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 Justice Antonin Scalia, in his dissent to the 1992 decision Eastman Kodak Co

Economics Dec 14, 2020

 Justice Antonin Scalia, in his dissent to the 1992 decision Eastman Kodak Co. Image Techni cal Services, Inc., made the observation that if Kodak had required consumers to purchase a life- time parts and service contract with each machine, the tie-in between service and parts would not have been a violation of Section 2 of the Sherman Act. What is the argument behind this claim man womalities in the chanter eriythe demand

Expert Solution

Sherman antitrust act makes it unlawful for an individual, any firm or company to create monopoly or attempt to create monopoly or combine with any other person or firm to monopolize any part of the trade or business among the states and other foreign nations. According to this case if Kodak had required consumers to purchase a life-time parts and service contract with each machine, the tie-in between service and parts would not have been a violation of section 2 of Sherman Act. The argument behind this decision is that section 2 of Sherman Act prohibits to create monopoly of a product but the Kodak company is not creating monopoly. Consumers have to purchase a life-time parts which is like a one time investment for the product otherwise the consumers have to purchase the product again and again. Service contact with each machine is also a service provided to the customers so that they can enjoy the hassle free service experience according to the contract. It is provided by the company at appropriate cost to maintain a healthy service after sale experience. So it was not considered violation not section 2 of Sherman Antitrust Act.

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