# Petition — Volkswagenwerk, A. G. v. Heatransfer Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_0250%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1978 - **Citation:** 434 U.S. 1087 ## Text *’ Supreme Court, U.S. + IN THE Supreme Court of the United October Term, 1977 FILED EC 23 1977 brat MICHAEL RODAK, JR., CLERK No 7 -QO02 ) VOLKSWAGENWERK AKTIENGESELLSCHAFT, VOLKS- WAGEN OF AMERICA, iNC., VOLKSWAGEN PRODUCTS CORPORATION and VOLKSWAGEN SOUTH CENTRAL DISTRIBUTOR, INC., Vv. Petitioners, HEATRANSFER CORPORATION, Respondent. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT Of Counsel: HerzFecp & Rus, P.C. 40 Wall Street New York, New York 10005 Wap, Harkraper & Ross 1320 Nineteenth Street, N.W. Washington, D.C. 20036 Vinson & ELKINS a First City National Bank Building Houston, Texas 77002 SESSIONS, FISHMAN, ROSENSON, SNELLINGS & BOISFONTAINE Bank of New Orleans Building New Orleans, Louisiana 70112 RICHARD A. PosNER 1222 East 56th Street Chicago, Illinois 60637 PuHItiep FLMAN 1320 Nineteenth Street, N.W. Washington, D.C. 20036 HERBERT RUBIN Cecetta H. Goetz 40 Wall Street New York, New York 10005 CHARLES T. NEWTON, Jr. First City National Bank Building Houston, Texas 77002 Cicero C. Sessions Bank of New Orleans Building New Orleans, Louisiana 70112 SS Lc ioe ts het eendeeeenaueedt SEE cic ods nacnacnUebues eeueensebuaenbes Se IID. dc ceccccedvecdtdtacssesevess EE EE cect cackscdcaetkeusanecceieests Reasons for Granting the Writ ................6.. The ‘‘Best Efforts’’ Tie-in Issues .............. oo a ie eda k Gudwedbes Gane PE COR odin vesesvndddededaiadsedese RS TD | on50:660dscnsunccdecsaecce’ The Competitive Effects of the Acquisitions ..... The Delanair Acquisition ............eeeeeees The Inter-Continental Acquisition ............ Se SED i a heccdcakankwéneadenhenctone Antitrust Injury Under Brunswick ............. ee er err Tre re rrr ere Torre rT Appendix A Opinion of the United States Court of Appeals for the Fifth Circuit (‘‘Opinion’’), filed June 13, 1977 Judgment of the United States Court of Appeals for the Fifth Circuit, filed June 13, 1977 ............ Letter of the Clerk of the United States Court of Appeals for the Fifth Circuit and Notice of Denial of Petition for Rehearing and Rehearing En Banc, entered October 19, 1977 ............0005. Opinion of the District Court Denying Motion for a Directed Verdict at the Close of Plaintiff’s Case = Court Opinion I’’), dated September ie MEE nawsadciaayeeedeodaddedubesvenesuuoute 47a 48a ii PAGE Opinion of the District Court Denying Motion for a Directed Verdict at the Close of All the Evidence (‘*District Court Opinion II’’), filed October 23, BOP Usd cdeeusddacenrcenennendsendeseoadecses 6la pinion of the District Court Denying Motion for a Judgment Notwithstanding the Verdict or for a New Trial (‘‘District Court Opinion III’’), filed EET SOE shan dcengienkid Sankar sxneedsiane 65a Appendix B Sherman Act: Se: Gee SEA ED do deaddescveawecwacen 87a eR SES UD hv usd dwdasassaescseeee 87a Clayton Act: ee Oe SR UD pccedeccdecncenannwe 87a ee BGP ES UD nu: d be eeswecnddus sce 87a Table of Cases Cited Beach Rambler, Inc. v. American Motors Corp., 1969 Trade Cas. q 72, Se NE oak cada s Soca 11 Brown Shoe Co. v. United States, 370 U.S. 294 SE ci ecusseye fephav ay kinetin enekecarsenmees 20 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 Se EEE Shi sscees scadscedksexens 3, 21, 23, 24, 25 Calnetics Corp. v. Volkswagen of America, Inc., 532 F.2d 674 (9th Cir. 1976), cert. denied, 429 U.S. 940 | psionic cuentas om Hania 10 Capital Temporaries, Inc. v. Olsten Corp., 506 F.2d Se Ge EE 0 60.40 4 Kee cawecdaesedesesoes 12 Citizen Publishing Co. v. United States, 394 U.S. 131 re tant chsh ea taneetieeeeiebes xs 23 Colorado Pump & Supply Co. v. Febeo, Ine., 472 F.2d 637 (10th Cir. 1973), cert. denied, 411 U.S. 987 COPED vec ccececesccdcdessandeessdeeteedvocens 12 ili ’ Continental T.V., Ine. v. GTE Sylvania Inc., 97 S.Ct. PAGE SF Re rr Pre om eeo 13, 14,18 International Shoe Co. v. FTC, 280 U.S. 291 (1930) 22, 23 oT) v. GTE Corp., 518 F.2d 913 (9th Cir. McElhenney Co. v. Western Auto Supply Co., 167 F.Supp. 949 (W.D.S.C. 1958), aff’d, 269 F.2d 332 SC Me 4 sbsdheeenweecdasbedenvenswada’ Miller Motors, Inc. v. Ford Motor Co., 149 F.Supp. 988) .D.N.C. 1957), aff’d, 252 F. 2d 441 (4th Cir, DEE 656 edEC0ens Cob wNehEd CaedenceeeeNecenNust Milos v. Ford Motor Co., 317 F.2d 712 (3d Cir. 1963) Northern Pac. R. Co. v. United States, 356 U.S. 1 RRR Oe ey ee er ceed eee Pick Manufacturing Co. v. General Motors Corp., 80 F.2d 641 (7th Cir. 1935), aff’d per curiam, 299 U.S. ED, 6:80.66 6065509550 ws0bs becnded ébeeaeeees Reed Bros., Inc. v. Monsanto Co., 525 F.2d 486 (Sth Cir. 1975), cert. denied, 423 U.S. 1055 (1976) .... Refrigeration Engineering Corp. v. Frick Co., 370 es De COPE Bs BPEED vcs cncdavenncccser South End Oil Co. v. Texaco, Inc., 237 F.Supp. 650 i Mn .Jeddaddodn ens $husdderees went es Standard Oil Co. of California v. United eee 337 ee ES oie co cud vuedeen ee eet tes eeunase Stokes Equipment Co. v. Otis Elevator Co., 340 PU, Ge Cie WO BOOED coceccecadcscccesese Telex Corp. v. International Business Mach. Corp., 510 F.2d 894 (10th Cir. 1975), cert. dismissed, 423 ee SE EE. ci.cccvasesuvdcdeavakacevendesss Times-Picayune Publishing Co. v. United States, 345 ee Ee SE Si cesivececupcecettscechacecees Timken Roller Bearing Co. v. FTC, 299 F.2d 839 Se Ss SED Si.g0¥0 500555 eudeertuubucuseeses Twin City Sportservice, Inc. v. Charles O. Finley & Co., 512 F.2d 1264 (9th Cir. 1975) ..........4... 15 12 15 iv PAGE United States v. American Technical Industries, 1974-1 Trade Cas, 74,873 (M.D. Pa.) ......... 23 United States v. Becton, Dickinson & Co., 1964 Trade Can: F 71,386 (Ae) incucccestcauneneeene 12 United States v. Bendix Aviation Corp., 1953 Trade Cas. FOU SES (TAM. Bed 0 Furthermore, Heatransfer, in alleging for damage purposes that Delanair was in an irreversible decline, negated the possibility of salvage through reor- ganization in bankruptcy. Antitrust Injury Under Brunswick In upholding damages based on the fact that Volks- wagen’s acquisition preserved Delanair as a competitor of plaintiff, the court below failed to follow Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., supra, 429 U.S. 477 (1977).?° The defendant in that case had acquired a number of bowl- 2° The instruction derives from United States Steel Corp. v. FTC, 426 F.2d 592, 608-09 (6th Cir. 1970), adopting a dictum in Citizen Publishing Co. v. United States, 394 U.S. 131, 138 (1969). Decisions of this Court postdating Steel have made clear that the Citizen dictum was unintentional. United States v. Greater Buffalo Press, Inc., 402 U.S. 549, 555 (1971); United States v. General Dynamics Corp., 415 U.S. 486, 507 (1974). Accordingly, United States v. M.P.M., Inc., 397 F.Supp. 78 (D. Colo. 1975) declined to follow Steel. Accord, United States v. Black & Decker Mfg. Co., 430 F.Supp. 729, 778 (D. Md. 1976); United States v. American Technicai Industries, 1974-1 Trade Cas. € 74,873 (M.D. Pa.). 2° Heatransfer made no attempt to relate its damages to the antitrust injuries claimed. Instead, it based damages on the sales 24 ing centers. The damage theory of the plaintiffs (competing bowling centers) was that but for the acquisitions the acquired centers—which were in perilous financial straits— would have gone out of business, enabling the plaintiffs to pick up some of their customers, This Court rejected that theory, holding that Section 4 of the Clayton Act requires that a plaintiff’s damage theory be consistent with its theory of liability. Having alleged that the Brunswick acquisitions were unlawful under a ‘‘deep pocket’’ theory, plaintiffs could not recover on the basis of Brunswick’s rehabilitation of the acquired bowling centers which was unrelated to any abuse of its deep pocket. Although the Delanair acquisition was deemed anticom- petitive because it ‘‘severely limited the chance of Volks- wagen’s approval of any other units’’ (3la), Heatransfer made no effort to show its damages, if any, from loss of ‘*the chance of Volkswagen’s approval.’’ It did not dem- onstrate what its sales would have been had the Heatransfer unit been bought and resold by Volkswagen. Instead, it pro- ceeded on the same ‘‘but for’’ approach as the Brunswick plaintiffs. It argued that but for the acquisition by Volks- wagen, Delanair would have proceeded on a steady down- ward decline, and it claimed and was awarded damages with respect to all of the sales it allegedly lost because Delanair’s decline was arrested and reversed by the acquisition. Heatransfer’s damages thus included sales it lost solely because, after the acquisition, the Delanair condenser was removed from its vulnerable position beneath the chassis, Delanair’s warranty was enlarged and its product line it would have gained as Delanair declined. Heatransfer’s damage theory assumed that the difference between the sales actually made by VPC following the acquisition and those which a declining Delanair would have enjoyed represented sales improperly taken from Delanair’s competitors. Of these, Heatransfer claimed it would have made 30 percent together with 30 percent of all sales of units for Volkswagen, Porsche and Audi vehicles actually made by DPD, Meier-Line and itself (PXs 621, 623, 626; R. 2175-86). 25 broadened and other product and service improvements were made (supra pp. 6-7). Yet none of these were ‘‘anti- competitive acts made possible by the violation.’’ In allow- ing the recovery of damages for these lawful acts taken to rehabilitate a failing competitor, the decision below clearly departs from Brunswick (33a-38a). The court of appeals attempted to distinguish Bruns- wick on the ground that Volkswagen did more than just rehabilitate Delanair (38a). But Heatransfer’s theory of damages was not based on whatever more the court be- lieved Volkswagen to have done. Even assuming that Heatransfer might have devised such a theory, this would not distinguish Brunswick. The same possibility existed there. This Court explicitly held that the fact that the plaintiffs might have but did not ‘‘attempt to prove that they had lost [some] income as a result of [Brunswick’s alleged] predation’’ could not save a damage theory un- related to that predation. 429 U.S. at 490. Conclusion In upholding a $15 million judgment against a foreign competitor of the American automobile manufacturers, the court below established expansive and erroneous rules of liability and damages applicable to all private antitrust damage actions, These rules, which are in conflict with holdings in this Court and in other circuits, will control the outcome of antitrust litigation throughout the Fifth Circuit, where nearly twenty percent of private antitrust cases originate.*’ Unless this Court grants certiorari and re- verses, the threat of potentially enormous treble-damage judgments will lie heavy on the $200 billion franchise in- 27 Computed from Annual Report, Administrative Office of the United States Courts (1974), pp. 397-99; Annual Report, Adminis- trative Office of the United States Courts (1975), pp. 354-55; Annual Report, Administrative Office of the United States Courts (1976), pp. 300-01. 26 dustry, and will discourage the acquisition and rehabilita- tion of failing or faltering firms. The petition for a writ of certiorari should be granted. Respectfully submitted, Ricuarp A. Posner 1222 East 56th Street Chicago, Illinois 60637 Puiu Etman 1320 Nineteenth Street, N.W. Washington, D.C. 20036 Hersert Rvusin Cecetia H. Goetz 40 Wall Street New York, New York 10005 Cuar.es T. NewTon, Jr. First City National Bank Building Houston, Texas 77002 Cicero C, Sessions Bank of New Orleans Building New Orleans, Louisiana 70112 Of Counsel: HerzFreLp & Rusty, P.C. 40 Wall Street New York, New York 10005 Wap, Harkrapver & Ross 1320 Nineteenth Street, N.W. Washington, D.C. 20036 Viyson & ELKINS First City National Bank Building Houston, Texas 77002 Sessions, FisumMan, Rosenson, SneLuincs & BolsFONTAINE Bank of New Orleans Building New Orleans, Louisiana 70112 Dated: December 23, 1977. Appendices Appendix A Opinion United States Court of Appeals Fifth Circuit No. 75-2779 June 13, 1977 HEATRANSFER CORPORATION, Plaintiff-Appellee, v. VoLKSWAGENWERE, A. G., et all, Defendants-Appellants. o> v @ e @ Appeal from the United States District Court for the Southern District of Texas. Before: GotpBerc, Simpson and Fay, Circuit Judges. Srupson, Circuit Judge: — I, PRELIMINARY STATEMENT This appeal has generated a record of giant proportions. We are presented with 37 volumes of transcript, nine ap- pendix volumes of abbreviated transcript, six briefs total- ling 409 pages (with 83 pages of appendices), over 1600 2a Opinion exhibits, and considerable correspondence to this Court from the parties. We have done our best to pare down the issues and arguments prese:ted on appeal, and the discussion and disposition of those issues and arguments, to the greatest extent possible consistent with reasoned resolution of the controlling questions presented. The re- sult is an opinion still regrettably overlong. II. NATURE AND DISPOSITION OF THE CASE Plaintiff-appellee Heatransfer Corporation filed a pri- vate antitrust suit, pursuant to Section 4 of the Clayton Act, 15 U.S. Code, Section 15, against defendants-appellants Volkswagenwerk Aktiengesellschaft (VWAG); its wholly- owned subsidiary, Volkswagen of America, Inc. (VWoA) ; and two wholly-owned subsidiaries of VWoA, Volkswagen South Central Distributor, Inc. (VWSC) and Volkswagen Products Corporation (VPC). Heatransfer’s complaint al- leged multiple violations of Sections 1 and 2 of the Sherman Act, 15 U.S.Code, Sections 1-2, and Section 7 of the Clayton Act, 15 U.S.Code, Section 18. The case was tried before a six-person jury, and was submitted for special verdict under Rule 49(a), Federal Rules of Civil Procedure, with 15 written Questions to be answered by the jury.’ 1 The Questions were as follows: Questions as to Section 1 of the Sherman Act. Question 1. Do you find from a preponderance of the evidence that the provisions of the Volkswagen dealer and distributor franchise agreements constitute tying arrangements under Section 1 of the Sherman Act? Burden of proof is on plaintiff. Answer yes or no. 3a Opinion The jury’s findings, in response to the written questions submitted may be summarized as follows: (1) The provisions of the Volkswagen dealer and dis- tributor franchise agreements const’ ‘ate tying agreements, in violation of Section 1 of the Sherman Act. If you answered the above question “No”, do not answer question 2 and do not consider defendants’ conduct with respect to the fran- chise agreements in violated Section 1. If you have answered question 1 “Yes”, then proceed to answer question 2. Question 2. Do you find from a preponder. ice of the evidence that the tying arrangement contained within the dealer and distributor franchise agreements was necessary in order to preserve the goodwill of the defendants? Burden of proof is on detrndant. Answer yes or no. If you have answered question 2 “Yes”, do not consider the defendants’ conduct with respect to the franchise agreements in deter- mining if the defendants have otherwise violated Section 1 of the Sherman Act. If you have answered question 2 “No”, you may con- sider the defendants’ conduct in determining whether such a violation has occurred. In any event, you will proceed to answer question 3. Question 3. Do you find from a preponderance of the evidence that Volkswagen Products Corporation (VPC) was a part of a con- spiracy, combination or agreement to restrain trade unreasonably in violation of Section 1 of the Sherman Act? Burden of proof is on plaintiff. Answer yes or no. Question 4. Do you find from a preponderance of the evidence that Volkswagen of America (VWOA) or Volkswagen South Central was a part of a conspiracy, combination or agreement to restrain trade unreasonably in violation of Section 1 of the Sherman Act? Burden of proof is on plaintiff. Answer yes or no. Question 5. Do you find from a preponderance of the evidence that Volkswagen Germany (VWAG) was a part of a conspiracy, combination or agreement to restrain trade unreasonably in violation of Section 1 of the Sherman Act? Answer yes or no. Questions as to Section 2 of the Sherman Act. Question 6. Do you find from a preponderance of