[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 14-11363

________________________

Agency No. 9351

MCWANE, INC.,

 Petitioner,

versus

FEDERAL TRADE COMMISSION, 

 Respondent.

________________________

Petition for Review of a Decision of the

Federal Trade Commission

________________________

(April 15, 2015)

Before MARCUS, and JILL PRYOR, Circuit Judges, and HINKLE,

∗ District 

Judge.

MARCUS, Circuit Judge:

 ∗ Honorable Robert L. Hinkle, United States District Judge for the Northern District of Florida, 

sitting by designation.

Case: 14-11363 Date Filed: 04/15/2015 Page: 1 of 55 
2

This antitrust case involves allegedly anticompetitive conduct in the ductile 

iron pipe fittings (“DIPF”) market by McWane, Inc., a family-run company 

headquartered in Birmingham, Alabama. In 2009, following the passage of federal 

legislation that provided a large infusion of money for waterworks projects that 

required domestic pipe fittings, Star Pipe Products entered the domestic fittings 

market. In response, McWane, the dominant producer of domestic pipe fittings, 

announced to its distributors that (with limited exceptions) unless they bought all 

of their domestic fittings from McWane, they would lose their rebates and be cut 

off from purchases for 12 weeks. The Federal Trade Commission (“FTC”) 

investigated and brought an enforcement action under Section 5 of the Federal 

Trade Commission Act, 15 U.S.C. § 45. The Administrative Law Judge (“ALJ”),

after a two-month trial, and then a divided Commission, found that McWane’s 

actions constituted an illegal exclusive dealing policy used to maintain McWane’s 

monopoly power in the domestic fittings market. The Commission issued an order 

directing McWane to stop requiring exclusivity from distributors. McWane 

appealed, challenging nearly every aspect of the Commission’s ruling.

After thorough review, we affirm the Commission’s order. The 

Commission’s factual and economic conclusions -- identifying the relevant product 

market for domestic fittings produced for domestic-only projects, finding that 

McWane had monopoly power in that market, and determining that McWane’s 

Case: 14-11363 Date Filed: 04/15/2015 Page: 2 of 55 
3

exclusivity program harmed competition -- are supported by substantial evidence 

in the record, as required by our deferential standard of review, and their legal 

conclusions are supported by the governing law.

I.

A.

The essential facts developed in this extensive record are these. Pipe fittings 

join together pipes and help direct the flow of pressurized water in pipeline 

systems. They are sold primarily to municipal water authorities and their 

contractors. Although there are several thousand unique configurations of fittings 

(different shapes, sizes, coatings, etc.), approximately 80% of the demand is for 

about 100 commonly used fittings.

Fittings are commodity products produced to American Water Works 

Association (“AWWA”) standards, and any fitting that meets AWWA 

specifications is interchangeable, regardless of the country of origin. Ductile iron 

pipe fittings manufacturers rarely sell fittings directly to end users; instead, they 

sell them to middleman distributors, who in turn sell them to end users. An end 

user (e.g., a municipal water authority) will issue a “specification” for its project, 

detailing the pipes, fittings, and other products required. Competing contractors 

solicit bids for the specified products from distributors, who in turn seek quotes 

from various manufacturers like McWane.

Case: 14-11363 Date Filed: 04/15/2015 Page: 3 of 55 
4

End users issue either “open specifications,” permitting the use of fittings 

manufactured anywhere in the world, or “domestic specifications,” requiring the 

use of fittings made in the United States. An end user might issue a domestic 

specification either because of its preference or due to legal procurement 

requirements: certain municipal, state, and federal laws require waterworks 

projects to use domestic-only fittings.1

 Domestic fittings sold for use in projects 

with domestic-only specifications command higher prices than imported fittings or 

domestic fittings sold for use in projects with open specifications. The majority of

specifications are open, and the majority of fittings sold (approximately 80-85%) 

are imported. 

Historically, fittings were made by a number of American companies, most 

of which offered a full line of domestic fittings. However, beginning in the 1980s, 

importing fitting suppliers -- including Star Pipe Products and Sigma Corporation -

- began to make significant inroads into the market. By 2005, imported fittings 

made up the vast majority of ductile iron pipe fittings sales, and the competition 

from lower-priced and lower-cost imports drove most domestic manufacturers out 

of the market.

