Full opinion text
TABLE OF CONTENTS I. The Facts. .1097 A. Nichols . 1097 B. Dunlop. 1098 C. Metzeler. 1099 D. Tucker/Roeky. 1099 E. Parts Unlimited. 1099 F. Combined Market Share. 1100 G. The Economic Experts. 1100 II. The Antitrust Conspiracy Claims . 1100 A. The Sherman Act § 1. 1100 1. Count I: Per Se Violations. 1101 a. Legal Standards . 1101 b. The Plaintiffs Evidence. 1105 (i) The Year 1991. 1105- (ii) The Year 1992 . 1105 (iii) The Year 1993 . 1107 (iv) March 1993-June 15,1993 . 1108 (a) March 15, 1993: Tucker/Roeky Article Quoting Bob Gregg (PX 1108 The March 22,1993 Gregg Letter (PX 4C). 1108 March 22,1993: Parts Unlimited Revises Price List (PX 444). 1109 March 31,1993: Phone Call (PX 624) . 1110 Late March 1993: Mike Buckley Replaces Pat' Logue as Dunlop’s National Sales Manager. 1110 Late March 1993: Gregg Phone Call to Buckley Regarding Termination of Distributors. 1110 g April 1,1993: Buckley Memo To Dunlop Distributors (PX 2). 1110 The April 8,1993 Gregg Letter (PX 5) . 1110 April Phone Call Between Buckley & Gregg Regarding April 8, 1992 Gregg Letter. 1111 April 30, 1993: Logue Conversation with Motorcycle Stuff Regarding Tucker/Rock/s Low Prices. 1111 0 May 6,1993: Buckley Visits Nichols, Meets Jack Jesse, and Writes CaH Reports (PX 14). 1111 M May 6, 1993: Buckley Spends Evening with Jeff Fox of Parts 1112 (m) May 7, 1993: Buckley Visits Tucker/Rocky Warehouse in Chicago... 1112 (n) Early May 1993: “Firm Commitments” (PX 17). 1112 (o) Late May 1993: Tucker/Rocky Issues Revised Price List (PX 214; PX 645). 1112 (p) May 20,1993: Buckley’s “Price War” Memo (PX 3). 1112 (q) Buckley’s Memos to Robin Mitchell (PX 17; PX 18). 1113 (r) June 15,1993: Dunlop Terminates Nichols (PX 16). 1114 Post-Termination Evidence. (v) 1114 (a) June 1993: Tucker/Rocky Branch Manager’s Report (PX 277). 1114 (b) Joe Piazza (PX 540). 1114 (c) Tucker/Rocky’s Missing Branch Manager Reports. 1114 (d) September 1993: Trade Show Memo (PX 206). 1114 (e) Metzeler Memo of October 5, 1993 on “Price Stability” (PX 303)... 1114 (0 Tucker/Rocky Memo Regarding “Market Stabilizing Programs” (PX 280) . 1115 (g) Dunlop Raises MSD Mid-Year. 1115 (h) Rick Ward (DX 36).1115 (i) 1994 Price Increases.1115 (j) Tom Peterich.1115 (vi) Inadmissible Testimony.1115 (a) James Stewart.1115 (b) Rocky Trevino (PX 622).1116 (c) Terry Baisley-William Giacomelli Conversation (PX 643).1116 c. Analysis.1116 (i) The Horizontal Agreement.1117 (ii) The Vertical Agreement.1118 (a) There is no evidence of parallelism supporting the inference of an agreement to terminate Nichols or to fix prices.1118 (i) Market Theory.1118 (ii) Three Examples of Non-Parallel Behavior.1119 (a) Dunlop Unilaterally Decided to Reduce Its Distribution Network.. .1119 (b) Parts Unlimited’s 1993 Price Increases.1121 (c) Tucker/Rocky and Parts Unlimited’s 1994 Price Increases.1122 (b) The Gregg letters are ambiguous evidence and therefore do not support an inference of pricefixing or a termination agreement.1122 (i) The March 22,1993 Gregg Letter.1122 (ii) The April 8,1993 Gregg Letter.1124 (c) There is no other direct or circumstantial evidence of collusion supporting Nichols’ section 1 claim.1125 2. Count II: The Rule of Reason.1125 a. Legal Standards .1125 b. Analysis.1126 3. Count III: Group Boycott.1128 B. The Illinois Antitrust Act.1128 1. Count IV: Per Se Prieefixing.1128 2. Count V: Rule of Reason.1129 3. Count VI: Group Boycott.1129 C. The Robinson-Patman Act Claims.1129 1. The Facts.1129 2. The Merits.1130 a. Dunlop: Section 2(a).1130 b. Tucker/Roeky and Parts Unlimited: Section 2(f).1132 3. The “Meeting Competition” Defense .1133 a. Background .1134 b. Analysis..1136 III. The State Law Claims.1138 A. The Facts.1138 B. Claims Against Dunlop.1139 1. Count VIII: Illinois Consumer Fraud Act.1139 2. Counts IX & X: Illinois Franchise Act.1141 3. Count XI: Promissory Estoppel.1141 4. Count XII: Equitable Estoppel.1142 5. Count XIII: Equitable Recoupment.1142 6. Count XIV: Breach of ContraeVGood Faith & Fair Dealing.1143 7. Count XV: Fraud.1143 C. Claims against Tucker/Rocky and Parts Unlimited.1144 1. Count XVI: Tortious Interference with Contract.1144 2. Count XVII: Tortious Interference with Prospective Economic Advantage.1145 IV. Dunlop’s Motion to Strike Nichols’ Jury Demand .1146 V.Conclusion.1147 MEMORANDUM OPINION AND ORDER CASTILLO, District Judge. On June 15, 1993, after a thirty-year business relationship, Dunlop Tire Corporation (“Dunlop”), the largest manufacturer of motorcycle tires in the United States, terminated Nichols Motorcycle Supply Inc. (“Nichols”), its oldest distributor. The termination letter — commonly referred to in the vernacular as a “Dear John” letter — merely stated: Dear Jack: Please see enclosed copy of your “Dunlop Distributor Motorcycle Tire/Tube Agreement” signed by you on January 11, 1993. In reference to item nine of above-mentioned agreement, Dunlop Tire Corporation exercises its option to terminate this agreement effective five days from receipt of this letter. Regards, DUNLOP TIRE CORPORATION Mike Buckley National Sales Manager Motorcycle Tire Division Not surprisingly, as a direct result of this letter, Nichols commenced a multi-faceted litigation campaign against Dunlop and other parties. Thus, currently pending before this Court is an antitrust action brought by Nichols against Dunlop and Dunlop’s two largest distributors, Tueker/Roeky Distributing (“Tucker/Rocky”) and LeMans Corporation, through its Parts Unlimited division (“Parts Unlimited”), Nichols’ former competitors. The Third Amended Complaint contains seventeen counts. The federal antitrust conspiracy claims, brought under the Sherman Antitrust Act, 15 U.S.C. § 1 (1995), and the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(a) (1995), are asserted in Counts I — III and VII. The Illinois Antitrust Act claims are asserted in Counts IV-VI and the supplemental state law claims are asserted in Counts VIII-XVII. The Court has federal subject matter, supplemental and diversity jurisdiction. The fate of the state law claims depends largely upon the decisions this Court makes regarding the Sherman and Robinson-Patman Act claims. We will begin there. I. The Facts The relevant market for antitrust purposes in this case is defined as the manufacture, sale, distribution and resale of replacement and premium motorcycle tires in the United States. 12(N)(3)(b) Reply ¶ 5. The relevant manufacturers and distributors, for purposes of this case, are as follows. A. Nichols Nichols is an Illinois corporation with its principal place of business in Alsip, Illinois. Nichols has been in the business of distributing motorcycle parts, accessories, supplies, and clothing since around 1960. 12(M) ¶ 1. Jack Jesse has been Nichols’ president since the spring of 1993. 12(M) App. A. Terry Baisley has been Nichols’ national sales manager since October 1989. Id. Ken Anderson is the marketing manager. Id. Nichols currently operates two warehouse distribution centers. Nichols’ principal distribution center, which it has operated since approximately 1970, is in Alsip, Illinois (a Chicago suburb). In September 1992, Nichols acquired a second warehouse distribution center in Phoenix, Arizona. 12(M) ¶ 33. These warehouses currently remain open. Id. See also 12(N)(3)(b) Reply ¶ 67. Nichols formerly distributed Dunlop tires and was Dunlop’s oldest distributor, acting in this capacity for over 30 years before being terminated on June 15, 1993. 