purchased from a component manufacturer or distributor. Five percent, however, were designed specifically for Honeywell by a third party manufacturer who was contractually bound not to sell these proprietary items to Honeywell equipment owners or to independent service providers, such as the plaintiff in PSI. Like the LCE logoed products, these small number of Honeywell parts would have no market apart from Honeywell industrial control machines. PSI offered circuit board repair services to owners of industrial control equipment. Because PSI was unable to obtain the five percent of the circuit board components manufactured exclusively for Honeywell control equipment, it was unable to compete in the market for the repair of Honeywell circuit boards. Honeywell provided replacement parts for faulty circuit boards by replacing the entire board with a new or refurbished board, charging the customer 50% of the list price for a new board so long as the customer returned the defective board. Honeywell would thereafter evaluate whether the defective board could be repaired, and if it could it would be repaired and put back into the inventory for replacement boards. The question before the Sixth Circuit was whether there was a separate market for two products — “parts for the circuit boards” and “the servicing of circuit boards when a board required repair or replacement.” 104 F.3d at 814. Like the LCE logoed products needed to operate an LCE franchise, these items— parts and service — were functionally related. The lower court found there were not two separate products that could be tied in violation of the antitrust laws. The Sixth Circuit reversed the lower court. It noted that the Supreme Court in Kodak also dealt with whether the unique replacement parts for Kodak copiers were separate from the services utilized to repair a Kodak copying machine. The Supreme Court in Kodak determined that parts and service could be separate products if there is “sufficient consumer demand so that it is efficient for a firm to provide service separately from parts.” Kodak, 504 U.S. at 462, 112 S.Ct. 2072, quoted in PSI, 104 F.3d at 815. In applying the consumer demand test of Kodak to its facts, the Sixth Circuit in PSI framed the question as to whether it would “be efficient for a firm to provide some component parts separate from the circuit-board services.” 104 F.3d at 816. It noted that “PSI’s very existence indicates the possibility of a separate market for service, because PSI does not manufacture any of the component parts for the circuit boards but instead purchases them from third-party manufacturers.” Id. The Sixth Circuit also noted in applying the consumer-demand test that 95% of the components necessary to construct a Honeywell circuit board were “available for sale either directly or through the manufacturer or a third-party distributor.” Id. Obviously firms sold these generic parts separate from service. In applying the consumer demand test to the present case, it is clear that the market for Little Caesar franchises is separate from the market for the goods and services, including logoed paper goods, necessary to run a Little Caesar franchise. Prior to the expansion of Blue Line to nearly all regions of the country, other private distributors, unrelated to Little Caesar, sold all the goods and services necessary to run Little Caesar franchises, including logoed paper goods. Yet, the Little Caesar franchises were sold separately by LCE and franchisees. Since the commencement of this suit, Little Caesar has also approved three alternate distributors of the goods necessary to run a Little Caesar franchise and has agreed to provide them logoed products to sell. In the past, there was a period where PYA Monarch, one of the recently reapproved distributors, sold all of the products needed by LCE franchises except logoed goods, which at that time the Little Caesar franchises in the Atlanta area had to buy logoed separately from Blue Line. Thus, the past history as well as the current approvals of new distributors demonstrate that there is sufficient consumer demand both for logoed goods and the other goods necessary to operate a Little Caesar franchise to provide them separately from the sale and marketing of the Little Caesar franchise itself. Defendant’s Motion for Partial Summary Judgment on the issue as to there being but one product should be denied. IV. CAN the Class Plaintiffs PROVE LCE has Sufficient MaRxet Power in the Tying PRODUCT MARKET TO INVOKE THE PER Se Rule Making a Tie-In Illegal? While a claim of illegal tying can be attacked as an antitrust violation under a rule-of-reason analysis, this requires actual proof of market harm in the tied product that can involve complex analysis of whether the