 1 In particular, the American Recovery and Reinvestment Act of 2009 (“ARRA”), Pub. L. No. 

111-5, 123 Stat. 115, provided more than $6 billion to fund water infrastructure projects, all with 

domestic-only specifications. Pennsylvania and New Jersey state laws also require domestic 

materials in public projects, as do Air Force bases, certain federal programs, and various 

municipalities. See, e.g., 73 Pa. Cons. Stat. § 1884, 1886; N.J. Stat. Ann. § 52:33-3; McWane, 

Inc. (McWane I), 155 F.T.C. 903, 994-95 (2013).

Case: 14-11363 Date Filed: 04/15/2015 Page: 4 of 55 
5

Today, the overall market for fittings sold in the United States -- whether 

manufactured domestically or abroad, sold into both open-specification and 

domestic-only projects -- is an oligopoly with three major suppliers: McWane, 

Star, and Sigma. Together they account for approximately 90% of the fittings sold 

in the United States. There are two national distributors, HD Supply and Ferguson, 

which together account for approximately 60% of the overall waterworks 

distribution market.

From April 2006 until Star entered the domestic fittings market in late 2009, 

McWane was the only supplier of domestic fittings. Until 2008, McWane 

produced fittings at two domestic foundries, one in Anniston, Alabama, (“Union 

Foundry”) and the other in Tyler, Texas. In 2005, McWane opened a foundry to 

produce fittings in China, and in 2008 it closed its Texas foundry.

In 2009, looking to take advantage of the increased demand for domestic 

fittings prompted by ARRA, Star decided to enter the market for domestic DIPFs. 

In June 2009, Star publicly announced at an industry conference and in a letter to 

customers that it would offer domestic fittings starting in September 2009. Star 

became a “virtual manufacturer” of domestic fittings, contracting with six thirdparty foundries in the U.S. to produce fittings to Star’s specifications. Star also 

investigated acquiring its own U.S. foundry, which the Commission found would 

Case: 14-11363 Date Filed: 04/15/2015 Page: 5 of 55 
6

have been a decidedly less costly and more efficient way to produce domestic 

fittings.

In response to Star’s forthcoming entry into the domestic DIPF market, 

McWane implemented its “Full Support Program” in order “[t]o protect [its] 

domestic brands and market position.” This program was announced in a 

September 22, 2009 letter to distributors. McWane informed customers that if they 

did not “fully support McWane branded products for their domestic fitting and 

accessory requirements,” they “may forgo participation in any unpaid rebates [they 

had accrued] for domestic fittings and accessories or shipment of their domestic 

fitting and accessory orders of [McWane] products for up to 12 weeks.” In other 

words, distributors who bought domestic fittings from other companies (such as 

Star) might lose their rebates or be cut off from purchasing McWane’s domestic 

fittings for up to three months.2

 The Full Support Program did contain two 

exceptions permitting the purchase of another company’s domestic fittings: where 

McWane products were not readily available, and where the customer bought 

domestic fittings and accessories along with another manufacturer’s ductile iron 

pipe.

 2 McWane emphasizes that the policy deliberately used the words “may” and “or” to convey “a 

weak stance.” However, McWane’s Vice President and General Manager Richard Tatman 

recognized that “[a]lthough the words ‘may’ and ‘or’ were specifically used, the market has 

interpreted the communication in the more hard line ‘will’ sense.”

Case: 14-11363 Date Filed: 04/15/2015 Page: 6 of 55 
7

Internal documents reveal that McWane’s express purpose was to raise 

Star’s costs and impede it from becoming a viable competitor. McWane executive 

Richard Tatman wrote, “We need to make sure that they [Star] don’t reach any 

critical market mass that will allow them to continue to invest and receive a 

profitable return.” In another document, he “observed that ‘any competitor’ 

seeking to enter the domestic fittings market could face ‘significant blocking 

issues’ if they are not a ‘full line’ domestic supplier.” McWane I, 155 F.T.C. at 

1134. In yet another, McWane employees described the nascent Full Support 

Program as a strategy to “[f]orce [d]istribution to [p]ick their [h]orse,” which 

would “[f]orce[] Star[] to absorb the costs associated with having a more full line 

before they can secure major distribution.” Mr. Tatman was concerned about the 

“[e]rosion of domestic pricing if Star emerges as a legitimate competitor,” and 

another McWane executive wrote that his “chief concern is that the domestic 

market [might] get[] creamed from a pricing standpoint” should Star become a 

“domestic supplier.”