12(M) ¶¶ 146, 400. At the time Nichols was terminated, Dunlop tires constituted approximately 20 percent of Nichols' total sales. PX 608 at 29. Nichols has never distributed Metzeler products. 12(N)(3)(b) Reply ¶ 54. Nichols, however, does sell about 150 lines of motorcycle-related merchandise to both motorcycle retailers and approximately 15-20 different distributors. Nichols also currently sells the following tire brands: Bridgestone, Cheng Shin, Continental, Kenda, and Kings. 12(M) ¶ 2. In the past Nichols has also sold Dun-lop, Avon, Michelin, Pirelli, and Yokohama. Nichols is also the owner of the Pro Sport line of motorcycle products and the exclusive agent for -Kings motorcycle tires in continental North America. Nichols sells Pro Sport products and Kings tires through a network of distributors and publishes an annual catalog of suggested resale prices. 12(M) ¶¶ 12, 48. Nichols’ market share for Dunlop tires between 1990-1994, as indicated by the percentage of tires Dunlop sold to Nichols, was as follows: Table 6. Dunlop Motorcycle Tire Sales to Select Distributors, 1990-94 (Percent) 1990 1991 1992 1993 1994 Nichols 13.2 5.4 9.3 1.9 0.0 12(N)(3)(b) ¶ 12. B. Dunlop Dunlop is a Delaware corporation "with its principal place of business in West Amherst, New York. 12(M) ¶4. Dunlop manufactures motorcycle tires and sells them to wholesale distributors, who resell them to retail dealers and subdistributors. Retail dealers in turn sell Dunlop tires primarily to the consuming public. Id. Robin Mitchell is Dunlop’s senior vice president of marketing and sales. 12(M) App. A. Patrick Logue was Dunlop’s national sales manager from approximately 1987 through March 1993. Id. Michael J. Buckley succeeded Mr. Logue as the national sales manager in March 1993. Id. Dunlop is the largest selling motorcycle tire manufacturer in the United States. Its current market share in the relevant markets is approximately 62-70 percent. 12(M) ¶ 6. Dunlop’s success can be partially attributed to the fact that Dunlop has very high consumer name recognition, which predisposes many consumers to purchase Dunlop replacement motorcycle tires. 12(N)(3)(b) Reply ¶ 7. Dunlop tires are also used by distributors as a lead product to generate sales of other non-Dunlop products to dealers. 12(N)(3)(b) Reply ¶ 8. At the time Nichols was terminated as a Dunlop distributor in June 1993, Dunlop sold tires to 18 distributors: American Honda, Bell Industries, Custom Chrome, Cycle Products, Cycle Sports (in Puerto Rico), Dixie, Harley-Davidson, Intrac, J & D Walter, KK Motorcycle, Marshall Distributing, Motorcycle Stuff, Parts Unlimited, Performance Tire, Pikes Peak, Tueker/Rocky, and Tri-State. Of these 18 distributors, Dunlop sold the most tires to the following four distributors between 1990-1993 (in decreasing order): Tucker/Rocky, Parts Unlimited, Motorcycle Stuff, and Nichols Supply. 12(M) ¶ 10. Dunlop’s top three distributors, measured by the percentage of tires sold to them from 1990-1994, are: Tucker/Rocky, followed closely by Parts Unlimited (within 2-5%), and Motorcycle Stuff (7-9% off the leader from 1990-92; 21% off the leader in 1993; 12.4% off the leader in 1994; and 12.2% off the leader for all four years). Id. (PX 608, App. Table D-3). Nichols followed in fourth and fifth place from 1990-1992, until its termination on June 15,1993. Id. C. Metzeler Metzeler is a German tire manufacturer, owned by Pirelli. Metzeler Motorcycle Tire North America is its North American subsidiary. 12(M) ¶¶ 7-8. Gregory Blackwell has been the president of Metzeler N.A. since January 1992. 12(M) App. A. Metzeler is the second largest selling motorcycle tire manufacturer in the relevant market. 12(N)(3)(b) Reply ¶ 9. Metzeler tires generally sell at a higher price than Dunlop, and are not . discounted as much because there is less intrabrand competition (i.e., fewer distributors) for Metzeler tires. 12(N)(3)(b) Reply ¶ 13. In the last several years, Metzeler has reduced its distributor base from approximately 12 distributors to five. 12(N)(3)(b) Reply ¶ 14. Metzeler’s five U.S. distributors are: KK Motorcycle, Moto-race, Parts Unlimited, Pike’s Peak and Tucker/Rocky. 12(M) ¶ 10. Tucker/Rocky and Parts Unlimited sell the largest numbers of Metzeler tires; together they account for 90 percent of its sales (Tucker/Rocky buys 60% and Parts Unlimited buys 30%). 12(N)(3)(b) Reply ¶ 14. In 1990, Metzeler had a market share in the relevant markets of 24r-30 percent. The president of Metzeler N.A., Gregory Blackwell, estimates that Metzeler’s market share is currently 25-30 percent. However, Dun-lop’s reports indicate that Metzeler’s total market share for tires fell to about 12.8-13.75 percent in 1993, although its share of the premium tire market may have been 15 percent. 12(N)(3)(b) Reply ¶ 10 (PX 608 at 16-18). D. Tucker/Rocky Tucker/Rocky is a Texas corporation with its principal place of business in Irving, Texas (Dallas). 12(M) ¶ 5. Robert Nickell is the current chairman and past president (October 1989 to October 1992). Robert Gregg succeeded Mr. Nickell as president on October 1, 1992. 12(M) App. A. Tucker/Rocky owns and operates 12 warehouses in the United States and is considered a national distributor. Tucker/Rocky is in the business of distributing parts, accessories, and apparel for motorcycles and watercraft. 12(M) ¶ 5. Tucker/Rocky is Dunlop’s largest distributor, as indicated by its market share. 12(N)(3)(b) Reply ¶ 12. This market share is based on the percentage of tires Dunlop sold to Tucker/Rocky during the periods 1990-1994, and was as follows: Table 6. Dunlop Motorcycle Tire Sales to Select Distributors, 1990-94 (Percent) Tucker/Rocky 1990 1991 1992 1993 1994 25.2 27.5 27.2 36.4 33.3 12(N)(3)(b) Reply ¶ 12. E.Parts Unlimited LeMans Corporation is a Wisconsin corporation with its principal place of business in Janesville, Wisconsin. 12(M) ¶ 6. Fred Fox is the current chairman and chief executive officer. Jeff Fox is Fred Fox’s son, and has been the president of Parts Unlimited since approximately October 1992. 12(M) App. A. LeMans, through its Parts Unlimited division, is in the business of distributing parts and accessories for motorcycles, watercraft, and snowmobiles. 12(M) ¶ 6. Parts Unlimited is Dunlop’s second largest distributor, as indicated by its Dunlop market share. 12(N)(3)(b) Reply ¶ 12. This market share is based on the percentage of tires Dunlop sold to Parts Unlimited during the period 1990-1994, and was as follows: Table 6. Dunlop Motorcycle Tire Sales to Select Distributors, 1990-94 (Percent) Parts Unlimited 1990 1991 1992 1993 1994 19.0 23.6 24.7 31.5 28.0 12(N)(3)(b) Reply ¶ 12. Plaintiffs expert concedes that Parts Unlimited, by itself, does not possess market power. Id. F. Combined Market Share For the years 1990-1994, Tucker/Rocky and Parts Unlimited, combined, held the following market share: Table 6. Dunlop Motorcycle Tire Sales to Select Distributors, 1990-94 (Percent) T/R&PU 1990 1991 1992 1993 1994 Subtotal 44.2 51.1 51.9 67.9 61.4 12(N)(3)(b) Reply ¶ 12. This data establishes that Tncker/Rocky and Parts Unlimited’s combined market share at the end of 1993 rose by 16 percent, dropping off in 1994, but remaining 9.5 percent higher than their combined 1992 market share. The combined market share of Dunlop and Metzeler is currently about 85 percent. 12(N)(3)(b) Reply ¶ 11. G. The Economic Experts Nichols has retained an economist, Dr John Pisarkiewiez, as an expert to perform several tasks in this litigation. 