the evidence that the relevant market in considering Section 2 of the Sherman Act was the manufacture and sale of air conditioners for only Volkswagen, Porsche and Audi automobiles throughout the world, rather than 4a Opinion (2) VWAG, VWoA (or VWSC), and VPC each (a) engaged in a conspiracy, combination, or agreement to re- either the manufacture and sale of air cunditioners for all automobiles or for all compact automobiles in the United States? Burden of proof is on plaintiff. Answer yes Or no. If you have answered question 6 “No”, and only in that event, then do not answer questions 7, 8, or 9, but proceed to answer Ques- tion 10. If you have answered question 6 “Yes”, then answer ques- tions 7, 8 and 9. Question 7. Do you find from a preponderance of the evidence that the defendant VWOA or Volkswagen South Central monopolized, attempted to monopolize, or conspired to monopolize, in violation of Section 2 of the Sherman Act? Burden of proof is on plaintiff. Answer yes Or no. Question 8. Do you find from a preponderance of the evidence that the defendant VPC monopolized, attempted to monopolize, or conspired to monopolize, in violation of Section 2 of the Sherman Act? Burden of proof is on plaintiff. Answer yes or no. Question 9. Do you find from a preponderance of the evidence that the defendant VWAG monopolized, attempted to monopolize, or conspired to monopolize, in violation of Section 2 of the Sherman Act? Burder of proof is on plaintiff. Answer yes or no. Questions as to Section 7 of the Clayton Act. Question 10. Do you find from a preponderance of the evidence that the relevant market in considering Section 7 of the Clayton Act was the manufacture and sale of air conditioners for only Volkswagen, Porsche and Audi automobiles, rather than either the manufacture and sale of air conditioners for all automobiles or for all compact automobiles. Burden of proof is on plaintiff. Answer yes or no. If you have answered question 10 “No” and only in that event, do not answer questions 11, 12 or 13, but proceed to answer question 14. If you have answered question 10 “Yes”, then answer questions 11 and 12 as well as question 13, if applicable. Question 11. Do you find from a preponderance of the evidence that the acquisition [sic] the assets of Intercontinental Motors by VWOA may substantially lessen competition in the sale of Volks- wagen. Porsche and Audi air conditioners in violation of Section 7 the Clayton Act? Burden of proof is on plaintiff. Answer yes or no. 5a Opinion strain trade unreasonably, in violation of Section 1 of the Sherman Act; and (b) conspired or attempted to monopo- lize, or monopolized, the sale of air-conditioners for Volks- wagen, Porsche, and Audi automobiles throughout the world, in violation of Section 2 of the Sherman Act. (3) The acquisition by VWoA of InterContinental Motors Corp. may substantially lessen competition in the Question 12. Do you find from a preponderance of the evidence that Delanair Engineering was a failing company? Burden of proof is on the defendants. Answer yes or no. If you have answered question 12 “Yes”, do not answer question 13. If you have answered question 12 “No”, proceed to answer question 13. Question 13. Do you find from a preponderance of the evidence that the acquisition of the stock of Delanair Engineering by VWOA, either separately or in combination with the acquisition of Intercon- tinental Motors, may substantially lessen competition in the sale of Volkswagen, Porsche and Audi air conditigners in violation of Section 7 of the Clayton Act? Burden of proof is on plaintiff. Answer yes or no. Questions as to Proximate Cause and Damages. If you have found as a result of your previous answers that one or more of the defendants have violated Section 1 of the Sherman Act and/or Section 2 of the Sherman Act and/or Section 7 of the Clayton Act, then answer question 14. Otherwise, do not answer such ques- tion. Question 14. Do you find from a preponderance of the evidence that plaintiff Heatransfer Corporation sustained injury to its business or property which was directly and proximately caused by such viola- tion or violations on the part of defendant or defendants? Burden of proof is on plaintiff. Answer yes or no. If you have answered question 14 “No” and only in that event, do not answer question 15. If you have answered such question “Yes”, then proceed to answer question 15. Question 15. What sum of money, if any, do you find would be required, if paid now in cash, to compensate plaintiff Heatransfer Corporation for any damages suffered by it by reason of such injury to its business or property which you have found was proximately caused by such violation or violations found in answer to interroga- tory 14? Burden of proof is on plaintiff. Answer by inserting the amount, if any. 6a Opinion sale of air-conditioners for Volkswagen, Porsche, and Audi automobiles, in violation of Section 7 of the Clayton Act. (4) Delanair Engineering Co. was not a failing company, and VWodA’s acquisition of Delanair may substantially lessen competition in the sale of air-conditioners for Volks- wagen, Porsche, and Audi automobiles, in violation of Sec- tion 7 of the Clayton Act. (5) Heatransfer sustained injury to its business or prop- erty that was directly and proximately caused by one or more of the violations found, and its damages were $5 million. The damage award was trebled pursuant to 15 U.S.C., Section 15,? and an attorney’s fee of $350,000 was added to the judgment, making a total judgment of $15,350,000. Ill. THE FACTS The facts as we state them were largely uncontroverted at trial, although sometimes subject to contrary inferences. As to facts in dispute, we state them in a manner consistent with the jury’s Special Verdict, and as supported thereby. A. Background The distribution system of Volkswagen products in the United States is essentially VWoA. VWoA buys auto- 2 The Clayton Act, § 4, 15 U.S.C. § 15 reads: Any person who shall be injured in his business or reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover three-fold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee. Ta Opinion mobiles and parts from VWAG for resale in this country. During the relevant time period, VWoA sold four basic types of Volkswagen vehicles: Type I—the ‘‘ Beetle’’; Type II—the ‘‘VW bus’’, a large station wagon, which is also available as a camper; Type III—a squareback, which is also available as a small station wagon; and Type IV—a larger, more powerful, version of the Type III. All of the above models have air-cooled engines mounted in the rear of the car, although in 1973, the Type ITI was replaced by the Dasher, which has a front-mounted, water-cooled engine, Since 1969, VWoA has also imported the Porsche 911— an expensive sports car manufactured by Porsche; and the Porsche 914, an economy sports car manufactured jointly by VWAG and Porsche.’ Both Porsche models have air- cooled engines. In 1970, VWoA began importing the Audi, a medium-sized car with a front-mounted, liquid cooled engine. From its inception in 1956 until the early 1960’s VWoA distributed the products it imported to 14 independent Volks- wagen distributors in the continental United States. These distributors were independently owned wholesale operations which purchased Volkswagen, Porsche, and Audi cars, parts, and accessories from VWodA, and purchased some parts and accessories from other suppliers as well. The distributors resold these products to the automobile deal- ers.© Beginning in the 1960’s, VWoA began purchasing * The Porsche had been imported into this country by an importer other than VWoA for a number of years prior to 1969. * There was also one small distributer in Hawaii. 5 At the time of trial, there were in this country approximately 1200 Volkswagen dealers, 300 Porsche-Audi dealers, with i- mately 100 of these dealerships overlapping. Trial Record (TR). pp. 3530-3531. 