Initially, the Full Support Program was enforced as threatened. Thus, for 

example, when the Tulsa, Oklahoma branch of distributor Hajoca Corporation 

purchased Star domestic fittings, McWane cut off sales of its domestic fittings to 

Case: 14-11363 Date Filed: 04/15/2015 Page: 7 of 55 
8

all Hajoca branches and withheld its rebates.3 Other distributors testified to 

abiding by the Full Support Program in order to avoid the devastating result of

being cut off from all McWane domestic fittings. For example, following the 

announcement of the Full Support Program, the country’s two largest waterworks 

distributors, HD Supply (with approximately a 28-35% share of the distribution

market) and Ferguson (with approximately 25%), prohibited their branches from 

purchasing domestic fittings from Star unless the purchases fell into one of the Full 

Support Program exceptions, and even canceled pending orders for domestic 

fittings that they had placed with Star. Indeed, the Commission found that “Star 

was rebuffed by some distributors even after offering a more generous rebate than 

McWane.” However, some distributors also identified other factors that 

contributed to their decision not to purchase from Star, including “concerns about 

Star’s inventory, the quality of fittings produced at several different foundries, . . . 

the timeliness of delivery,” and negative past business dealings with Star.

Despite McWane’s Full Support Program, Star entered the domestic fittings 

market and made sales to various distributors. From 2006 until Star’s entry in 

2009, McWane was the only manufacturer of domestic fittings, with 100% of the 

market for domestic-only projects. By 2010, Star had gained approximately 5% of 

 3 McWane maintains that this was the only example of the Full Support Program’s enforcement: 

“McWane never enforced the rebate program against any other distributor.” Of course, the goal 

of the program was not necessarily to enforce the punishments but to dissuade customers from 

leaving McWane in the first place.

Case: 14-11363 Date Filed: 04/15/2015 Page: 8 of 55 
9

the domestic fittings market, while McWane captured the remaining 95%. Star 

grew to just under 10% market share in 2011, leaving the remaining 90% for 

McWane, and Star was “on pace, at the time of trial, to have its best year ever for 

[d]omestic [f]ittings sales in 2012.” The Commission noted that “many 

distributors made purchases under the exceptions allowed by the Full Support 

Program,” but that Star’s sales in total “were small compared to the overall size of 

the market.” Star estimated that if the Full Support Program had not been in place, 

its sales would have been greater by a multiple of 2.5 in 2010 and by a multiple of 

three in 2011. 

Star never ended up building or buying a domestic foundry of its own. The 

Commission found that this was because Star “believed its sales level was 

insufficient to justify running its own foundry.” Star estimated that the cost of 

producing fittings at its own domestic foundry would have been significantly lower 

than the cost of contracting with independent foundries, and that operating its own 

foundry would have allowed it to appreciably reduce its domestic fittings prices. 

(This is because the third-party foundries used less specialized and less efficient 

equipment, had increased logistical costs and higher labor costs, and charged a 

markup plus a fee for shipping.) The Commission and the ALJ also found that the 

Full Support Program was a “significant reason” that another distributor, 

Serampore Industries Private, decided not to enter the domestic fittings market.

Case: 14-11363 Date Filed: 04/15/2015 Page: 9 of 55 
10

During 2009-2010, following Star’s entry into the market and the Full 

Support Program’s implementation, McWane’s production costs for domestic 

fittings remained flat, but it raised its prices for domestic fittings and increased its 

gross profits. These prices were relatively consistent across all states, regardless of 

whether Star had entered the domestic fittings market as a rival; Star’s presence in 

various states did not result in lower prices. McWane “continued to sell its 

domestic fittings into domestic-only specifications at prices that earned 

significantly higher gross profits than for non-domestic fittings, which faced 

greater competition.” McWane, Inc. (McWane II), 2014-1 Trade Cas. (CCH) ¶ 

78670, 2014 WL 556261, at *17 (F.T.C. Jan. 30, 2014). Star’s average prices, 

however, were higher than McWane’s in several states.