12(M) ¶¶ 21, 196. Raymond S. Sims is a Vice President at A.T. Kearney, Inc., in Chicago, Illinois. He has been retained as an expert in this case by Dunlop. 12(M) ¶201. The defendants also offer Professor David T. Sheffman, who has produced a report entitled “Trends in the Motorcycle Industry 1985-1993,” which indicates that the number of motorcycle dealers selling motorcycles and other related products dropped from 12,953 to 9,264 from 1985 to 1993. The number of real dollars (per million) from these sales, according to this report, also dropped from $1,671 to $1,247 during that time period. DX 70. II. The Antitrust Conspiracy Claims A The Sherman Act § 1 In Counts I, II and III, plaintiff broadly alleges that the defendants unreasonably restrained trade by forming an illegal conspiracy to terminate smaller discounting distributors, like Nichols, to consolidate the market and implement an agreement to raise and stabilize resale dealer prices for Dunlop tires in violation of section 1 of the Sherman Antitrust Act. 12(N)(3)(b) ¶ 12. In particular, Nichols claims that Dunlop, Tucker/Rocky and Parts Unlimited formed vertical and horizontal combinations. Section I states: “Every contract, combination ... or conspiracy, in restraint of trade or commerce among the several States ... is declared to be illegal.” 15 U.S.C. § 1 (1995). According to the statute, a plaintiff claiming a section 1 violation must establish a combination or some form of concerted action between at least two legally distinct economic entities. See Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771, 104 S.Ct. 2731, 2741, 81 L.Ed.2d 628 (1984). Under well-established principles of antitrust law, unilateral conduct (“independent action”) by a single person or enterprise falls outside the scope of this provision. Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 1469, 79 L.Ed.2d 775 (1984) (citing United States v. Colgate, 250 U.S. 300, 307, 39 S.Ct. 465, 468, 63 L.Ed. 992 (1919)). Whether an unlawful conspiracy or combination exists should be judged by what the parties actually did rather than by the words they used. See United States v. Parke, Davis & Co., 362 U.S. 29, 44, 80 S.Ct. 503, 511, 4 L.Ed.2d 505 (1960) (citing Eastern States Retail Lumber Dealers’ Ass’n v. United States, 234 U.S. 600, 612, 34 S.Ct. 951, 954, 58 L.Ed. 1490 (1914); see also United States v. General Motors Corp., 384 U.S. 127, 142, 86 S.Ct. 1321, 1329, 16 L.Ed.2d 415 (1966) (holding explicit agreement is not a necessary part of a Sherman Act conspiracy where joint and collaborative effort is pervasive). Once a plaintiff establishes the existence of an illegal contract, combination, or conspiracy (“an agreement”), it must then proceed to demonstrate that the agreement constituted an unreasonable (and therefore illegal) restraint of trade under either the per se rule or the rule of reason. The nature of the restraint (e.g., vertical price restraint, vertical nonpriee restraint, horizontal price restraint etc.) determines which rule must be applied. See Denny’s Marina, Inc. v. Renfro Prods., Inc., 8 F.3d 1217, 1220 (7th Cir.1993). The per se claims will be addressed first. I. Count I: Per Se Violations In Count I, plaintiff alleges that the defendants participated in a vertical and a horizontal conspiracy to fix prices in violation of section 1 of the Sherman Act. The plaintiffs theory in Count I is that these agreements were illegal per se. In particular, plaintiffs theory is that Dunlop, together with its two largest distributors, Tucker/Rocky and Parts Unlimited, conspired to terminate smaller discounting distributors, like Nichols, to consolidate their market share and implement an illegal agreement to raise and stabilize resale dealer prices for Dunlop motorcycle tires. There are two agreements under this theory: an agreement to terminate Nichols (because it was a discounter) and an agreement to fix prices. Plaintiff defines these agreements as both horizontal (between the two defendant distributors) and vertical (between Dunlop, Tucker/Rocky and Parts Unlimited) and admits that the proof of these conspiracies “tends to blend together.” Transcript at 26. A review of the plaintiffs proof follows a short discussion of the applicable legal principles. a. Legal Standards Conduct considered illegal per se is limited to cases where a defendant’s actions are so plainly harmful to competition, Business Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 724, 108 S.Ct. 1515, 1519, 99 L.Ed.2d 808 (1988), that they are presumed illegal and the need for further proof of anticompetitive impact is unnecessary. Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 110 S.Ct. 1884, 109 L.Ed.2d 333 (1990); Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49-50, 97 S.Ct. 2549, 2557, 53 L.Ed.2d 568 (1977). Per se cases include horizontal and vertical pricefbdng agreements and certain types of group boycotts. See Capital Imaging v. Mohawk Val ley Medical Assoc., 996 F.2d 537, 542-43 (2d Cir.1993) (listing the types of per se violations recognized by the Supreme Court). Pricefixing agreements need not include an “explicit agreement on prices to be charged or that one party have the right to be consulted about the other’s prices.” Denny’s Marina, Inc. v. Renfro Productions, Inc., 8 F.3d 1217, 1221 (7th Cir.1993) (citing cases). Rather, pricefixing agreements need only have been formed for the purpose and effect of fixing or stabilizing the price of a product in interstate commerce. Id. Tacit agreements are therefore actionable if they can be shown to exist. 6 P. Areeda, Antitrust Law § 1410 at 66 (1986). An agreement that is illegal per se under section 1 is difficult to prove. Much like Title VII cases, the antitrust analysis proceeds in stages because it involves shifting burdens that lead to an ultimate burden of proof which is extremely difficult for a plaintiff to satisfy. Market Force Inc. v. Wauwatosa Realty Co., 906 F.2d 1167, 1171 (7th Cir.1990). The Seventh Circuit has articulated a burden shifting formula: “[w]hen the defendants establish that their conduct is consistent with independent action, the plaintiffs are required to come forward with evidence tending to exclude the possibility of independent action.” Id. If the plaintiffs evidence of a conspiracy is ambiguous, (i.e., is as consistent with the defendant’s permissible independent interests, then the case may not proceed to a jury). Id. Conversely, the case may proceed if the plaintiff can demonstrate, through specific evidence, that the “inference of conspiracy to fix prices is reasonable in light of the competing inference of independent action.” Id. at 1171 (quoting Valley Liquors, Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 660-61 (7th Cir.), cert. denied, 484 U.S. 977, 108 S.Ct. 488, 98 L.Ed.2d 486 (1987)). These Seventh Circuit standards have been derived from the specific standards set out by the Supreme Court in Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), and Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1983). In Matsushita, the Supreme Court granted certiorari to articulate the standard that district courts must apply when deciding a motion for summary judgment in an antitrust conspiracy case. In Monsanto, the Court granted certiorari to articulate the standard of proof required to find a vertical pricefixing conspiracy in violation of section 1 of the Sherman Act. These two cases establish the legal parameters for this Court’s decision. In Monsanto, Justice Powell, writing for the Supreme Court, found that the plaintiff presented sufficient evidence of an agreement to terminate a distributor, pursuant to a vertical pricefixing conspiracy between a manufacturer and a large distributor, to create a jury issue. In reaching this conclusion, the Court articulated the proper standard to be applied to section 1 claims like the one before us. The Court also outlined several important distinctions that are worth repeating here because they address the very heart of this case: This Court has drawn two important distinctions that are at the center of this and any other distributor-termination case. First, there is the basic distinction between concerted and independent action— a distinction not always clearly dram by the parties and the courts. Section 1 of the Sherman Act requires that there be a “contract, combination ... or conspiracy” between the manufacturer and other distributors in order to establish a violation. 