8a Opinion these distributorship operations, and by the time of tria! of this case it had acquired 8 of the original 14 distributor- ships. By 1968, VWoA was selling more than a half million new Volkswagens per year in the United States, which amounted to just over 55% of all imported car sales, and 5.5% of the total United States car market. By 1970, Volkswagen sales mounted to 6.8% of total automobile sales in the United States, with approximately 570,000 Volkswagen ‘sold that year. Its percentage of the foreign car market for 1970 was 46.2%. By 1973, due to much stronger com- petition from other importers, VWoA (Volkswagen, Porsche and Audi) maintained 31.3% of the imported car market, and the Volkswagen percentage of the total car market had fallen to 4.1%. These figures were still very impressive considering the increase of sales among domestic and foreign manufacturers of cars in direct competition with VWoA imports. None of these cars imported by VWoA had factory-in- stalled air-conditioners. Since air-conditioning was becom- ing almost a standard item in the United States by the end of the 1960s, there appeared to be a waiting market for an air-conditioner that would function satisfactorily in the VWoA imports.® * A primary reason for the lack of factory air-conditioning in the imported German cars may have been a belief by the importers that German air-conditioning manufacturers lacked expertise in the air- conditioning field. John Stuart Perkins, President of VWoA, testified at trial: You cannot find an engineer [in Germany] who understands air-conditioning. And we were not interested in having any part of air-conditioning from Germany, who are making their first air-conditioners, we would much sooner do business here in the States. particularly here in Texas, where it seemed to be the center of air-conditioning, where we had the talent, where we had the expertise, and were quite happy with that. T.R., p. 3672. 9a Opinion VWAG first attempted in 1973 to install factory air- conditioning in automobiles for export to the United States. One thousand Audi cars were equipped with factory in- stalled air-conditioners before being shipped to the United States. The results were not impressive. T.R., pp. 3674- 3676. B. Automobile Air-Conditioning The basic components of an automobile air-conditioner are: the compressor; a pump, powered by the automobile engine, which circulates the coolant; the condenser, which uses the car’s airflow, supplied principally by the car’s movement and the radiator fan, to condense the coolant gas into liquid form; and the evaporator, where the liquid evaporates and is biown as cold air into the car. In water-cooled cars, the condenser is placed in front of the radiator, so that outside air, ‘‘ramming’’ through the front of the car, can help to supply the condenser with its need for a flow of air coming over it. The main airflow, however, is supplied by the radiator fan. In the air cooled, rear engine Bectle Volkswagen, this technique was not practicable. Ramming of outside air over the condenser would be impossible with the condenser in the rear with the engine. And, of course there was no radiator fan to provide the necessary constant airflow. To overcome these problems, Don P. Dixon, founder of the DPD Manufacturing Company, designed a condenser that would fit behind the spare tire in the front compart- ment of the Beetle, and a separate fan that would provide independent airflow for the condenser. He also designed a compressor to fit in the rear engine compartment next to the engine, and an evaporator to fit partially in the front end of the car and partially under the dashboard in the passenger compartment. Because of the scattered place- 10a Opinion ment of the component parts of the air-conditioning unit, it was necessary to run hoses and electrical wires under- neath the floorboard to make the component parts function as a working unit. Delanair Engineering Company,’ which became VWoA’s approved supplier in 1963, had also designed a compressor to fit in the rear engine compartment next to the engine. The condenser system designed by Delanair, however, was markedly different from the DPD front-located condenser system. Delanair designed two condensers which were to be placed under the rear of the car. They were connected by tubing with a propeller fan blowing air over one of the condensers. The evaporator was placed entirely under the dash in the passenger compartment. The main defect with the Delanair un:t was that the condensers were constantly exposed to damage because of their proximity to the road surface.* Aside from the difficulties associated with the DPD and the Delanair units, both offered at least some solu- tion to the Beetle’s lack of a radiator fan by providing in- dependent airflow within the condenser system. In 1963, Henry Willard Lende, Jr., formed a company, Heatransfer Corporation, for the purpose of selling the DPD units to Volkswagen dealers. Lende testified at trial that the main obstacle to his sales efforts were the problems encountered installing the unit: ‘‘Those fellows [working for the dealers] didn’t know how to install an air conditioner, because it was 7 Delanair was a subsidiary of an English company, Delaney- Gallay Ltd., itself in turn a subsidiary of another English company, Lindustries Ltd. ’ A parts manager for a Volkswagen dealership testified that: _ “It would take us like two days to put an air conditioner in one and, you know, the thing would get down the road, three or four hundred miles down the road, and everything would fall off of it out in the middle of the road... .” lla Opinion a new product, and it was an involved complicated product. You had mechanics putting mechanical things in a car, and then you had some chemistry in it, and you had to know how to put freon in, and you had to pull the air out of this, it’s called pulling a vacuum before you put the freon, because if you have air in with the freon the thing won’t work. You had to use a vacuum pump to pull all the air out, and you had to use gauges to put the freon in. You had to do a little electrical work, and then check it and know how to troubleshoot it. But before I would get out the door, he would say, ‘Does my mechanic know how to fix this thing? Sure, it runs now, but if that customer comes back in, what are we going to do, I’m the fellow that’s in the soup.’ So, I teach the fellow how to troubleshoot and serv- ice that air conditioner, if it came in and wasn’t working, what to look for first, was it out of freon, had a belt that slipped. Then, I go up and teach the salesmen how to sell it. They didn’t know what knob did what, whether it was high, medium low fan, or what, and they didn’t know what the thermostat did and all these things. It was a brand new industry. And if you didn’t do this, didn’t get the whole deal- ership squared away, they couldn’t do a job of selling it.’’ T.R., pp. 141-142. With Lende’s Heatransfer Corporation as its sales com- pany, DPD’s sales increased from 200 VW Beetle air-con- ditioning units in 1963 to 7000 units in 1968. During 1968, however, Lende learned of another unit being sold to Volkswagen dealers with the VWoA stamp of approval 12a Opinion (manufactured by Overseas Motors Corporation of Fort Worth, Texas—iater Delanair Engineering Company), which was selling far more units to Volkswagen dealers than was DPD. Approval by VWoA meant that VWoA would purchase large quantities of the approved Delanair unit and sell them to Volkswagen dealers, Efforts by Lende and Dixon to secure VWoA approval of the DPD unit were unsuccessful. Since a distributorship allowed the dealer the opportu- nity of ordering all of his parts and accessories from one central location rather than from a number of suppliers, Lende recognized that it would be advantageous to approach these distributors, rather than the individual dealers, con- cerning the purchase of DPD units. Because his unit was not approved by VWoA, he met with opposition, aggravated by VWoA’s promotion of the Delanair unit. In 1968, however, Lende’s efforts were rewarded when the second largest seller of air-conditioners among the Volkswagen distributors, International Auto Sales in New Orleans, agreed to purchase units from DPD. Lende found this to be a particularly significant ana encouraging devel- opment because it was the first time in his experience that a Volkswagen distributor had been willing to abandon an approved VWoA part or accessory for one that had not been approved. To Lende this indicated that other distribu- tors might be willing to consider an alternative to the Delanair unit. After securing the New Orleans business for DPD, Lende severed his relationship with that company. He had been developing his own concept of an air-conditioner for the Beetle, and decided that the time was ripe to produce and market that concept. 