The duration of the Full Support Program is a matter of some dispute. 

McWane contends that it ended the Full Support Program in early 2010, 

eliminating the provision that customers might forego shipments for up to 12 

weeks. But the Commission found that McWane had never “publicly withdrawn 

the policy or notified distributors of any changes,” and that some distributors 

believed that the policy was “still in effect.” There is also evidence that some 

distributors started to ignore the Full Support Program in 2010 after they learned of 

the FTC’s investigation into McWane’s practices.

Case: 14-11363 Date Filed: 04/15/2015 Page: 10 of 55 
11

B.

On January 4, 2012, the FTC issued a seven-count administrative complaint 

charging McWane, Star, and Sigma4 with violating Section 5 of the Federal Trade 

Commission Act. (In February and May of 2012, Star and Sigma entered consent 

decrees with the FTC without any admission of wrongdoing, leaving McWane as 

the sole defendant.) The only charge at issue on appeal is found in count six,5

which alleged that McWane’s exclusivity mandate (the Full Support Program) 

constituted unlawful maintenance of a monopoly over the domestic fittings market.

The ALJ conducted a two-month trial. On May 8, 2013, he issued a 464-

page decision ruling in favor of the complaint counsel on count 6.6

 He specifically

found that the sales for projects requiring domestic fittings constituted a separate 

product market in which McWane had monopoly power. McWane I, 155 F.T.C. at 

1239-40, 1375-88. He ruled that McWane’s Full Support Program was an 

exclusive dealing arrangement that foreclosed Star from a substantial share of the 

domestic fittings market and, thereby, unlawfully maintained McWane’s 

 4 In a series of events irrelevant to the resolution of this appeal, Sigma entered the domestic 

fittings market as an authorized distributor of McWane’s domestic fittings. See McWane II, 

2014 WL 556261, at *10-11.

5 Counts 1, 2, and 3 alleged an earlier conspiracy among McWane, Sigma, and Star to stabilize 

prices in the non-domestic fittings market. Counts 4 and 5 alleged that McWane’s distribution 

agreement with Sigma violated the Federal Trade Commission Act. Count 7 alleged that the 

same conduct targeted in Count 6 amounted to attempted monopolization.

6 The ALJ dismissed counts 1-3 but ruled in favor of the complaint counsel on counts 4-7.

Case: 14-11363 Date Filed: 04/15/2015 Page: 11 of 55 
12

monopoly. Both McWane and the complaint counsel appealed the ALJ’s decision 

to the Commission.

A divided Commission affirmed as to count 6.7

 Like the ALJ, the 

Commission found that the relevant market was the supply of domestically 

manufactured fittings for use in domestic-only waterworks projects, because 

imported fittings are not a substitute for domestic fittings for such projects. 

McWane II, 2014 WL 556261, at *13. The Commission noted that this conclusion 

was bolstered by the higher prices charged for domestic fittings used in domesticonly projects. Id. at *14. The Commission also found that McWane had 

monopoly power in that market, with 90-95% market share from 2010-11 (a much 

higher share than courts usually require for a prima facie showing of monopoly 

power) and substantial barriers to entry in the form of major capital outlays 

required to produce domestic fittings. Id. at *15-18. 

The Commission agreed that McWane’s Full Support Program was an 

unlawful exclusive dealing arrangement that foreclosed Star’s access to distributors 

for domestic fittings and harmed competition, thereby contributing significantly to 

the maintenance of McWane’s monopoly power in the market. Id. at *18-28. It 

noted that HD Supply and Ferguson, the country’s two largest waterworks 

 7 The Commission dismissed the other six counts. As to Count 7, attempted monopolization, the 

Commission deemed it “unnecessary to ask whether McWane attempted to monopolize the 

market” since it had found that McWane had actually done so. McWane II, 2014 WL 556261, at 

*31 n.16.