anticompetitive consequences of the tie are outweighed by procompetitive business justifications asserted by the defendant. When the per se rule against tying is invoked, market harm is presumed and this obviates the need for the extensive discovery and proofs of market harm and the balancing of procompetitive benefits against anticompeti-tive harms. The per se rule against illegal tying is a judicial shortcut available where risks of market harm are so obvious that courts will dispense with the cumbersome market harm inquiry and balancing. See Arizona v. Maricopa County Medical Society, 457 U.S. 332, 350-51, 102 S.Ct. 2466, 2476, 73 L.Ed.2d 48 (1982). In the present case, class plaintiffs are asserting a per se tying violation and LCE’s Motion for Partial Summary Judgment asserts that plaintiffs cannot prove sufficient power in the tying product market, as properly defined, to make any tie-in subject to a per se attack. As this Court has noted in its earlier summary judgment opinion the prima facie elements of a per se tie-in claim are: 1. there must be a tying arrangement between two distinct products; 2. the seller must have sufficient economic power in the tying market to restrain appreciably competition in the tied product market; and 3. the amount of commerce affected must not be insubstantial. Little Caesar Enter., Inc. v. Smith, 895 F.Supp. 884, 894 (E.D.Mich.1995). The earlier Report and Recommendation which this Court accepted addressed class certification of those LCE franchise owners who had signed the post-mid-1990 Franchise Agreement. Because this case does not involve an admitted tie nor an express tie clearly set out in the Franchise Agreement or other documents, a major issue in that class certification controversy concerned whether there was a tying arrangement under prima facie element # 1 above. Could class plaintiffs prove whether their purchase of logoed goods from Blue Line was actually a “coerced” or “forced” tie — -i.e. an understood condition of continuing as a Little Caesar franchise — or was it a voluntary choice, and thus not illegal under antitrust law. The core dispute for class certification purposes was whether under Fed.R.Civ.P. 23(b)(3) class plaintiffs had sufficient common proofs of this “forcing” or “conditioning” to proceed as a class, or would the issue of “coercion” depend predominately on individual proofs. This Court determined that in light of the change in language in the mid-1990 Franchise Agreement, and the practical economic effects of the market realties and other internal documents of the defendant, this “coercion” issue on the “was there a tie” question could proceed by common proofs and thus class treatment was appropriate. Also, in determining whether the case could proceed as a class action, this Court did not inquire “into the merits of plaintiffs’ claims” and “assum[ed] plaintiffs’ legal theory was correct.” Little Caesar Enter., Inc. v. Smith, 172 F.R.D. 236, 241, 261 n. 19 (E.D.Mich.1997). The “coercion” issue considered in that earlier class certification dispute dealt with prima facie element # 1 of a tying claim — is there a tie of two products? The present motion deals with element # 2 — does the defendant have sufficient economic power in the tying market to invoke the per se tie-in doctrine. The core dispute on the present motion is how the relevant tying product market should be defined. Plaintiffs contend the tying product market is the market of LCE franchises and the rights to continue operating these economic entities. If that is the case, LCE has substantial market power in the tying product. Defendant argues that plaintiffs have defined the wrong market. As noted above, defendant argues that the appropriate market for antitrust purposes is the market either for carryout pizza franchises or for all fast food franchises of which they have less than 20% of the market which is insufficient for plaintiffs to invoke the per se tying rule. A. Substantial Market Power in Tying Market After FoHner II and Jefferson Parish: Market power has been defined as the power “to force a purchaser to do something that he would not do in a competitive market” such as buying a “tied product that the buyer did not want at all or might have preferred to purchase elsewhere or on different terms. When such ‘forcing’ is present, competition on the merits in the market for the tied item is restrained and the Sherman Act is violated.” Jefferson Parish, 466 U.S. at 12 and 14, 104 S.Ct. 1551. It has also been defined as “the ability of a single seller to raise price and restrict output.” United States v. E.I. DuPont de Nemours & Co., 351 U.S. 377, 391, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). It can be determined by various surrogate tests, but the most common