13a Opinion C. The Heatransfer Unit In the Heatransfer unit all major component parts were located in the rear of the vehicle by placing the eondenser and the evaporator in a box which was installed behind the back seat of the Beetle with a small opening in the floor pan behind the back seat which allowed the condenser to remove heat and further allowed the condenser-evaporator module to be connected by hoses to the engine compartment where the compressor was located. The unit was designed to feed cold air into the car’s passenger compartment in a constant flow, along the roofline from the back of the car to the front of the car. The new unit was particularly distinctive for two reasons. It was relatively easy to install as compared with other units, and the location of the condenser reduced significantly the chance of damage to it. As Lende began marketing Heatransfer units in early 1969, he approached Guenter Kittel, at the time VWoA’s Vice President of Parts (he is presently President of a VWAG affiliate), concerning approval of the Heatransfer unit. Because Delanair was having severe problems at about this time, Lende had grounds for hope that his unit would get VWoA approval. At this same time, Lende was also soliciting Intercontinental Motors in San Antonio, Texas, the largest seller of air-conditioners among VWoA distributors. Intercontinental Motors agreed to purchase and sell the Heatransfer unit in June of 1969 even though it had not received the VWoA stamp of approval. By the end of the summer Heatransfer had sold 1800 units to Intercontinental. At this time, Delanair was losing ground on other fronts. Delanair lost the business of the New Orleans distributor- ship to DPD, and the business of the California distributor- ship, Volkswagen Pacific, to Meierline, a California com- l4a Opinion pany. In the summer of 1969, distributor orders for the Delanair dropped drastically. VWoA had projected sales of 13,000 for the months of July, August, and September, but, in actuality, sales for those months amounted to 1280, 372 and 26 units respectively. Plaintiff’s Exhibit (PX)—7. Delanair’s English-based parent company, Delaney- Gallay, Ltd., decided not to expend the effort to rehabilitate Delanair, but rather to sell it. On September 29, 1969, it was announced that VWoA had acquired Delanair for a new wholly-owned subsidiary which VWoA named Volks- wagen Products Corporation (VPC). During the three months following the purchase of Delanair, VPC sales increased markedly in comparison with Delanair’s preced- ing three months. In October 1, 1,399 units were sold, in November, 1,193 units, and in December, 999 units. In October of 1969, VWoA acquired the largest Amer- ican Volkswagen distributorship: Intercontinental Motors of San Antonio, and renamed it Volkswagen South Central Distributor, Inc. (VWSC). Before the acquisition Heatrans- fer had had a 65%-35°% advantage over Delanair in terms of unit sales by Intercontinental to dealers. By the end of the first year after the acquisition, the advantage had been reversed, 635¢-37%, in favor of VPC. There were no sales by Heatransfer to VWSC of any Heatransfer units after June, 1971, when their relationship was terminated. The last Volkswagen distributor in the United States to do business with Heatransfer was Import Motors in Grand Rapids, Michigan, but sales fell when the distribu- tor refused to install Heatransfer units in Volkswagens at its port facility. The relationship with Import Motors was terminated in June, 1972. After this time, Heatransfer con- tinued to do business with franchised dealers on a direct basis, but the lack of access to distributors made it increas- ingly difficult to sell to VWoA’s franchised dealers. lia > Opinion é‘ Lende next attempted to develop the ‘‘after market’’ for Volkswagen air conditioners. This term is used for the market consisting of cars originally sold by dealers without air-conditioners. There was little competition in this market for air-conditioners for Volkswagens and Lende received favorable response from both Sears Roebuck Company and J. C. Penny Company, two large retailing chains. The after market, however, was still not sufficient to sustain Heatransfer. Lende also tried to push the Heatransfer unit on the foreign market, and met with some initial success. For example, he went to Brazil in late 1969, and secured an order for a shipment of Heatransfer units. After cor- respondence from VWAG to the purchaser, however, no additional Brazilian orders were forthcoming. We re- produce that correspondence in the margin.° ® Translation of letter from Volkswagenwerk A.G. December 17, 1969 Airconditioner for VW 1300 Dear Mr. Scholz: We take reference to your letter number 223 of November 19th to Mr. Quinn, subject airconditioners for VW 1300. A few months ago we already informed you that we are develop- ing airconditioners in close cooperation with Delanair in the United States. In the interim Delanair has been acquired by Volkswagen of America and continues under the name of Volkswagen Products Corporation. Mr. Schlager is in charge of the company. Because of your above letter we inform you of this and would like to suggest that you contact Mr. Schlager before carrying out tests with airconditioners of Heat Transfer Corporation because as far as we knew such evaluations have already been carried out there. As Delanair belongs now to the combine we would suggest that all your problems are communicated to Delanair which certainly now is most interested to also assist you in this matter either from the United States or possibly with manfacturing in the country. ° VOLKSWAGENWERK, A.G. H. J. Radok l6a Opinion The best foreign market for Volkswagen air-conditioners appeared to be Japan, where the Heatransfer unit could fit Japan’s right-hand drive vehicles without any major design change. In 1971, the Volkswagen importers in Japan bought 400 units from Heatransfer, and this amount in- creased to 1200 units in 1972. In 1973, however, sales dropped by 509% when the Japanese importer began pur- chasing VPC’s newly designed right-hand drive unit. Because of the continuing marketing problems, Lende and his associates decided in 1974 to liquidate Heatransfer Corporation. IV. UNLAWFUL TYING A tying arrangement, generally stated, is an agree- ment by which one party agrees to sell a product (the tying product), but only upon condition that the buying party also purchases another product (the tied product) which the buyer would ordinarily not purchase, where the effect is to substantially lessen competition. Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5-6, 78 S.Ct. 514, 518, 2 L.Ed.2d 545, 549-550 (1958). In Northern Pacific, the Supreme Court stated: [Tying agreements] are unreasonable in and of themselves whenever a party has sufficient economic power with respect to the tying product to appreci- ably restrain free competition in the market for the tied product and a ‘‘not insubstantial’? amount of interstate commerce is affected. International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20: Cf. United States v. Paramount Pictures, 334 U.S. 131, 156-159, 68 S.Ct. 915, 928-929, 92 L.Ed. 1260; United States v. Griffith, 334 U.S. 100, 68 S.Ct. 17a Opinion 941, 92 L.Ed. 1236. Of course where the seller has no control or dominance over the tying product so that it does not represent an effectual weapon to pressure buyers into taking the tied item any re- straint of trade attributable to such tying arrange- ments would obviously be insignificant at most. As a simple example, if one of a dozen food stores in a community were to refuse to sell flour unless the buyer also took sugar it would hardly tend to restrain competition in sugar if its competitors were ready and able to sell flour by itself. 