Case: 14-11363 Date Filed: 04/15/2015 Page: 12 of 55 
13

distributors (with a combined 60% market share), prohibited their branches from 

purchasing domestic fittings from Star after the Full Support Program was 

announced, except through the program’s limited exceptions. Id. at *23. The 

practical effect of the program, the Commission found, “was to make it 

economically infeasible for distributors to drop McWane[] . . . and switch to Star.” 

Id. at *24. Unable to attract distributors, Star was prevented from generating the 

revenue needed to acquire its own foundry, a more efficient means of producing 

domestic fittings; thus, its growth into a rival that could challenge McWane’s 

monopoly power was artificially stunted. Id. at *25.

Moreover, the Commission found that there was evidence that McWane’s 

exclusionary conduct had an impact on price: after the Full Support Program was 

implemented, McWane raised domestic fittings prices and increased its gross 

profits despite flat production costs, and it did so across states, regardless of 

whether Star had entered the market as a competitor. Id. at *27.

Commissioner Wright filed a lengthy dissent. He assumed that McWane 

was a monopolist in the domestic-only fittings market, agreed that the Full Support 

Program was an exclusive dealing arrangement, and concluded that there was 

“ample record evidence” that the program harmed Star. Id. at *46 (Wright, 

dissenting). However, he contended that the government “failed to carry its burden 

to demonstrate that the Full Support Program resulted in cognizable harm to 

Case: 14-11363 Date Filed: 04/15/2015 Page: 13 of 55 
14

competition.” Id. at *62. He argued that according to modern economic theory, 

exclusive dealing is harmful to competition (as opposed to merely harmful to a 

competitor) only if it prevents rivals from attaining a minimum efficient scale 

needed to constrain a monopolist’s exercise of monopoly power. Id. at *48. 

Commissioner Wright contended that the government had failed to demonstrate 

such harm to competition, either through direct or indirect evidence. Specifically, 

he suggested that the government had failed to show that Star’s inability to afford 

its own foundry was the equivalent of its being unable to achieve minimum 

efficient scale, failed to link the market foreclosure to McWane’s alleged 

maintenance of monopoly power, and miscalculated the relevant foreclosure share. 

Id. at *58-60. Moreover, he noted that other forms of indirect evidence --

including Star’s ability to enter the domestic fittings market and expand despite the 

existence of the Full Support Program, as well as the short duration and 

terminability of the exclusive dealing arrangement -- cut against a finding that 

McWane’s conduct was exclusionary.8

 Id. at *61-62.

McWane filed a timely petition in this Court seeking review of the 

Commissioner’s order on the lone remaining count.

 8 Former FTC Commissioner Rosch -- whom Commissioner Wright replaced on the Commission 

in January 2013 -- had issued similar criticisms in his dissents at both the pleading and summary 

judgment stages of the case.

Case: 14-11363 Date Filed: 04/15/2015 Page: 14 of 55 
15

II.

This Court “review[s] the FTC’s findings of fact and economic conclusions 

under the substantial evidence standard.” Schering-Plough Corp. v. FTC, 402 F.3d 

1056, 1062 (11th Cir. 2005); see 15 U.S.C. § 45(c) (“The findings of the 

Commission as to the facts, if supported by evidence, shall be conclusive.”). 

“Substantial evidence is more than a mere scintilla, and [this Court] require[s] such 

relevant evidence as a reasonable mind might accept as adequate to support a 

conclusion.” Schering-Plough, 402 F.3d at 1062 (quotation omitted). This 

standard “forbids a court to ‘make its own appraisal of the testimony, picking and 

choosing for itself among uncertain and conflicting inferences.’” Polypore Int’l, 

Inc. v. FTC, 686 F.3d 1208, 1213 (11th Cir. 2012) (quoting FTC v. Algoma 

Lumber Co., 291 U.S. 67, 73 (1934)). Indeed, “the possibility of drawing two 

inconsistent conclusions from the evidence does not prevent an administrative 

agency’s finding from being supported by substantial evidence.” Consolo v. Fed. 

Mar. Comm’n, 383 U.S. 607, 620 (1966).