is determining the defendant’s share of the relevant market. While earlier per se tying eases were quick to condemn tying arrangements without too much attention to the strength of the defendant’s power in the tying product market, this ended when Justice White’s dissent in FoHner 7 gained favor with Justice Stevens and a substantially different Court in FoHner II. United States Steel (through one subsidiary) was discriminating in price on certain tied sales — it charged more for prefabricated homes that it sold to developers who financed those homes through another United States Steel subsidiary than it charged when the homes were purchased by a developer separately. The tying product loans were for 100% of the cost not only of the prefabricated houses, but also the land and development costs of the developer. These unique 100% loans were “unusually inexpensive” financing giving the U.S. Steel defendants power to attract credit hungry developers. In assessing this tying arrangement, Justice Black in Fortner I suggested that economic power in the tying market for credit could be found when an “appreciable number” of buyers wanted the tying product sufficiently that they would take the tied product which they might have preferred to buy elsewhere, all other factors being equal. Because tie-ins were deemed to serve no legitimate procompetitive purpose that could not be achieved by a less restrictive means, Justice Black concluded that “the presence of any appreciable restraint on competition” can serve to trigger the per se tie-in doctrine. Such appreciable restraint results whenever the seller can exert some power over some of the buyers in the market .... despite the freedom of some or many buyers from the seller’s power _Accord-ingly, the proper focus of concern is whether the seller has the power to raise prices, or impose other burdensome terms such as a tie in, with respect to any appreciable number of buyers within the market. Fortner I, 394 U.S. at 503-504, 89 S.Ct. 1252. United States Steel by offering uniquely favorable credit terms (the tying product) was able to extract supracompetitive prices for its prefabricated houses (the tied product). After remand, Fortner prevailed in the lower court which allowed a finding that United States Steel had sufficient power in the credit market to invoke per se condemnation of the tying arrangement. When the case eventually returned to the Supreme Court, Fortner II held that a more careful analysis of actual power in the tying market was needed — even for “unique” products and for powerful defendants such as United States Steel. As is alleged in the present case concerning the full “market basket” of goods purchased from Blue Line, United States Steel was charging its tied customers supracompetitive prices for the tied product, and there were a substantial number of buyers accepting this “burdensome” tie. Nonetheless, the Supreme Court held that the plaintiff had to prove that “the seller has the power, within the market for the tying product, to raise prices” or “to require purchasers to accept burdensome terms that could not be exacted in a completely competitive market.” Id. at 620, 97 S.Ct. 861. The defendant must have “some advantage not shared by his competitors in the market for the tying product.” Id. at 620, 97 S.Ct. 861. Cheaper and more freely available credit terms are indeed a “unique” tying product, but this is because U.S. Steel was “willing to accept a lesser profit — or to incur greater risks — than its competitors.” Without dissent, the Fortner II Court determined that this is not the “kind of uniqueness” that constitutes exploitable “economic power in the credit market.” Id. at 621-22, 97 S.Ct. 861. The Court noted that United States Steel was willing “to provide cheap financing in order to sell expensive houses” and this “unique ... financing” does not support a finding that defendant “had the kind of economic power” which a plaintiff must demonstrate to invoke the per se rule against tieins. Fortner II refused to infer market power from the fact United States Steel’s prefabricated houses were sold at above-market prices, and there were a number of people that accepted its tie between credit and the purchase of these houses. The lack of apparent power for the fungible tying item — the market for money — led the Court to accept “the possibility” that the lower cost of borrowing offset the higher cost of the houses, and the bundled package was thus “competitive.” Fortner II, 429 U.S. at 618, 97 S.Ct. 861. When a seller defendant clearly dominates a conventionally defined market, the finding of market power is an easy task. In other cases, it is a far more complicated task involving comparisons of the product the defendant is offering with