356 U.S. at 6-7, 78 S.Ct. at 518-519, 2 L.E.2d at 550. The Court then determined what was to be considered sufficient economic power of the seller to make the tying agreement an illegal one: While there is some language in the Times- Picayune [Publishing Co. v. U.S., 345 U.S. 594, 73 S. Ct. 872, 97 L.Ed. 1277], opinion which speaks of ‘‘monopoly power’’ or ‘‘dominance’’ over the tying product as a necessary precondition for application of the rule of per se unreasonableness to tying ar- rangements, we do not construe this general language as requiring anything more than sufficient economic power to impose an appreciable restraint on free competition in the tied product (assuming all the time, of course, that a ‘‘not insubstantial’’ amount of interstate commerce is affected). Id. at 11, 78 S.Ct. at 521, 2 L.Ed.2d at 553. See Broussard v. Socony Mobil Oil Co., 350 F.2d 346 (5th Cir. 1965). 18a Opinion Thus, for a tying arrangement to be a violation of Section 1 of the Sherman Act *® (as well as Section 3 of the Clayton Act, although a violation of that section of the Clayton Act is not presented to us on appeal) it must be shown that (1) the seller has sufficient economic power over the tying product, e. g., monopoly, market dominance, etc., to induce his customer, through economic leverage, to pur- chase the tied product along with the tying product, and (2) a not insubstantial amount of commerce in the tied product is restrained as a result. See Sulmeyer v. Coca Cola Company, 515 F.2d 835, 844 (Sth Cir. 1975), cert. denied, 424 U.S. 934, 96 S.Ct. 1148, 47 L.Ed.2d 341. 10 The Sherman Act, § 1, 15 U.S.C. § 1, reads: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal: Provided, That noth- ing contained in sections 1 to 7 of this title shall render illegal, con- tracts or agreements prescribing minimum prices for the resale of a commodity which bears, or the label or container of which bears, the trademark, brand, or name of the producer or distributor of such com- modity and which is in free and open competition with commodities of the same general class produced or distributed by others, when contracts or agreements of that description are lawful as applied to intrastate transactions, under any statute, law, or public policy now or hereafter in effect in any State, Territory, or the District of Colum- bia in which such resale is to be made, or to which the commodity is to be transported for such resale, and the making of such contracts or agreements shall not be an unfair method of competition under section 45 of this title: Provided further, That the preceding proviso shall not make lawful any contract or agreement, providing for the establishment or maintenance of minimum resale prices on any com- modity herein involved, between manufacturers, or between pro- ducers, or between wholesalers, or between brokers, or between factors, or between retailers, or between persons, firms, or corpora- tions in competition with each other. Every person who shall make any contract or engage in any combination or conspiracy declared by sections 1 to 7 of this title to be illegal shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding fifty thousand dollars, or by imprisonment not exceed- ing one year, or by both said punishments, in the discretion of the court. a a 19a Opinion In answers to written questions, the jury in the present case found, from what it believed to be a preponderance of the evidence, that the provisions of the Volkswagen dealer and distribution franchise agreements constituted tying agreements under Section 1 of the Sherman Act. It further found that such agreements were not necessary to preserve the goodwill of the defendants. It is well established that tying arrangements are ille- gal per se. See, e.g., Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969) ; Northern Pacific Railway Co. v. United States, 356 U.S. 1, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958); Miller v. Granados, 529 F.2d 393 (Sth Cir. 1976); Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368 (5th Ci». 1977). That is to say, there are ‘‘certain categories of business arrangements ... [which] exhibit a high likeli- hood of anticompetitive impact and offer virtually no pros- pect at all of enhancing competition. With respect to sucu arrangements, antitrust plaintiffs need not demonstrate un- reasonableness ; the conduct constitutes a per se violation of the Sherman Act.... The per se label indicates that a plain- tiff need not demonstrate that the effects of the tie are un- reasonable. Indeed, not only is the plaintiff relieved from establishing that the effects are unreasonable, but in addi- tion the defendant is not free to demonstrate that the effects are reasonable or even affirmatively desirable’. Kentucky Fried Chicken, supra, at 374-375. Of course this is not to say that the plaintiff is relieved from establishing that a tie-in has actually occurred. Lawful arrangements by an7 other name do not thereby become unlawful. Appellants assert that there is nothing in the best efforts clauses in their franchise agreements on which to base a finding oi an illegal per se tying agreement. Those agree- 20a Opinion “ ments contain provisions requiring the franchisee to use his ‘‘best efforts’? to promote Volkswagen automobiles, parts, and accessories.‘ Looking at the ‘‘best efforts’’ clauses in isolation, as appellants would have us do, we would tend tow agree with this view. But our duty is to look at the cireum- stances surrounding the use of these clauses to determine if violations of the antitrust laws occurred. ‘*The presence of the illegal condition may be inferred from an extrinsic course of conduct supplementing the written contract’’. Advance Business Systems & Supply Co. v. S.C.M. Corpo- ration, 415 F.2d 55, 64 (4th Cir. 1969), cert. denied, 397 U.S. 920, 90 S.Ct 928, 25 L.Ed.2d 101. Initially, we reject appellant’s argument that the court’s charge to the jury allowed a finding of tying on the basis of the best efforts provisions standing alone. We view the court’s tying arrangement instruction as sufficient to direct the jury to consider the means by which the pro- visions were enforced.*? 11 For example, Plaintiff's Exhibit (PE)—142, Volkswagen Dis- tributor Agreement, Article 6(1) provides: “Distributor will use its best efforts to promote the sale of VW Automobiles in the Territory through such means as may be specified from time to time by Directives and Suggestions.”; and Article 7(1): “Distributor will use its best efforts to promote the sale of VW Parts in the Territory through such means as may be specified from time to time by Directives and Suggestions.” 12 The trial court's charge to the jury on tying was as follows: A tying arrangement exists when a seller refuses to sell one product except on the condition that the buyer also purchase from the seller some other product, or service, which the buyer does not need or want, where the effect may be to substantially lessen com- petition. Tying arrangements are considered to be naturally anti- competitive since they deny free access to the market for the unwanted product, not because the party imposing the tying arrangement has a better product or a lower price, but because it has the power to force a product upon the purchaser. To constitute an illegal tying agree- ment, however, it is not enough that the seller simply possess eco- 21a Opinion It is obvious that VWoA had sufficient economic power in the tying product, Volkswagen automobiles, to ‘‘strong- nomic power. That power must have been used to force the purchase of some unwanted product. There can be no illegal tie unless unlawful conduct by the seller influences the buyer’s choice. For an antitrust violation, it is mot necessary that the tying arrangement force a purchaser to buy only the product of the seller, but only that the amount of trade foreclosed by the agreement is more than merely insubstantial. Moreover, a manufacturer may require its distributor to promote to customers all its products so long as the purchase of one product of the manufacturer is not tied to the purchase of another of the manufacturer’s