We review de novo the Commission’s legal conclusions and the application 

of the facts to the law. Polypore Int’l, 686 F.3d at 1213. However, “we afford the 

FTC some deference as to its informed judgment that a particular commercial 

practice violates the Federal Trade Commission Act.” Schering-Plough, 402 F.3d 

at 1063; see FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 454 (1986) (“[T]he 

Case: 14-11363 Date Filed: 04/15/2015 Page: 15 of 55 
16

identification of governing legal standards and their application to the facts found . 

. . are . . . for the courts to resolve, although even in considering such issues the 

courts are to give some deference to the Commission’s informed judgment that a 

particular commercial practice is to be condemned as ‘unfair’ [under the Federal 

Trade Commission Act].”).

McWane challenges three particular determinations by the Commission: its 

market definition; its finding that McWane monopolized the domestic fittings 

market; and its finding that the Full Support Program harmed competition. 

Because the standard of review is essential to our analysis, we explain the 

applicable standard for each of the Commission’s conclusions. All three 

determinations are factual or economic conclusions reviewed only for substantial 

evidence.

First, our caselaw makes clear that “[t]he definition of the relevant market is 

essentially a factual question.” U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 

986, 994 (11th Cir. 1993). Thus, we review the FTC’s determination of market 

definition -- like all its factual findings -- for substantial evidence. See Jim Walter 

Corp. v. FTC, 625 F.2d 676, 682 (5th Cir. 1980) (applying the substantial evidence 

standard in reviewing the FTC’s finding of market definition).

9

 9 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), this Court 

adopted as binding precedent all decisions of the old Fifth Circuit handed down prior to October 

1, 1981.

Case: 14-11363 Date Filed: 04/15/2015 Page: 16 of 55 
17

Second, the FTC’s determination that a defendant possesses monopoly 

power is a factual or economic conclusion that we also review for substantial 

evidence. No prior case of ours appears to hold this specifically, but this 

conclusion follows from previous cases that have treated a determination that a 

defendant possesses market power -- a lesser-included element of monopoly power 

-- as a factual finding. See NaBanco, 779 F.2d at 605. Again, other circuits agree. 

 

A recent opinion of this Court stated that we review the FTC’s finding of market 

definition for “clear error.” Polypore Int’l, 686 F.3d at 1217. Clear error is the traditional 

standard used to review a district court’s factual findings, and we employ it in reviewing a 

finding of market definition by a district court judge. See, e.g., United States v. Engelhard Corp., 

126 F.3d 1302, 1305 (11th Cir. 1997); Cable Holdings of Ga., Inc. v. Home Video, Inc., 825 

F.2d 1559, 1563 (11th Cir. 1987); Nat’l Bancard Corp. (NaBanco) v. VISA U.S.A., Inc., 779 

F.2d 592, 604 (11th Cir. 1986). Polypore drew its “clear error” language from just such a case. 

688 F.3d at 1217 (citing Engelhard, 126 F.3d at 1305). But substantial evidence, not clear error, 

is the “traditional . . . standard used by courts to review agency decisions.” Am. Tower LP v. 

City of Huntsville, 295 F.3d 1203, 1207 (11th Cir. 2002). Indeed, Polypore itself noted the 

correct standard of review for the FTC’s factual findings earlier in the opinion. See 686 F.3d at 

1213. 

Other circuits follow this distinction, reviewing the FTC’s market definition finding for 

substantial evidence while reviewing a district court’s market definition finding for clear error. 

Compare, e.g., Olin Corp. v. FTC, 986 F.2d 1295, 1297-98 (9th Cir. 1993) (reviewing FTC’s 

market definition for substantial evidence), and ProMedica Health Sys., Inc. v. FTC, 749 F.3d 

559, 566 (6th Cir. 2014) (same), petition for cert. filed, No. 14-762 (Dec. 30, 2014), with, e.g., 

JBL Enters., Inc. v. Jhirmack Enters., Inc., 698 F.2d 1011, 1016 (9th Cir. 1983) (reviewing 

district court’s market definition for clear error), and United States v. Cent. State Bank, 817 F.2d 

22, 24 (6th Cir. 1987) (per curiam) (same).