15 U.S.C. § 1. Independent action is not proscribed. A manufacturer of course generally has a right to deal, or refuse to deal, with whomever it likes, as long as it does so independently. United States v. Colgate & Co., 250 U.S. 300, 307 [39 S.Ct. 465, 468, 63 L.Ed. 992] (1919); cf. United States v. Parke, Davis & Co., 362 U.S. 29 [80 S.Ct. 503, 4 L.Ed.2d 505] (1960). Under Colgate, the manufacturer can announce its resale prices in advance and refuse to deal with those who fail to comply. And a distributor is free to acquiesce in the manufacturer’s demand in order to avoid termination. The second important distinction in distributor-termination eases is that between concerted action to set prices and concerted action on nonprice restrictions. The former have been per se illegal since the early years of national antitrust enforcement. See Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 404-409 [31 S.Ct. 376, 383-385, 55 L.Ed. 502] (1911). The latter are judged under the rule of reason, which requires a weighing of the relevant circumstances of a case to decide whether a restrictive practice constitutes an unreasonable restraint on competition. See Continental T.V. Inc. v. GTE Sylvania Inc., 433 U.S. 36 [97 S.Ct. 2549, 53 L.Ed.2d 568] (1977). While these distinctions in theory are reasonably clear, often they are difficult to apply in practice. In Sylvania we emphasized that the legality of arguably anti-competitive conduct should be primarily judged by its “market impact.” But the economic effect of all the conduct described above — unilateral and concerted vertical price-setting, agreements on price and nonprice restrictions — is in many, but not all, eases similar or identical, [citation omitted]. And judged from a distance, the conduct of the parties in the various situations can be indistinguishable. For example, the fact that a manufacturer and its distributors are in constant communication about prices and marketing strategy does not alone show that the distributors are not making independent pricing decisions. A manufacturer and its distributors have legitimate reasons to exchange information about prices and the reception of their products in the market. Moreover, it is precisely in cases in which the manufacturer attempts to further a particular marketing strategy by means of agreements on often costly nonprice restrictions that it will have the most interest in the distributors’ resale prices. The manufacturer often will want to ensure that its distributors earn sufficient profit to pay for programs such as hiring and training additional salesmen or demonstrating the technical features of the product, and will want to see that “free-riders” do not interfere. Thus, the manufacturer’s strongly felt concern about resale prices does not necessarily mean that it has done more than the Colgate doctrine allows. Nevertheless, it is of considerable importance that independent action by the manufacturer, and concerted action on nonprice restrictions, be distinguished from price-fixing agreements, since under present law the latter are subject to per se treatment and treble damages. On a claim of concerted price-fixing, the antitrust plaintiff must present evidence sufficient to carry its burden of proving that there was such an agreement. If an inference of such an agreement may be drawn from highly ambiguous evidence, there is a considerable danger that the doctrines enunciated in Sylvania and Colgate will be seriously eroded. Monsanto, 465 U.S. at 760-63, 104 S.Ct. at 1464-70 (emphasis added). The Supreme Court then held that evidence that is sufficient to show agreement is evidence that “tends to exclude the possibility that the manufacturer and nonterminated distributors were acting independently.” 465 U.S. at 764, 104 S.Ct. at 1471. In Matsushita, the Court found that the defendants lacked an economically plausible motive to conspire and thus concluded that there was no genuine issue for trial. On the issue of motive, Justice Powell, again writing for the Court, found: the absence of plausible motive to engage in the conduct charged is highly relevant to whether a genuine issue for trial exists within the meaning of Rule 56(e). Lack of motive bears on the range of permissible conclusions that might be drawn from ambiguous evidence: if petitioners had no rational economic motive to conspire, and if their conduct is consistent with other, equally plausible explanations, the conduct does not give rise to an inference of conspiracy. 475 U.S. at 596, 106 S.Ct. at 1361. To summarize, Monsanto requires the plaintiff to produce evidence that tends to preclude independent action. Matsushita limits the range of justifiable inferences that can be drawn from ambiguous evidence offered to comply with Monsanto. Direct evidence of a conspiracy will always meet this standard. “Ambiguous” circumstantial evidence, alone, will not be enough. Somewhere between these two extremes lies the kind of circumstantial evidence that will provide enough direction for the factfinder to conclude that the defendants’ minds met, and from this meeting an agreement arose and was implemented through concerted action that achieves an unlawful objective. Monsanto, 465 U.S. at 761 n. 9, 104 S.Ct. at 1471 n. 9. The demarcation between circumstantial evidence which is “ambiguous” and that which is not, however, is unclear. Ambiguous evidence permits equally competing inferences without “tending” to point in one- direction or the other. Market Force, 906 F.2d at 1171. For example, circumstantial evidence of a conspiracy that is “consistent with independent action” is ambiguous. Monsanto, 465 U.S. at 763, 104 S.Ct. at 1470. Ambiguous evidence cannot be sent to a jury because a court may not invite the factfinder to speculate that an agreement existed. See 6 P. Areeda, Antitrust Law § 1405 at 21-23, for a good discussion of the judge and jury’s role in determining whether an agreement exists. To prevent such speculation, the Supreme Court has held that “the range of [permissible] inferences that may be drawn from ambiguous evidence [must be] limited,” Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Capital Imaging v. Mohawk Valley Medical Assoc., 996 F.2d 537, 542 (2d Cir.), cert. denied, — U.S.