products. Plaintiff alleges that the provisions of the distributor and dealer agreements and their interpretation by VWOA imposed the require- ment on the distributors and dealers to purchase reasonable inven- tories of first Delanair and then VPC air conditioners and to promote the sale of these air conditioners, regardless of whether the distributors and dealers in fact wished to buy these VWOA approved air condi- tioners on the basis of the merits of the Delanair-VPC air conditioner when compared to the merits of the competing brands. The defend- ants deny this allegation saying that they have never required Volks- wagen distributors and dealers to purchase Delanair-VPC air condi- tioners as a condition to purchasing Volkswagen automobiles. Second, they allege that they have never enforced the provisions of the dis- tributor and dealer agreements relating to the promotion of approved parts and accessories and that they have never used any economic power to force distributors or deaiers into buying Delanair-VPC air conditioners. On the contrary, defendants contend, as a practical matter, Volkswagen distributors and dealers have always been free to purchase any brand of air conditioner they desire. Therefore, you must consider if. based on the evidence you have heard, it is more likely than not that Volkswagen distributors and dealers have purchased Delanair-VPC air conditioners because VWOA required them to do so as a condition to their also purchasing Volkwagen automobiles. Even if you find the existence of a tving agreement, no violation of Section 1 of the Sherman Act should be found if you find such arrangement was reasonably necessary to protect the goodwill of the Volkswagen vehicles or trademarks. The protection of goodwill is a reasonable basis to justify an otherwise unlawful tying agreement. To establish this defense, the defendants have the burden to show that these provisions were reasonably necessary to assure that the products idetntified by the Volkswagen trademarks were available at the places identified by such trademarks to assure adequate service and parts to such products, or to provide quality products. 22a Opinion ly urge’? Volkswagen distributors and dealers to purchase VWoaA approved parts, the tied product. It is also obvious that more than an insubstantial amount of interstate com- merce was affected. See Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 501-502, 89 S.Ct. 1252, 1258, 22 L.Ed.2d 495, 503-504 (1969). We held in a recent case that ‘‘it is not enough to show that the seller has sufficient economic power and that two products were purchased together. In addition, it must be shown that the purchaser was coerced into purchasing an unwanted product.’’ Response of Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307, 1327 (5th Cir. 1976). But Leasco involved a suit by franchisees against a franchisor claiming antitrust violations. In that type of action, a party to a contract is alleging that the contract is being illegally enforced against it or is illegal on its face. Courts are un- derstandably reluctant to find such contracts to be illegal absent a fairly strong showing of coercion. In cases like the one at bar, on the other hand, an independent supplier to the franchisees asserts harm to it because of antitrust violations by the franchisor. The fact of coercion appears less important in this situation then the fact of foreclosure. If franchisees are coerced or ‘‘persuaded’’ to buy goods which they otherwise would not buy, with the result being tremendous lessening of the market in which a competitor sells his product, such a showing is sufficient to submit the question of a Section 1 antitrust violation to the jury. If you have found that a tying arrangement exists but that the provisions of the franchise agreement were reasonably necessary to protect the defendants’ goodwill, then you cannot find that the pro- visions of the franchise agreement violated Section 1. On the other hand, if you found that a tying arrangement exists and if you believe that these provisions were not reasonably necessary to protect Volks- wagen’s goodwill, then you must find a violation of Section 1. 23a Opinion We think the evidence as a whole, includirg corres- pondence and memoranda from Guenter Kittel, Vice Presi- dent of v WoA at the time, and VPC records, provided ample basis for a jury to find that distributors and dealers, as a result of the best efforts clauses as enforced,'* were urged to stock the Delanair/VPC air-conditioner, even though the franchise agreement, on its face, allowed the purchase of other units. We indicate the source of this evidence in the margin.'* It is too voluminous to reproduce in full. That same evidence also appears to us a sufficient basis upon which a jury could reject the appellant’s defense that the tying arrangement was necessary to preserve the goodwill of defendants. It is of course not our holding that all best efforts clauses are violations per se of the antitrust laws, but we find that an inquiry into the circumstances surrounding the best efforts clauses and their implementation in the present case sufficiently raised in this respect significant questions for jury determination. We view the record as supporting the jury’s finding that the best efforts clauses here, as implemented, were tying arrangements of the type which the antitrust laws were designed to prevent, and, as such, were per se violations of Section 1 of the Sherman Act. 13Tt is necessary to determining whether the persuasion or coercion was a product of enforcement of the best efforts clauses since the tying violation found by the jury, in answer to Interrogatory +1, specifically referred to the best efforts clauses (distributor franchise agreements). See footnote 1, supra. 14 The following sources are not all inclusive, but furnish ample evidence for a jury to find the existence of antitrust violations. Guenter Kittel memoranda—Plaintiff’s Exhibits 98, 100, 104, 117, 264, 638; VPC sales reports, etc.—Plaintiff’s Exhibits 9, 35-41; R. pp. 199-208, 3074-3077, 3533-3539, 3714-3719, 3746-3749, 4615- 4618. 24a Opinion V. CONSPIRACY IN RESTRAINT OF TRADE In answer to written interrogatories*® the jury found that VWoA, VWAG and VPC were part of a con- spiracy to restrain trade in violation of Section 1. We have already determined that there was sufficient evidence for the jury to find that the franchise agreement best efforts clauses of VWoA were tying arrangements that unreason- ably restrained trade. In our discussion of the acquisition of Delanair, infra, we, likewise, find sufficient evidence to uphold the jury’s finding of an antitrust violation which tended to restrain trade. These are two clear indicia of conspiring to restrain trade. In addition, the proof that VPC and VWoA arranged to pre-air condition a substantial percentage of cars at port installation centers before deliv- ering those cars to dealers was evidence of a conspiracy to restrain trade. Further the evidence showed that certain dealers would not carry the Heatransfer unit because it was not approved by VWoA for reasons, it appeared, other than performance. Officials of VWAG and of VPC, the evi- dence showed, met several times to coordinate the develop- ment of the Volkswagen vehicles and the VPC air-condition- ing unit. The competition was excluded from these meet- ings and was denied the information disclosed there. Additionally, several memoranda were _ submitted in evidence, from which the jury could find attempts to restrain trade. However in view of the fact that we have found ample evidence in the record to show that the best efforts clause, as implemented, was a per se violation, it is unnecessary to further analyze the evidence to determine whether there was shown to have been an unreasonable restraint of trade. This is so since a per se violation is ipso facto an unreasonable restraint of trade. 15 See Questions 3, 4 and 5, note 1, supra. 