Moreover, Polypore’s language cannot be squared with the old Fifth Circuit’s approach 

in Jim Walter. In that case, the Court asked “whether there is substantial evidence to support the 

FTC’s finding of a national market for tar and asphalt roofing products.” 625 F.2d at 683. After 

determining that the FTC’s market definition was founded “primarily on the casual observations 

of industry representatives and an economist,” the Court held that the FTC’s proposed market 

was “not supported by substantial evidence” and remanded “for reconsideration of the 

appropriate . . . market.” Id. Jim Walter plainly held that the FTC’s market definition is 

reviewed for substantial evidence. Although Polypore may be read to say otherwise, in the case 

of an intra-circuit conflict, the earlier case is binding. See Morrison v. Amway Corp., 323 F.3d 

920, 929 (11th Cir. 2003). 

Case: 14-11363 Date Filed: 04/15/2015 Page: 17 of 55 
18

E.g., Realcomp II, Ltd. v. FTC, 635 F.3d 815, 829 (6th Cir. 2011) (applying 

substantial evidence standard to FTC’s finding that defendant possessed substantial 

market power); L.G. Balfour Co. v. FTC, 442 F.2d 1, 13 (7th Cir. 1971) (applying 

substantial evidence standard to FTC’s finding that defendant possessed monopoly 

power).

Finally, so too with the Commission’s determination that McWane’s 

conduct harmed competition and lacked offsetting procompetitive benefits. Again, 

no binding case of ours appears to deal with the particular type of Federal Trade 

Commission Act violations at issue here, but we have applied the substantial 

evidence standard to analogous findings under that same act and other antitrust 

statutes. See Schering-Plough, 402 F.3d at 1068 (examining “whether there is 

substantial evidence to support the Commission’s conclusion that [defendant’s 

conduct] restrict[ed] competition” in violation of Section 1 of the Sherman Act and 

Section 5 of the Federal Trade Commission Act); Foremost Dairies, Inc. v. FTC, 

348 F.2d 674, 678-79 (5th Cir. 1965) (applying substantial evidence standard to 

FTC’s finding of injury to competition under the Robinson-Patman Act).

This approach comports with the law in other circuits in a variety of antitrust 

contexts. The Seventh Circuit put the point most clearly in a Clayton Act case: 

“[T]he substantial evidence rule (like the clearly erroneous rule) applies to ultimate 

as well as underlying facts, including economic judgments. . . . [T]he ultimate 

Case: 14-11363 Date Filed: 04/15/2015 Page: 18 of 55 
19

question under the Clayton Act -- whether the challenged transaction may 

substantially lessen competition -- is governed by the substantial evidence rule.” 

Hosp. Corp. of Am. v. FTC, 807 F.2d 1381, 1385 (7th Cir. 1986) (internal citation 

omitted). Our sister circuits have applied the substantial evidence standard to 

analogous economic conclusions in cases brought under the Federal Trade 

Commission Act, e.g., N.C. State Bd. of Dental Exam’rs v. FTC, 717 F.3d 359, 

374 (4th Cir. 2013) (applying substantial evidence standard to FTC’s determination 

that defendant’s behavior “was likely to cause significant anticompetitive harms” 

in violation of the Federal Trade Commission Act), aff’d, 135 S. Ct. 1101 (2015); 

Realcomp II, 635 F.3d at 831-34 (applying substantial evidence standard to FTC’s 

finding that defendant’s policies harmed competition in violation of the Federal 

Trade Commission Act), and under other antitrust statutes, see, e.g., N. Tex. 

Specialty Physicians v. FTC, 528 F.3d 346, 370 (5th Cir. 2008) (applying 

substantial evidence standard to FTC’s determination that defendant’s conduct 

“amounted to horizontal price-fixing that is unrelated to competitive efficiencies” 

under Section 1 of the Sherman Act); Gibson v. FTC, 682 F.2d 554, 571 (5th Cir. 

1982) (applying substantial evidence standard to FTC’s finding of illegal 

brokerage in violation of Clayton Act § 2(c)); RSR Corp. v. FTC, 602 F.2d 1317, 

1320, 1324-25 (9th Cir. 1979) (applying substantial evidence standard to FTC’s 

finding under Section 7 of the Clayton Act that merger was anticompetitive); 

Case: 14-11363 Date Filed: 04/15/2015 Page: 19 of 55 
20

Fruehauf Corp. v. FTC, 603 F.2d 345, 355 (2d Cir. 1979) (same); Yamaha Motor 

Co. v. FTC, 657 F.2d 971, 977 n.7 (8th Cir. 1981) (same, as to a joint venture).

