McWane, Inc.v.Federal Trade Commission
McWane, Inc., the dominant domestic producer of ductile iron pipe fittings, challenged a Federal Trade Commission order arising from its distribution practices. The FTC found that McWane’s Full Support Program pressured distributors to buy all domestic fittings from McWane or risk losing rebates and access to domestic products, while Star Pipe Products was trying to enter the market. After a two-month administrative trial, the FTC concluded that the program unlawfully maintained McWane’s monopoly in the market for domestically manufactured fittings used on domestic-only projects; a divided Commission affirmed and entered an order restricting the practice. The Eleventh Circuit affirmed under the Federal Trade Commission Act. The court held that the relevant market was supported by substantial evidence because domestic-only legal and project specifications made imported fittings poor substitutes, and McWane charged materially different prices where imports could not be used. McWane also possessed monopoly power: its market share was about 90 to 95 percent, entry required substantial capital and distribution relationships, and Star’s limited entry did not constrain McWane’s prices. The Full Support Program was not insulated from antitrust scrutiny merely because it was short-term, voluntary, or not a formal contract. In practical operation, the program foreclosed substantial distribution, including distributors controlling roughly half to three-fifths of distribution, delayed Star’s growth, and prevented it from achieving the scale needed to compete effectively. The court rejected McWane’s proposed justifications because preserving sales volume and preventing Star from selecting only high-volume products did not establish consumer benefits, and internal documents supported an exclusionary purpose. The court therefore held that the FTC’s market, monopoly-power, and competitive-harm findings were supported by substantial evidence and affirmed the Commission’s order.
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