-, 114 S.Ct. 388, 126 L.Ed.2d 337 (1993); Valley Liquors, Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 660-61 (7th Cir.1987), and cannot be used, without more, to establish the existence of a section 1 agreement. Conversely, unambiguous evidence tends to point in a single direction — like a signpost. The Supreme Court has defined the absence of ambiguity as evidence which “tends to exclude the possibility” that the defendants acted independently for lawful business reasons, rather than in concert for unlawful purposes. Monsanto, 465 U.S. at 761, 104 S.Ct. at 1469. As Professor Areeda says: Notwithstanding many difficulties in appraising the sufficiency of circumstantial evidence, we know what we are looking-for: some level of commitment to a common course of action. The fact-finder may be perplexed by the evidence, but his reasoning will not be confused if he keeps clearly in mind that he is looking for a traditional agreement. The analytical problem is that there is a “no man’s land” between the traditional agreement and tacit coordination through recognized interdependence. The line between lawful interdependent behavior and unlawful commitment is not sharp. The former can often blend into the latter, because reciprocal assurances can be communicated by conduct rather than be words and remain “agreements” even though vague, incomplete, and riddled with qualifications and exceptions. Id. § 1410 at 67. The crucial question is: “Who was in agreement with whom and about what?” Id. § 1409 at 59. b. The Plaintiff’s Evidence What follows is the evidence that the plaintiff has relied upon in an attempt to meet the requirements of Monsanto and Matsushita and to survive the defendants’ Motions for Summary Judgment. It is summarized in a chronological fashion to give the reader a comprehensive view of the evidence plaintiff discovered to prove its case and which this Court evaluated in reaching its decisions. (i) The Year 1991 In August of 1991, Tueker/Roeky, the largest distributor for Dunlop tires in the United States, attempted to purchase Nichols’ business, which then consisted of just one warehouse located in Alsip, Illinois, a suburb of Chicago. Tucker/Rocky threatened to open its own warehouse in Chicago if Nichols declined to sell. Nichols declined to pursue negotiations with Tucker/Rocky. 12(N)(3)(b) Reply ¶ 17. Tucker/Rocky then made good on its threat, opening its own Chicago warehouse (its 12th location) in August 1992. In May 1992, Nichols began planning to open a Phoenix, Arizona warehouse. In the meantime, a price war among distributors had developed regarding the sale of Dunlop tires. For instance, in September of 1991, Tucker/Rocky’s monthly reports indicate that its Dunlop sales were dropping due to “deteriorating service level and competitive pressure.” PX 252U. Reports in the following months bore the same complaints. An October 1991 report noted the existence of “[sjevere price pressure on Dun-lop.” PX 251. A December 1991 report referred to “[ajnother 25% drop in Dunlop sales over the previous month_ Discounting by the competition has to be a big factor.” PX250U. Despite its one-warehouse operation, the evidence indicates that Nichols successfully used discounting methods to undercut Tucker/Rocky and Parts Unlimited in areas of the country where these large distributors were strongest. There is also deposition testimony that Tucker/Rocky was “unwilling to sell” at Nichols’ prices and that Jeff Fox of Parts Unlimited discussed the need to “clean up the market” with Pat Logue of Dunlop. (ii) The Year 1992 In January 1992, Tucker/Rocky’s monthly reports indicated that “[i]f profits fell in 1991, [Dunlop] was probably to blame.” PX 249U. In April 1992, Tucker/Rocky indicated that it was concerned about maintaining a “decent [profit] margin.” PX 228. By November 1992, Bob Gregg found it necessary to send a memo to Tucker/Rocky’s sales representatives to pass the word that “[d]ealers should resent deals that are too low” and should “[t]ell the opportunist distributor that the path to long term success is not short term deep discounts that actually hurt the dealer. Rather, if they want the business they must earn it through market stabilizing programs, service and support that helps a dealer short and long term.” PX 280 (emphasis in original). Gregg also noted that dealers “should not switch orders from an industry supporter like Tucker/Rocky to an opportunistic offer.” Id. During the summer and fall of 1992, various meetings took place between Dunlop, Nichols, Tucker/Rocky and Parts Unlimited. For instance, in July or August 1992, Pat Logue of Dunlop met with Jack Jesse, the president of Nichols. Nichols did not mention the new warehouse at that time. On August 16, 1992, Logue attended Tucker/Rocky’s open house for its new Chicago warehouse. On August 17, 1992, Logue held a business meeting with Jeff Fox of Parts Unlimited. On September 14, 1992, Nichols leased the new Phoenix warehouse. Later that month, at the IMAE trade show in Las Vegas, Nevada, Jesse told Logue that Nichols planned to open a new warehouse in Phoenix. In October 1992, Logue flew to Dallas to hold business meetings with Bob Nickell, the current chairman and past-president of Tueker/Rocky, and Bob Gregg, the president of Tueker/Rocky since October 1, 1992. In November of 1992, Nickell spoke with Jeff Fox of Parts Unlimited at a Dunlop distributor meeting in Hawaii. Fox recalled discussing only non-business matters with Nickell in Hawaii. On November 14,1992, Lee Walsh, a Parts Unlimited representative, wrote a letter to Jeff Fox, which stated: Nichols Motorcycle supply has recently hired 2 Road Reps for this area. One in Washington and One in Oregon. While in Oregon this week I got my hands on the discount program that they are proposing to the dealers, (copy enclosed). I also did a price compare spread sheet so we could see where we stood (copy enclosed). The pricing is bad enough, but they are also talking up the new Phoenix warehouse and are telling the dealers that they are looking to expand their warehouse locations and that Seattle is one of the target areas!! This is probably a big line of bull — but the dealers are sure listening. I’m not concerned, but I thought you ought to know and should see how the pricing actually ends up. Please show this to Jet. Thanks, Jeff PX 22. On December 28, 1992, Pat Logue, the National Sales Manager for Dunlop, issued the following Memorandum to all of Dunlop’s distributors: To: All Dunlop Motorcycle Tire Distributors From: P.J. Logue Date: December 28,1992 Subject: 1993 Dunlop Distributor Motorcycle Tire/Tube Agreement As we move into 1993, it is important that you understand Dunlop’s plans for the tire replacement market is not going to grow in the predictable future. Our distributor base is still at approximately the same level as it was when the market was 35% larger than it is today. Because of this situation, it is our intention to reduce our account base before the September IMAE by at least two to three distributors. This is a very difficult decision but it is still one that must be made. In addition, anyone involved in sub-distribution will be cancelled. Clearly if we are concerned about the size of our existing direct distributor base, it would only make sense that “unapproved” sub-distribution base must be eliminated first. You are encouraged to read the entire Motorcycle Tire/Tube Agreement. In particular, read point number 8. The channel of distribution that Dunlop will support and approve is detailed