Sports Racing Servs. v. Sports Car Club of Am.

In Sports Racing Servs. v. Sports Car Club of Am., 131 F.3d 874 (10th Cir. 1997), the Tenth Circuit found a valid cause of action under antitrust law for tying even though the tied product was not sold by the defendant.

The court held that:

“  |  Critical to a tying claim is the fact that the seller forced the buyer to purchase the tied product in order to get the tying product, but it is not critical that the buyer have purchased the tied product directly from the seller. An illegal tie may be found where the seller of the tying product does not itself sell the tied product but merely requires the purchaser of the tying product to buy the tied product from a designated third party rather than from any other competitive source that the buyer might prefer. See, e.g., Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 585 F.2d 821, 833-34 (7th Cir. 1978) (finding illegal tying where licensor of mattress trademark required licensee-manufacturers to purchase mattress component from a particular source and where licensor received a financial reward from the approved sources for such sales); Thompson v. Metropolitan Multi-List, Inc., 934 F.2d 1566, 1570-72 (11th Cir. 1991) (finding possible illegal tying where defendant multilisting service required real estate brokers wanting to use multilist system to join branch of realtor organization not necessarily related to defendant).

However, where a third party is involved in selling the tied product to the plaintiff, most courts have required that the tying product seller have a direct economic interest in the sale of the tied product before an illegal tying arrangement will be found. See, e.g., Beard v. Parkview Hosp., 912 F.2d 138, 140-44 (6th Cir. 1990) (finding no illegal tying arrangement when hospital required its patients to purchase radiological services (tied product) from a single third party because hospital had no direct economic benefit from sale of tied product); White v. Rockingham Radiologists, Ltd., 820 F.2d 98, 104 (4th Cir. 1987) (finding no tying arrangement where hospital required official interpretations of CT scans from particular radiological group because "hospital is not a competitor in the market for the tied product [interpretations] . . . [and] receives no part of the fee for interpreting the scans"); Robert's Waikiki U-Drive, Inc. v. Budget Rent-A-Car Sys., Inc., 732 F.2d 1403, 1407-08 (9th Cir. 1984) (holding no illegal tying arrangement where airline offered discount air fares--the tying product--only if the customer purchased car rental services from a designated third party because there was no showing the airline had a direct economic interest in the car rentals); Keener v. Sizzler Family Steak Houses, 597 F.2d 453, 456 (5th Cir. 1979) (finding no illegal tie where defendant seller of franchise trademark (tying product) required franchisee to use particular contractor to construct building where defendant "had no stake in that contractor's business, it derived no income from his sales, and it would receive no rental income from the building"); Ohio-Sealy, 585 F.2d at 835; but see Gonzalez v. St. Margaret's House Hous. Dev. Fund Corp., 880 F.2d 1514, 1517 (2d Cir. 1989) (declining to impose an "economic interest" requirement for the tied product, at least where "the same party actually sold the tying and the tied product directly to the consumer").

Courts that have imposed the economic interest requirement when the tied and tying products are sold by different, unrelated sellers have done so generally on the grounds that if the tying product seller does not have an economic interest in the sale of the tied product, the seller "is not attempting to invade the alleged tied product or service market in a manner proscribed by section 1 of the Sherman Act." Beard, 912 F.2d at 142; see also id. at 143 (noting rule is "consistent with the fundamental antitrust policy opposing the use of market power in one part of the economy to acquire power in another part"); Venzie Corp. v. United States Mineral Prods. Co., 521 F.2d 1309, 1317-18 (3d Cir. 1975) ("The absence of a direct interest in the tied product market leaves open the possibility of a nonpredatory justification for requiring sales only through [designated party] and distinguishes this situation from the solely anti-competitive arrangements which have been branded as per se antitrust violations."). Importantly, while most of these cases have found no illegal tie because of a lack of economic interest by the tying product seller in the sale of the tied product, none of them, or any others of which we are aware, rejected a tying claim on the basis that the plaintiff did not buy the tied product directly from the seller.

While the clear majority of courts require that the seller derive some economic benefit from sale of the tied product when the tied and tying products are sold by separate, unrelated sellers, we do not need to decide that question in this case. Here, defendants purchase cars and parts, apparently often on the open market, add markups to the prices they pay, and then resell the goods at the higher prices to the CSRs who, in turn, sell to Freeman and other racers. Thus, there is no doubt here that defendants have a direct financial interest in the sale of the tied product to Freeman. Enterprises' sales of cars and parts to the CSRs is totally dependent upon the ability of CSRs to resell their cars and parts to racers like Freeman. It appears clear that defendants are at least alleged to be using whatever power they have in the tying product market to limit competition in the tied product market for their own economic benefit.

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Sports Racing Servs. v. Sports Car Club of Am., 131 F.3d 874, 887-88 (10th Cir. 1997).