Court opinions for Omega Environmental, Inc. v. Gilbarco, Inc.
Omega Environmental, Inc. v. Gilbarco, Inc., 127 F. 3d … - Court of Appeals, 9th Circuit
Gilbarco is a manufacturer of petroleum dispensing equipment used in gas stations and only 5 such manufacturers compete in the US (Gilbarco has 55% in the market, next two have 18%). Distributors sell about 2/3s of Gilbarco's equipment and the rest are sold wholesale to large retail chains. The distributors all have exclusive dealing relationships with the 5 manufacturers. Omega wants to set up a one-stop shop for equipment and buys some authorized Gilbarco distributors; Gilbarco immediately ceases supplying equipment based upon violation of the exclusive dealing arrangement.
- Lots of competition between the manufacturers (for distributors and sales), prices went down, not up, recently, and exclusive dealing contracts were limited to durations of 1 year and generally cancellable by either side with 60-day notice.
- Although Omega alleges that these have the effect of chilling entry to another manufacturer, Gilbarco shows that Schlumberger successfully entered and expanded.
- Although the Court acknowledges a theoretical 38% foreclosure, it rules that foreclosure from distributors is not identical to foreclosure from the market and that this foreclosure level is much lower than it appears.
- Omega’s evidence that exclusive dealing arrangements (not merely Gilbarco’s) actually occupied the entire field were apparently disregarded.
- Despite the incipiency language in Clayton § 3, the majority disagrees with the potential danger inflicted upon the industry.