in this section. Please return the signed agreement by January 8, 1993. After January 8th, all shipments will cease to distributors that have not returned agreements. Thank you for both your understanding and cooperation. Happy Holidays! Patrick J. Logue National Sales Manager Dunlop Motorcycle Tires PX1. (iHi) The Year 1993 By the beginning of 1993, the ongoing price war had driven the resale price of Dunlop tires down. Decreased retail sales and “small dealer purchases from distributors” led to deep price cutting. PX 605 (Tucker/Roeky Feb. 1993 Report). On January 14, 1993, three days after Nichols signed its 1993 distributor agreement, Logue flew to Dallas to have dinner with Nickell, Gregg, and Andre Lacy, the owner of Tucker/Roeky’s parent company. Logue testified that the four men discussed the termination of distributors and the pricing of Dunlop tires. Nickell and Gregg do not recall any such conversation. Logue Dep. 985-88. Tucker/Roeky and Parts Unlimited also admit that they often complained to Dunlop about Nichols’ pricing during this time frame. PX 240U (refers to “Nichols’ ridiculous pricing”); PX 510 states that “our most frequent thorn is Nichols M/C in Chicago” due to deep discounting). By February 1993, Tucker/Rocky’s President’s Report indicated that the ongoing price war had reduced the profit margins for Tucker/Rocky to an “unacceptable” level. PX 605H. On February 1, 1993, the two defendant distributors issued their annual published dealer price catalogs for that year. Tueker/Rocky’s prices remained the same as its 1992 dealer resale prices. Parts Unlimited’s prices, however, increased to reflect Dunlop’s increased manufacturer’s suggested dealer (“MSD”) prices for 1993. The defendants argue that this disparity in pricing demonstrates the lack of a conspiracy. Nichols claims, however, that the disparity shows only that Tucker/Roeky reneged on the agreement to raise prices. In February 1993, a new round of conversations between the defendants ensued. Pat Logue talked to Jeff Fox about Tucker/Roeky’s published prices for Dunlop tires in early February 1993 at the Cincinnati dealer show. According to Logue, Fox pointed out that Parts Unlimited’s published prices were significantly higher than Tucker/Rocky’s published prices. 12(N)(3)(b) ¶ 31(g). Fox admits that he recalled talking to Pat Logue about price levels, but did not recall when this conversation took place. Id. Mike Buckley (who did not yet ’work for Dunlop) and Jeff Fox also spoke together at the Cincinnati show. 12(N)(3)(b) Reply ¶ 31(j). In addition, Pat Logue’s daybook contains a notation for February 15, 1993, stating “Call J. Fox.” Id. at ¶ 31(g) (citing PX 153). Logue assumed that he entered the notation because he received a message to call Fox, but he could not recall the subject matter of any message or phone call. Id. Then, on February 16, 1993, Nickell, Tucker/Rocky’s chairman, attended a sports banquet in Buffalo, New York, as Logue’s guest. 12(N)(3)(b) ¶ 31(h). On February 17, 1993, Tucker/Rocky’s phone records indicate that someone at Tucker/Rocky (although the source of the call could not be identified) placed a telephone call to the Parts Unlimited main switchboard that lasted 17 minutes and 32 seconds. There is no evidence regarding the subject matter or the persons involved in that telephone call. ■ 12(N)(3)(b) Reply ¶ 31(i). Two days later, on February 19, 1993, Logue and Fox once again discussed Tucker/Rocky prices at a trade show. Standing alone, these conversations, despite their coincidental (and perhaps suspi-eious) timing, are not probative of the issue before us: whether the defendants agreed to fix prices and terminate Nichols. The February conversations, however, do not stand alone; they provide the context for the two events which took place on March 22,1993: (1) Parts Unlimited published its revised dealer price list for 1993, in which it dropped its prices (including its “best quantity” price) significantly below the MSD price, thereby equalling or undercutting Tucker/Rocky’s published February 1, 1993, prices — in most cases by mere cents, PX 444; and (2) the March 22, 1993, Gregg Letter to Pat Logue (PX 4), the first documented communication between the three defendants since the February 19, 1993, trade show meeting between Logue and Fox. (iv) March 1993 — June 15,1993 The following evidence is a list of events, documents and testimony that date from March 1993 through June 15,1994. (a) March 15, 1993: Tucker/Rocky Article Quoting Bob Gregg (PX 382) An in-house article by Tucker/Rocky, regarding a Tucker/Rocky meeting, reports: Bob [Gregg] indicated that Tucker/Rocky will immediately undertake to require stable pricing and minimal discounting at the retail level of all house brands sold by Tucker/Rocky. 12(N)(3)(b) Reply ¶39. Gregg apparently stated: “Tucker/Rocky will take a leadership role in bringing price stability to major house brands.” Id. (b) The March 22, 1993 Gregg Letter (PX W) On or around March 22, 1993, Robert Gregg, the president of Tucker/Rocky, wrote a two-page letter to Patrick Logue, then the national sales manager for Dunlop, and enclosed a price analysis comparing Tucker/Rocky’s and Parts Unlimited’s 1992 dealer resale prices with each other and then against Dunlop’s suggested dealer price. This letter is reprinted in its entirety: March 22,1993 Mr. Pat Logue Dunlop Tire & Rubber Co. P.O. Box 1109 Buffalo, NY 14240 Re: Dealer Price Analysis Dear Pat, Enclosed please find a detailed analysis of current Tucker/Rocky dealer prices, relative to Dunlop suggested dealer, Parts Unlimited, and Tucker/Rocky 1992. Note: Parts Unlimited and Tucker/Rocky are both published quantity prices. The following observations are of interest: 1. Tucker/Rocky 1993 prices are equal to Tucker/Rocky 1992 prices. That is, it confirms Tucker/Rocky has not passed along Dunlop’s 1993 price increase. 2. Excluding ATV and Scooter, 213 tires are in the analysis. Of those the number and percentage of tires fall into the following categories: TR Prices Greater Than PU 22 10% TR Prices 0%-3.5% Lower Than PU 112 52% TR Prices 3.5%-5.0% Lower Than PU 36 17% TR Prices 5.0% + Lower Than PU 32 15% TR Prices With Errors ** 11 5% * All K591R and K127 * Adjusted Approx. 3/12/93 As you read this, 85% of Tucker/Rocky prices are higher or within 5% of Parts Unlimited. 15% (K591R and K127) are more than 5% lower than Parts Unlimited. Conclusion: Tucker/Rocky would like to pass on the 1993 Dunlop price increase at this time. (Page Two) Problem: Tucker/Roeky pricing relative to Parts Unlimited is not relevant. Single warehouse distributors who dump tires at disruptively low and predatory prices, thousands of miles from their warehouse and service area continue to damage Dunlop’s marketing objectives. Solution: Dunlop is on record that Dunlop has too many distributors. We strongly urge Dunlop to take the action Dunlop has already identified as necessary to bring Dunlop distribution in line with market conditions. Please take into consideration the percentage of tires sold outside a distributor’s service area (i.e., more than 500 miles from any warehouse) and the degree of disruptive and predatory pricing. Tucker/Roeky will increase the amount of resources Tucker/Roeky spends to promote and service Dunlop tires to assure Dunlop increased sales and market share for Dunlop via the resulting distributor network. This extra Tucker/Rocky expenditure on behalf of Dunlop market share will increase interbrand competition. Sincerely, Robert R. Gregg President RRG:ms/enclosure PX 4C (emphasis in original). During the course of discovery, the plaintiff found copies of this letter and the price analysis in the files of both Dunlop and Tueker/Roeky. Plaintiff also found a copy of the first page of the letter in the files of Parts Unlimited. PX 4A. No one knows how (or why) this page was sent to Parts Unlimited, nor who sent it (no envelope with the names of the addressee or addressor was found). The Parts Unlimited copy has a handwritten notation on the front stating: 3/26 — Fred-Donna C. rec’d this in her mail today-!? (She didn’t get envelope, so we don’t know who it was addressed to) Janice. (PX 4B). “Donna C.” is Donna Colclasure, the person in charge of credit inquires at Parts Unlimited. 