25a Opinion VI. RELEVANT MARKET OFFENSES A. Relevant Market In United States v. E. I. duPont de Nemours Co., 351 U.S. 377, 393, 76 S.Ct. 994, 1006, 100 L.Ed. 1264 (1956), the Supreme Court stated that ‘‘[s]Jection 2'* requires the ap- plication of a reasonable approach in determining the ex- istence of monopoly power... ’’ Thus, before it can be de- termined whether a monopoly exists it must be determined what the relevant market in the present case is. Relevant market is essentially a question of fact, so that findings concerning this subject should be over- turned on appeal only if clearly erroneous, or where there is a dearth of evidence to support the finding below. See Yoder Brothers, Inc. v. California-Florida Plant Corp., 537 F.2d 1347, 1366 (Sth Cir. 1976) ; Sulmeyer v. Coca Cola Co., 515 F.2d 835, 849 (Sth Cir. 1975), cert. denied, 424 U.S. 934, 96 S.Ct. 1148, 47 L.Ed.2d 341; Telex Corporation v. International Business Machines Corp., 510 F.2d 894, 915 (10th Cir. 1975), cert. dismissed, 423 U.S. 802, 96 S.Ct. 8, 46 L.Ed.2d 244. Relevant market may be defined on the basis of geographical boundaries of the market, Indiana Farmer’s Guide Co. v. Prairie Farmer Pub. Co., 293 U.S. 268, 55 S.Ct. 182, 79 L.Ed. 356 (1934), and on the basis of product differentiation, United States v. E. I. duPont de Nemours € Co., supra. We are concerned with the latter on this appeal. The Supreme Court has stated that ‘‘[t]he outer boundaries of a product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it. However, within this broad market, well-defined submarkets 16 Of the Sherman Act. 26a Opinion may exist which, in themselves constitute product markets for antitrust purposes. United States v. E. I. duPont de Nemours € Co., 353 U.S. 586, 593-595, 77 S.Ct. 872, [877- 878], 1 L.Ed.2d 1057, [1066-1068]. The boundaries of such a submarket may be determined by examining such prac- tical indicia as industry or public recognition of the sub- market as a separate economic entity, the product’s peculiar characteristics and uses, unique production facilities, dis- tinct customers, distinct prices, sensitivity to price changes, and specialized vendors.’’ Brown Shoe Co. v. United States, 370 U.S, 294, 325, 82 S.Ct. 1502, 1523-1524, 8 L.Ed.2d 510, 535-536 (1962). If the relevant market is, as appellants argue, air-con- ditioners for all automobiles or, at the very least, for small foreign automobiles, the violations found by the jury, based on the relevant market encompassing only VWoA imported cars, must be overturned. If, however, appellees submitted sufficient evidence to support their view of what comprised the relevant market, we should not disturb that finding. We will attempt a brief review of the evidence submitted. t seems from the record that the major competitors for the Volkswagen air-conditioning market were DPD, Meier- line, Heatransfer, and Delanair/VPC. Indeed, this was found to be so when appellants conducted a study of Dela- nair shortly before that company was acquired by appel- lants. See Plaintiff’s Exhibit 7, Acquisition Audit of Dela- nair Engineering Company, p. 7. With few exceptions, these companies produced air-conditioning units almost exclusively for VWoA import cars, concentrating on this market because of the distinct engineering problems asso- ciated with the Volkswagen imports. Further, up until the time of trial in this case, these four competitors were the sole suppliers of air-conditioners for VWoA. 27a Opinion While Heatransfer developed an air-conditioning unit for the Opel, it never sold units to any company save VWoA and VWAG, or their distributors. Meierline and DPD did sell units to other automobile manufacturers besides VWoaA, but these sales were insignificant compared to sales to VWoA. During its first three years in business, Dela- nair sold some 2,670 air-conditioning units for installation in vehicles other than VWoA imports. This amounted to about 10% of Delanair’s total sales during that period. By its third year in operation, however, from the time it first became profitable, Delanair ‘‘sold air-conditioners almost exclusively for installation in Volkswagen vehicles’’. Plaintiff’s Exhibit 7, p. 5. VPC, although it made proto- types for other automobiles, has never actually sold air- conditioners to any other manufacturers. All these things are supportive, vis-a-vis Brown Shoe, of the jury’s finding as to the relevant market. Appellants argue that such cases as Teler Corp. v. International Business Machines Corp., supra, Twin City Sportservice, Inc. v. Charles O. Finley & Co., 512 F.2d 1264 (9th Cir. 1975), and ITT Corp. v. GTE Corp., 518 F.2d 913 (9th Cir. 1975), support their argument that the relevant market should be broader than that determined by the jury. Those cases deal with the adaptability or substi- tutability of products, and contain nothing that persuades us to overturn the finding of the reply to Question 6 that the relevant market in considering Section 2 of the Sherman Act was the manufacture and sale of air-conditioners for only Volkswagen, Porsche and Audi automobiles through- out the world. We have carefully perused the briefs in this case and the relevant records and exhibits. As we understand the points of contention, we cannot find, as a 28a Opinion matter of law, that the jury’s factual finding as to relevant market was not supported by the evidence. See Sulmeyer v. Coca Cola Co., supra, 515 F.2d at 849. B. Unlawful Monopolization, Attempt to Monopolize, and Conspiracy to Monopolize ; Having approved the jury’s finding as to the rele- vant market, we consider the proof as to the unlawful monopolization, attempt to monopolize, and conspiracy to monopolize charges. Under Section 2 of the Sherman Act ** the offense of monopoly has two elements: ‘‘(1) the pos- session of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic acci- dent’’. United States v. Grinnell Corporation, 384 U.S. 563, 570-571, 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778, 786. Once the relevant market has been determined, the existence of monopoly power ‘‘ordinarily may be inferred from the predominant share of the market’’. Id. at 571, 86 S.Ct. at 1704, 16 L.Ed.2d at 786. The evidence in the record appears to support appellee’s estimate that appellants’ market control was between 71%-76% during the years 1971-1973. See Plaintiff’s Exhibits 9-10; R. pp. 1907-1912, 1929-1930. Such a share of the relevant market is sufficient 17 The Sherman Act, § 2, 15 U.S.C. § 2, reads: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding fifty thousand dollars. or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. July 2, 1890, c. 647, § 2, 26 Stat. 209; July 7, 1955, c. 281, 69 Stat. 282. 29a Opinion to establish a monopoly power. See United States v. E. I. duPont de Nemours & Co., 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956); United States v. United Shoe [sic] Machinery Corp., 110 F.Supp. 295 (D.Mass. 1953), aff’d per curiam, 347 U.S. 521, 74 S.Ct. 699, 98 L.Ed. 910 (1954). The willful acquisition or maintenance of the mono- poly power can be demonstrated by ‘‘conduct designed to barricade access to markets or inhibit production .. .’’ Woods Exploration & Producing Company, Inc. v. Alu- minum Company of America, 438 F.2d 1286, 1307 (Sth Cir. 1971), cert. denied, 404 U.S. 1047, 92 S.Ct. 701, 30 L.Ed.2d 736. We have already upheld the jury’s verdict finding the existence of a tying agreement. This in itself is sub- stantial evidence of narrowing access and prohibiting pro- duction. Our affirmance, infra, of the violation of Section 7 of the Clayton Act, through the acquisition of Delanair and Intercontinental Motors, is further supportive of the finding by the jury that the monopoly power was willfully attained. C. Acquisition of Delanair and Intercontinental Motors The jury found that appellants violated Section 7 of the Clayton Act *® by acquiring Delanair and Intercontinental 18 The Clayton Act, § 7, 15 U.S.C. § 18, reads in pertinent part: No corporation shall acquire, directly or indirectly, the whole or indirectly, the whole or any part of the stock or qther share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. No corporation shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation sub- ject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of one or more corporations engaged in commerce, where in any line of commerce in any section 30a Opinion Motors.