that of the defendant’s rivals. The defendant’s and its rivals’ prices and costs must also be compared for each of the products and for the combined package. It is possibly for this reason that courts, such as Fortner II, will not infer substantial market power solely from the existence of numerous ties coupled with above-market prices for the tied product. Jefferson Parish reiterated that significant power in the tying product market is needed to find a tie-in per se illegal. The Court defined the tying market as competing hospitals in the Jefferson Parish geographic area from which a patient (with the advice or preference of his or her doctor) could select. Defendant had only a 30% share of that market. The Supreme Court considered this insufficient market power in the tying product to condemn East Jefferson Hospital under the per se tie-in rule even though it unquestionably had a tie-in between the use of its surgical facilities and the services of its selected anesthesiologists. If patients, in consultation with their doctors, did not like East Jefferson Hospital’s tie-in because it was more expensive or limited their free choice in the tied market, they could go to another hospital in the Jefferson Parish area and get a different anesthesiologist of their choice. As commonly stated and recently reiterated by the Sixth Circuit, under tying’s per se rule the seller must possess substantial market power in the tying product market. PSI, 104 F.3d at 815 n.2. Without significant market power in the tying product the defendant cannot force the buyer to pay higher prices or accept other burdensome terms such as buying a tied product on less favorable terms than offered by competitors or that the buyer would otherwise not have purchased at all. As with every element of the prima facie case, plaintiffs have the burden of proof on showing significant market power in the tying market. One of the most thoughtful analyses of the “significant” aspect of market power is found in Grappone v. Subaru of New England, 858 F.2d 792 (1st Cir.1988), where Justice (then Judge) Stephen Breyer wrote for the First Circuit. He defined “significant market power” as necessitating “more than the mere ability to raise price only slightly, or only on occasion, or only to a few of a seller’s many customers.” Id. at 796. “To show market power, the seller must have a significant market share or sell a unique, such as a patented, product for which there are not readily available substitutes.” Id. A seller with limited ability to raise prices “cannot easily cause harm in tied product markets” and “cannot easily harm consumers.” Id. at 796-97. Grappone noted that without market power in Product A, the seller cannot force a buyer to take “a more expensive or less desirable Product B.” Id. at 795. It notes that a seller with market power in Product A who has already exercised it by charging more for Product A cannot force buyers to take a more expensive or less desirable Product B, unless it provides buyers equivalent compensation by lowering the price of Product A (or maintaining Product A’s price at a level lower than the Seller has the power to charge), for otherwise buyers, who were already paying as much as the Seller could charge them (with its degree of market power) would also likely switch to other sellers or discontinue use of Product A. See Jefferson Parish, 466 U.S. at 39 & n. 8, 40, 104 S.Ct. at 1572 & n. 8, 1573 (O’Connor, J., concurring). This is simply to make the logical point that “fully exploited” buyers would not take a less desirable Product B without compensation, for otherwise they were not being “fully exploited.” Id. at 795. The Grappone opinion notes that Jefferson Parish brings into visibility the upshot “counterintuitive” notion that a “tie” does not hurt the typical buyer in any obvious way; one needs a more refined analysis to find the harm. * * * * :!: ❖ The Jefferson Parish Court provides that more refined analysis. The majority and concurrence recognized that a Seller, possessing significant market power with respect to Product A, may cause anticom-petitive harm by tying as follows: by reducing the price of Product A slightly (or by otherwise not fully exploiting its power with respect to Product A), the Seller may induce the Buyer to accept the tie; by doing so, the Seller may build a strong market position in Product B; and that position in Product B, in turn, may increase its power to charge high prices in respect to Product A. If a monopolist of patented can-closing machinery, for example, insists, as a condition of selling his machines, that their purchasers buy his cans, he will likely soon have a monopoly in cans as well as machines. And, that fact — the fact that he controls both cans and machines — may make his monopoly safer from competitive attack when his patent on the can-closing machinery expires. A new competitor would then have to enter both levels of the business (cans and machines) to deprive him of monopoly profits. And, this added security may enable the machinery monopolist to charge higher prices. The tie, by permitting the Seller to extend its market power from one level to two, may thereby raise entry barriers, providing security that helps a monopolist-seller further harm the consumer. This point is made both by the Jefferson Parish majority, 466 U.S. at 14, 104 S.Ct. at 1559, and the concurring justices, id. at 36-37, 39, 104 S.Ct. at 1570-71, 1572; see also 3 Areeda and Turner ¶¶ 725h, 733e. Of course, in such circumstances, tying would hurt the Buyer or consumer only when it first hurts firms seeking to sell the tied product. Only if the tie significantly reduces the opportunities to sell Product B, can the tie significantly increase the Seller’s power in respect to Product B, and thereby (ie., by raising entry barriers) increase the Seller’s power in respect to Product A. See Jefferson Parish, 466 U.S. at 14, 18-25, 104 S.Ct. at 1559. And, insofar as tying impedes “competition on the merits,” discouraging the search for innovation or efficiency, it does so in the tied product markets. Jefferson Parish, 466 U.S. at 14, 104 S.Ct. at 1559; 3 Areeda and Turner ¶ 725g; * * * * * * The majority and minority [concurring] opinions in Jefferson Parish disagree, not in respect to the nature of the link between tie and potential competitive harm, but in respect to the legal conclusions they would draw from the nature of this linkage. The minority would abandon the per se anti-tying rules and analyze tying under a “rule of reason”; it would prohibit tying only when according to its “demonstrated economic effects!,] • • • [tying’s] anticompeti-tive impact outweighs its contribution to efficiency.” Jefferson Parish, 466 U.S. at 41-42, 104 S.Ct. at 1573-74. The majority would retain pre-existing per se rules; but it also breathes life into the screening function that the preconditions of those per se rules serve. The majority, for example, makes clear that by its requirement of “market power” it means significant market power — more than the mere ability to raise price only slightly, or only on occasion, or only to a few of a seller’s many customers. s}s jfc # s|J # That the “market power” hurdle is moderately high — that it cannot ordinarily be surmounted simply by pointing to the fact of the tie itself or to a handful of objecting customers — makes sense in light of the harms the anti-tying rules seek to avoid.... [Vjirtually every seller of a branded product has some customers who especially prefer its product. But to permit that fact alone to show market power is to condemn ties that are bound to be harmless, including some that may serve some useful social purpose. 858 F.2d at 795-97 (various case citations and academic references omitted). While Grappone was pre-Kodak, and plaintiff Grappone was not “locked in” by high switching costs because the dealership in which he had “sunk costs” sold multiple brands of cars other than the Subaru, the opinion concludes that for most product distribution franchises or dealerships, the relevant tying market is the interbrand fore-market. In Grappone, the tied product was a package of Subaru parts, the tying product was the Subaru franchise, but the relevant tying product market was either all automobiles or all imported automobiles. Subaru’s market share, whether measured in terms of sales of all autos or of imports or in any other reasonable way, is minuscule. See Kenworth of Boston, Inc. v. Paccar Financial Corp., 735 F.2d 622, 623-24 (1st Cir.1984) (tying product is Pac-car trucks, relevant market is that for all heavy trucks); Kingsport Motors, Inc. v. Chrysler Motors Corp., 644 F.2d 566, 571 (6th Cir.1981) (tying product is Dodge cars, relevant market is that for all medium priced automobiles sold in U.S.); Anderson Foreign Motors, Inc. v. New England Toyota Distributor, Inc., 475 F.Supp. 973, 986 (D.Mass.1979) (tying product is Toyotas, relevant market is that for all new foreign and domestic cars); see also A. I. Root Co. v. Computer/Dynamics, Inc., 806 F.2d 673, 675 (6th Cir.1986) (tying product is specialized computer equipment, relevant market is that for all small computers). Id. at 797. Thus, the Fortner II-Jefferson Parish cases insisted on a “more refined analysis” of the need for demonstrating substantial market power in the tying product market before the probability of harm in the tied market is so high that it can be presumed under the per se tying doctrine. Thereafter, courts were reluctant to find market power in single brand