12(M) ¶87. “Janice” is the secretary to Jeff Fox, the current president of Parts Unlimited and Fred Fox’s son. “Fred” is Fred Fox, chairman and former president of Parts Unlimited. In Fred Fox’s handwriting, the following is written: “Lynne Forward to Jeff.” There is no evidence that Parts Unlimited received a copy of either the second page of the letter or the attached price analysis, both of which Pat Logue at Dunlop did receive. Id. Pat Lo-gue also gave a copy of the letter to his successor at Dunlop, Michael Buckley. 12(M) ¶83. Logue testified that he never asked for the letter, 12(M) ¶ 79, but spoke to Gregg after receiving it and was told that Gregg wanted to show that Tucker/Rocky’s prices “aren’t that different than those of Parts Unlimited.” Logue Dep. at 301. Gregg denied any such conversation. Gregg Dep. at 328-29. Gregg also denied ever discussing the letter with Parts Unlimited. Gregg Dep. at 356. In his deposition, however, Gregg explained his motivation for sending the letter. For instance: Question: “Why were you comparing the prices for Logue?” Answer: “I thought he would find it interesting.” Question: “Why?” Answer: “Because he’s in the tire business.” Gregg Dep. at 269-70; Transcript at 20. (c) March 22, 199S: Parts Unlimited Revises Price List (PX kkk) On March 22,1993, Parts Unlimited issued a revision of its February 1,1993, price list to conform its prices with those issued by Tucker/Rocky on the same date. The revision went into effect on March 23, 1993. Parts Unlimited’s prices were higher than Tucker/Rocky’s February 1, 1993, prices with respect to the “any” price (quantity of 1), with about 2-6 cents difference. On the “best quantity” price (large orders) the differences are negligible. The parties agree that the best quantity price is the important price because most dealer discounts are applied to that number. Fox Dep. at 677; Nickell Dep. at 222. (d) March 31, 1993: Phone Call (PX 62i) On March 31, 1993, Bob Gregg at Tucker/Rocky made a phone call to the Parts Unlimited switchboard; the call lasted 18 minutes. 12(N)(3)(b) Reply at ¶ 31(k). Gregg cannot remember making the call. Gregg Dep. at 455-69, 477. (e) Late March 1993: Mike Buckley Replaces Pat Logue as Dunlop’s National Sales Manager In late March 1993, Michael Buckley was hired by Dunlop to replace Logue. Before hiring Buckley, Logue talked with Robert Gregg and Robert Nickell at Tucker/Rocky and Jeff Fox at Parts Unlimited to inquire whether their contacts with Buckley had been agreeable. Buckley received a favorable recommendation. (f) Late March 1993: Gregg Phone Call to Buckley Regarding Termination of Distributors Around the time of Gregg’s March 22, 1993, Letter, Gregg telephoned Mike Buckley, who had just replaced Logue as Dunlop’s national sales manager. According to Buckley, Gregg wanted to know if Dunlop was going to terminate any distributors. (Buckley, 91-95). Gregg, however, denied the conversation. (Gregg, 247-49; 327). (g) April 1, 1993: Buckley Memo To Dunlop Distributors (PX 2) On April 1, 1993, Mike Buckley sent a memo to all Dunlop distributors introducing himself as Dunlop’s new national sales manager. PX 2. In this memo, Buckley indicated that he would be meeting with the distributors to become acquainted. He also stated that he would continue with Logue’s plan to move Dunlop’s distribution “to a more limited focus” in the coming months. Buckley also specifically requested a “current price list” to update his files. (h)The April 8,1993 Gregg Letter (PX 5) On April 8, 1993, Mike Buckley received a letter from Bob Gregg regarding “1993 Suggested Dealer Pricing.” This letter is reprinted in its entirety: April 8,1993 Mr. Mike Buckley National Sales Manager Dunlop Motorcycle Tires P.O. Box 1109 Buffalo, N.Y. 14240-1109 Re: 1993 Suggested Dealer Pricing Dear Mike: Enclosed please find analysis of published “each” prices in the market. In most eases, Tucker/Rocky publishes manufacturer suggested dealer (MSD) prices. As you know, our current price list is from 1992 due to stock carryover. It has been our opinion that Dunlop MSD is unrealistically high versus actual market conditions. Column #2 is approximately 4.5% below Dunlop 1993 MSD and seems to be a more realistic level. Just a suggestion to discuss: How about issuing a new 1993 MSD price list that (without changing distributor cost) lowers MSD about 4.5%. This would be an official lowering of MSD, making Dunlop dealer pricing more competitive without reducing the amount for which Dunlop sells tires to distributors. It would also make our imminent 1993 price increase more logical as we could just publish Dunlop MSD. Please give it some thought and call me as we need to make a decision soon as to new prices. Best regards, Robert R. Gregg President RRG:ms enclosure P.S. Our Dunlop sales were up 15% and 16% in February and March. PX5. The letter also includes a handwritten post-script, asking Buckley to find out if Parts Unlimited’s new published prices are intended to be an “April Special” or “long term repricing.” There is no evidence that Parts Unlimited received a copy of this letter. (i) April Phone Call Between Buckley & Gregg Regarding April 8, 1992 Gregg Letter Mr. Buckley remembers, and Mr. Gregg does not, one telephone conversation in which Mr. Buckley said he would disregard the suggestions in Mr. Gregg’s April 8, 1993, Letter. 12(N)(3)(b) ¶ 31(1). BucMey recalls telhng Gregg that “it didn’t make sense to change a suggested dealer pricing in the middle of the year. There’s no good reason to do that.” Buckley Dep. at 139. 0) April 30, 1993: Logue Conversation with Motorcycle Stuff Regarding Tucker/Rocky’s Loiv Prices Mr. Dodd of Motorcycle Stuff testified that he complained about Tucker/Rocky’s low prices and asked Mr. Logue to take action. According to Mr. Dodd, Mr. Logue said that he would try to get Tucker/Rocky to increase its prices. 