Kodak Organization Case Study

 Kodak Business Case Study Article

Hyun Lee

Eastman Kodak v. Graphic Technical Solutions -- Individual

This is just one more case that concerns the conventional for brief summary judgment in an antitrust controversy. The principal concern here is whether a defendant's lack of market electrical power in the principal equipment industry precludes — as a matter of law — the possibility of marketplace power in derivative aftermarkets. Eastman Kodak Company manufactures and offers photocopiers and micrographic products. Kodak likewise sells support and auto parts for its equipment. Respondents happen to be 18 impartial service companies (ISOs) that in the early 1980s started out servicing Kodak copying and micrographic tools. Kodak consequently adopted guidelines to limit the availability of parts to ISOs and to make it tougher for ISOs to take on Kodak in servicing Kodak equipment. Participants instituted this action in the United States Area Court pertaining to the Upper District of California alleging that Kodak's policies had been unlawful underneath both §§ 1 and 2 from the Sherman Action, 1 and 2 . Following truncated discovery, the District Court approved summary wisdom for Kodak. The The courtroom of Is attractive for the Ninth Outlet reversed. The appellate court docket found that respondents acquired presented enough evidence to make a genuine concern concerning Kodak's market electricity in the assistance and parts markets. This rejected Kodak's contention that lack of market power operating and parts must be presumed when this kind of power is usually absent in the equipment industry. Kodak companies and markets complex organization machines — as relevant here, substantial volume photocopier and micrographics equipment. Kodak equipment is exclusive; micrographic software packages that operate on Kodak equipment, for example , are certainly not compatible with competitors' machines. Kodak parts are generally not compatible with other manufacturers' tools, and the other way round. Kodak products, although expensive when new, has very little resale benefit. Kodak provides service and parts due to the machines to its customers. It makes some of the parts itself; the remaining are made to buy for Kodak by independent original equipment producers (OEMs). Kodak does not sell a whole system of factory, lifetime assistance, and lifetime parts for a single price. Rather, Kodak gives service following your initial guarantee period either through annual services contracts, including all necessary parts, or perhaps on a per phone basis. That charges, through negotiations and bidding, distinct prices to get equipment, assistance, and parts for different customers. Kodak provides 80% to 95% with the service pertaining to Kodak devices. Beginning in early 1980s, ISOs began mending and repairing Kodak equipment. They also offered parts and reconditioned and sold employed Kodak equipment. Their customers were federal, condition, and local government agencies, banks, insurance agencies, industrial companies, and companies of particular copy and microfilming providers. ISOs give service for a price considerably lower than Kodak does. Some customers found that the INTERNATIONALE ORGANISATION FUR STANDARDISIERUNG service was of higher quality. In 85 and 1986, Kodak applied a policy of selling replacement parts for micrographic and burning machines just to buyers of Kodak products who employ Kodak services or restore their own machines. As part of the same policy, Kodak sought to limit INTERNATIONALE ORGANISATION FUR STANDARDISIERUNG access to some other sources of Kodak parts. Kodak and the Oes agreed which the OEMs may not sell parts that in shape Kodak gear to anyone other than Kodak. Kodak likewise pressured Kodak equipment owners and self-employed parts marketers not to promote Kodak parts to ISOs. In addition , Kodak took steps to restrict the of utilized machines. Kodak intended, through these procedures, to make this more difficult to get ISOs to sell service intended for Kodak devices. It succeeded. ISOs were unable to obtain parts from trustworthy sources, and many were required out of business, while some lost substantive revenue. Customers were forced to switch to Kodak service even though they...