products, no matter how coveted or unique, if other brands of the product might, at a certain price level, be selected as substitutes for the preferred brand. If the inter-brand competition in Product A is healthy, and no firm has a substantial market share suggesting market power in the pre-contract market, courts assumed that interbrand competition in the foremarket would police any market abuses by competing firms. Thus, with a competitive foremarket, if any firm had a tie-in of its Product A with Product B, the normal economic assumption would be that acceptance of the bundling was a voluntary consumer choice and not “coerced.” Jefferson Parish involved clearly tied products in which substantial consumers acquiesced. Fortner II involved not only a substantial number of consumers accepting the tie of the credit and houses, but also proven above-market prices for Product B when obtained as part of a tie. B. Kodak and Narrowed Market Definition: The Supreme Court in Kodak called into question the reluctance of courts to use a single brand product to define a market for antitrust tying purposes and its per se rule. Kodak sold photographic and micrographic equipment which the majority opinion defined as “unique” at least to the extent that software programs and parts that operated with Kodak’s machines were “not compatible with competitors’ equipment, and visa versa.” 504 U.S. at 457, 112 S.Ct. 2072. It provided service and parts to its customers. Some of its unique parts were made by Kodak but most were made by licensed manufacturers. Independent service organizations (“ISO’s”) in the 1980’s began repairing Kodak equipment, selling its parts, reconditioning and reselling used Kodak equipment. In 1985-86 Kodak began a policy of selling replacement parts only to buyers of its equipment who used Kodak’s repair service or who serviced their own equipment. The manufacturers of those Kodak parts that Kodak did not make agreed not to sell such parts to anyone except Kodak. As a result of this new policy, ISO’s were unable to get adequate parts to service or rebuild Kodak machines, and many went out of business. Id. at 458, 112 S.Ct. 2072. The ISO’s sued Kodak alleging an illegal tie under the per se rule that involved Kodak tying its service to its unique parts. After very limited discovery the district court granted Kodak summary judgment because the ISO’s had provided no evidence that Kodak’s equipment was tied to Kodak’s parts and service — a claim that the ISO’s were not making. The Ninth Circuit reversed noting that there was a disputed issue of fact over whether there were separate markets for the tying product (which the Ninth Circuit correctly recognized the ISO’s were claiming was the unique Kodak repair parts) and the tied product (the Kodak service). Having determined that there was sufficient evidence to allow a finding that two product markets existed, the Ninth Circuit considered the question of whether “Kodak has sufficient economic power in the tying product market [parts] to restrain competition in the tied product market [service].” 504 U.S. at 460, 112 S.Ct. 2072 (quoting Image Technical Service, Inc. v. Eastman Kodak Co., 903 F.2d 612, 616 (9th Cir.1990), bracketed materials in original). Kodak argued that as a matter of law interbrand “competition in the equipment market [prevented] Kodak from possessing power in the parts market.” Id. While the Ninth Circuit acknowledged that this “theoretical” premise “might be true” it would not allow summary judgment on a factually thin record because “market imperfections can keep economic theories about how consumers will act from mirroring reality.” 903 F.2d at 617. In its certiorari review, the Supreme Court majority opinion stated that “[t]he principal issue here is whether a defendant’s lack of market power in the primary equipment market precludes — as a matter of law — the possibility of market power in derivative aftermarkets.” 504 U.S. at 454-455, 112 S.Ct. 2072. It noted later that: Kodak does not present any actual data on the equipment, service or parts markets. Instead, it urges the adoption of a substantive legal rule that “equipment competition precludes any finding of monopoly power in derivative aftermarkets.” ... Kodak argues that such a rule would satisfy its burden as the moving party of showing “that there is no genuine issue as to any material fact” on the market power issue. 504 U.S. at 466,112 S.Ct. 2072. A legal presumption against a finding of market power is warranted in this situation, according to Kodak, because the existence of market power in the service and parts market absent power in the equipment market “simply makes no economic sense,” and the absence of a legal presumption would deter procompetitive behavior. 