12(N)(3)(b) ¶ 31(m). (k) May 6, 1993: Buckley Visits Nichols, Meets Jack Jesse, and Writes Call Reports (PX H) On May 6, 1993, Mike Buckley made a personal visit to Nichols in Chicago. He met Jack Jesse and other Nichols personnel, discussed Dunlop’s goals, the price war and Nichols’ concerns about the market. After this meeting, Mr. Buckley made two handwritten notes of the interview designated as “call reports.” These call reports state: May 6 — Meeting in Chicago w/Kenny Anderson, Terry Baisley, Jack Jesse. Nichols staff was adamant about the fact that it is D> responsibility to improve or control the inability of Dist. to make acceptable profit margins on D> Tires. Nichols felt that T/R, P/U, M.Stuff were actively discounting D> at close to Dist. cost to all dealers. Nichols was adamant that they are not involved w/mail order houses. They feel that the 3 previously mentioned dist. all sell mail order houses at cost. Nichols feels its D> responsibility to address this. Jack Jesse made specific mention that if we don’t address the mai-lorder and discounting problems that very soon Nichols will have to stop selling D>. He also asked me what I felt sold our Tires. I replied — Advertising, Racing, Club + PR involvement, word of mouth. He replied Bull.... He feels Dealers only ! Sell in this system and we need to do everything possible to make them more profitable. While at this meeting we discussed Pro Sport — aline of offroad apparel and aec. exclusively imported by Nichols. While touring their warehouse I observed a container of Alpinestar Boots which they had Gray-Marketed in from Europe to sell against P/U — the exclusive importer of Al-pinestar in the U.S. Aggressive Tone Throughout meeting. (DN00438). Meeting — Nichols Dist. Terry Baisley Kenny Anderson Jack Jesse Topics Gave Dist. Interview Talked Quite a bit about Mail order Problem Nichols doesn’t sell Mail order. “has much concern about where current trends are taking D> “Does not agree That D> has a “loyal” cust base “Feels That dealers will begin switching to Profitable brands. “is now importing their own Private label tire — “Kings” This Tire is Mail order Prohibited. Also heavily involved in their own Private label M/C acces. inc. — “Pro Sport” Nichols has 30 Road Reps 10 Phone Nichols feels they are a National Dist. I sent Nichols 100 T.T.L. Brochures. Nichols feels that P/U and T/R are causing All The Problem with Discounting out there. (DN 00439). No call reports were prepared for any other distributor. (Buckley, 272-73). There was, however, a form filled out for the interview with Motorcycle Stuff. PX 15. (l) May 6, 1993: Buckley Spends Evening with Jeff Fox of Parts Unlimited Late in the afternoon on May 6th, Buckley visited Parts Unlimited’s Janesville, Wisconsin office and went out for supper and drinks with Jeff Fox. Mr. Buckley called ahead to set up the meeting. Mr. Fox recalled having dinner with Buckley. Mr. Fox remembered that Mr. Buckley told him he was making a trip through the area visiting Dunlop distributors and mentioned his visit with Nichols that day, commenting that “... Jack Jesse was a real piece of work or something to that effect.” Mr. Buckley also remembered telling Mr. Fox that he had visited Nichols on May 6 and also telling him that the visit was “... rather strange.” Buckley denies discussing the termination of distributors with Mr. Fox. 12(N)(3)(b) ¶ 31(n). (m) May 7, 1993: Buckley Visits Tucker/Rocky Warehouse in Chicago The next day, May 7, 1993, Mr. Buckley made a visit to Tucker/Rocky’s Chicago warehouse and had lunch with the Bensen-ville, Illinois branch manager. There is no relevant testimony regarding their conversation. 12(N)(3)(b) Reply ¶ 31(o). (n) Early May 1993: “Firm Commitments” (PX17) In early May 1993 Buckley called Jeff Fox of Parts Unlimited and Bob Gregg of Tucker/Rocky seeking commitments from these distributors to absorb the sales volume of any unnamed distributor to be terminated. Fox and Gregg gave Buckley “firm commitments” which Buckley memorialized in a document designated PX 17. Fox admits this conversation. Gregg denies it. Although defendants collectively admit that they individually discussed the absorption of sales volume of unnamed distributors to be terminated with Buckley, they do not admit a common commitment to fix prices or terminate distributors. 12(N)(3)(b) Reply ¶ 31(p). (o) Late May 1993: Tucker!Rocky Issues Revised Price List (PX 21í; PX 615) In late May 1993, shortly before Nichols’ termination, Tucker/Rocky published a new dealer resale price list on Dunlop tires, which significantly raised its prices above those published on February 1,1993. (p) May 20, 1993: Buckley’s “Price War” Memo (PX 3) On May 20, 1993, Mike Buckley sent the following memo to all Dunlop distributors entitled “Price Wars.” Buckley attached a Wall Street Journal Article to the memo entitled “How to Avoid a Price War.” Buckley wrote: Enclosed please find some “food for thought” regarding the negative effects of attempting to gain market share by lowering price. I think [the article] raises some extremely' valid points to the long term damage we do when we attempt these types of practices. Particularly alarming is the fact that almost never do we accomplish what we attempt (market share gain) when we do business in this way. The only thing we do is establish a “lower perceived value” for our products. I’m sure you’ll all agree that this doesn’t do anything positive for our future growth. I’m not pointing fingers here; I’m just offering some moi'e information. We can never have enough information. “All too often, this kind of price war has no real winner except the customer.” The Wall Street Journal Article goes on to suggest: PX3. (q) Buckley’s Memos to Robin Mitchell (PX 17; PX18) In May 1993, Mike Buckley wrote two memos to Robin Mitchell proposing to terminate Nichols as a distributor. The first memo, titled “Reasons For Change” states: 1. Overall market size shrinking. Less sales available for same number of distributors when market was bigger. 2. National distributor expansion provides excellent regional coverage (overnight service anywhere in U.S.) 3. Nichols only real weapon right now— discounting. 4. Nichols recently opened warehouse in Phoenix market. Recent meeting with Nichols officials revealed plans to expand further. Next market — Dallas. 5. Recent meeting also revealed Dunlop and Nichols are at odds on how to continue to grow Dunlop business. Dunlop — -Advertising, racing, public relations. Nichols — None of the above, stop mail-order. 6. Nichols focus right now on off-shore produced “house brands,” pro-sport off-road apparel, kings — private label tires, etc. In this scenario, Dunlop gets used as a loss leader to leverage sales for “exclusive” products. 7. Nichols claims no mail-order solicitation — invoices prove otherwise. 8. Firm commitment from T/R and P/U to absorb volume of any cancelled distributor. 9. Cycle Products — credit situation makes the decision easy. PX 17 (DN 02279). The second memo is dated June 15, 1993, and the subject is “Motorcycle Distributor Reduction.” As a follow-up to our discussion of the above-mentioned topic two weeks ago, I want to update you on the current situation. As I told you, Pat Logue and I agreed that since the motorcycle market continues to shrink, it has now become necessary to cut the number of distributors we have. This is a list of the reasons for this move: 1. Less sales available for same number of distributors has led to aggressive discounting tactics. 2. Expansion of national distributors allows us complete coverage off 11 parts of the country (overnight service). 3. Discounting has produced a low “perceived value” for premium Dun-lop product. The two distributors I am cancelling immediately are Nichols Distributing and P.J. Cycle Products. Nichols is currently viewed as the leaders of the “sales by discounting” philosophy. By analyzing invoices from all over the country, it is clear that Nichols is using Dunlop as a “loss leader” to leverage sales for their own private label — high margin products. In addition, Nichols management does not agree with Dunlop’s market