504 U.S. at 467, 112 S.Ct. 2072. The majority opinion notes that in considering Kodak’s per se defense: To determine whether Kodak has met [its summary judgment] burden, we must unravel the factual assumptions underlying its proposed rule that lack of power in the equipment market necessarily precludes power in the aftermarkets. The extent to which one market prevents exploitation of another market depends on the extent to which consumers would change their consumption of one product in response to a price change in another, i.e. the “cross-elasticity of demand.” Hi h* h* # ❖ h* 504 U.S. at 469, 112 S.Ct. 2072. Kodak argued that the Court should accept, as a matter of law, this “basic economic realitfy]” ... “that competition in the equipment market necessarily prevents market power in the aftermarket.” 504 U.S. at 470, 112 S.Ct. 2072. The Supreme Court in Kodak stressed that in considering market power, economic theory provides useful guides. Yet, textbook economic models cannot be a substitute for the actual facts and the market realities of the case. Legal presumptions that rest on formalistic distinctions rather than actual market realities are generally disfavored in antitrust law. This Court has preferred to resolve antitrust claims on a case-by-case basis, focusing on the “particular facts disclosed by the record.” In determining the existence of market power, and specifically the “responsiveness of the sales of one product to price changes of the other,” this Court has examined closely the economic reality of the market at issue. 504 U.S. at 466-67, 112 S.Ct. 2072 (citations omitted). At least in a case where the plaintiff has come forward with some evidence of a dysfunction in the theory that markets control prices by competition and free access to new competitors, the Kodak court stressed that defendant “bears a substantial burden in showing that it is entitled to summary judgment. It must show that despite evidence of increased prices and excluded competition, an inference of market power is unreasonable.” Id. at 469, 112 S.Ct. 2072. Citing Jefferson Parish, Kodak emphasized “[t]he relevant market for antitrust purposes is determined by choices available to Kodak equipment owners.” Id. at 482, 112 S.Ct. 2072. “The proper market definition in this case can be determined only after a factual inquiry into the ‘commercial realities’ faced by consumers.” Id. (quoting United States v. Grinnell, 384 U.S. 563, 572, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966)). Grinnell had held that after defining the appropriate market, monopoly may “ordinarily be inferred from the predominant share of the market.” 384 U.S. at 571, 86 S.Ct. 1698. The Court stated that “Kodak’s theory does not explain the actual market behavior revealed in the record.” 504 U.S. at 473, 112 S.Ct. 2072. The ISO’s had come forward with some evidence that was inconsistent with the general economic theory. They demonstrated that Kodak had raised prices and driven out ISO competition in the aftermarkets. 504 U.S. at 477, 112 S.Ct. 2072. The Court found that: Respondents [the ISO’s] offer a forceful reason why Kodak’s theory, although perhaps intuitively appealing, may not accurately explain the behavior of the primary and derivative markets for complex durable goods: the existence of significant information and switching costs. These costs could create a less responsive connection between service and parts prices and equipment sales. 504 U.S. at 473, 112 S.Ct. 2072. The Kodak majority also noted that there was other evidence consistent with illegal ties. There was evidence of price discrimination favoring those Kodak customers who serviced their own equipment (which might be the more sophisticated customers) and thus could avoid any supracompetitive pricing of Kodak service. The Court added: Service prices have risen for Kodak, but there is no evidence or assertion that Kodak equipment sales have dropped. 504 U.S. at 472, 112 S.Ct. 2072. In light of these factors and “higher service prices and market foreclosure,” the Court chided that “Kodak’s service and parts policy is simply not one that appears always or almost always to enhance competition.” Id. at 478-79. The Court concluded that Kodak has failed to demonstrate that respondents’ inference of market power in the service and parts markets is unreasonable, and that, consequently, Kodak is entitled to summary judgment. It is clearly reasonable to infer that Kodak has market power to raise prices and drive out competition in the aftermarkets, since respondents offer direct evidence that Kodak did so. It is also plausible ... to infer that Kodak chose to gain immediate profits by exerting that market power where locked in customers, high information costs, and discriminatory pricing