The ultimate legal conclusion that a defendant’s conduct violates the Federal 

Trade Commission Act is an “application of the facts to the law,” which we review 

de novo, Polypore Int’l, 686 F.3d at 1213, except for the limited deference 

prescribed by Indiana Federation of Dentists, 476 U.S. at 454. But the 

Commission’s factual building blocks and economic conclusions -- findings of 

market definition, monopoly power, and harm to competition -- are reviewed for 

substantial evidence. 

III.

The Commission found that McWane adopted an exclusionary distribution 

policy that maintained its monopoly power in the domestic fittings market in 

violation of Section 5 of the Federal Trade Commission Act, which prohibits 

“[u]nfair methods of competition in or affecting commerce.” 15 U.S.C. § 45.10 

Although exclusive dealing arrangements are common and can be procompetitive,

 10 The Commission acknowledged that violations of Section 2 of the Sherman Act 

(monopolization) also constitute “unfair methods of competition” under Section 5 of the Federal 

Trade Commission Act, and therefore relied on Section 2 caselaw in its analysis. See McWane 

II, 2014 WL 556261, at *11 n.7 (citing Cal. Dental Ass’n v. FTC, 526 U.S. 756, 762 & n.3 

(1999); FTC v. Motion Picture Adver. Serv. Co., 344 U.S. 392, 394-95 (1953)); see also William 

Holmes & Melissa Mangiaracina, Antitrust Law Handbook § 7:2 (2014) (“For the most part . . . 

the [Federal Trade Commission Act] has been held coterminous with the Sherman and Clayton 

Acts.”). Both parties (and the dissenting Commissioner) agree that this is the correct analytical 

approach.

Case: 14-11363 Date Filed: 04/15/2015 Page: 20 of 55 
21

particularly in competitive markets, see Race Tires Am., Inc. v. Hoosier Racing 

Tire Corp., 614 F.3d 57, 76 (3d Cir. 2010), these arrangements can harm 

competition in certain circumstances, see Jefferson Parish Hosp. Dist. No. 2 v. 

Hyde, 466 U.S. 2, 45 (1984) (O’Connor, J., concurring) (“Exclusive dealing can 

have adverse economic consequences by allowing one supplier of goods or 

services unreasonably to deprive other suppliers of a market for their goods . . .”), 

abrogated on other grounds by Ill. Tool Works Inc. v. Ind. Ink, Inc., 547 U.S. 28 

(2006); Jonathan M. Jacobson, Exclusive Dealing, “Foreclosure,” and Consumer 

Harm, 70 Antitrust L.J. 311, 328 (2002) (“The concern [with exclusive dealing 

arrangements] is . . . that creating or increasing market power through exclusive 

dealing is the means by which the defendant is likely to increase prices, restrict 

output, reduce quality, slow innovation, or otherwise harm consumers.”). When a 

market is competitive, the “competition for the [exclusive] contract is a vital form 

of rivalry” that can induce the offering firm to provide price reductions or 

improved services to buyers, to the ultimate benefit of consumers. See Menasha 

Corp. v. News Am. Mktg. In-Store, Inc., 354 F.3d 661, 663 (7th Cir. 2004). But, 

notably, in the absence of such competition, a dominant firm can impose exclusive 

deals on downstream dealers to “strengthen[] or prolong[] [its] market position.” 

IIIB Philip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 760b7, at 54 (3d ed. 

2008). Thus, while such arrangements are “not illegal in themselves,” they can run 

Case: 14-11363 Date Filed: 04/15/2015 Page: 21 of 55 
22

afoul of antitrust laws as “an improper means of maintaining a monopoly.” United 

States v. Dentsply Int’l, Inc., 399 F.3d 181, 187 (3d Cir. 2005). 

A violation of Section 5 of the Federal Trade Commission Act premised on 

monopolization requires proof of “(1) the possession 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 accident.” Morris Commc’ns Corp. v. PGA Tour, 

Inc., 364 F.3d 1288, 1293-94 (11th Cir. 2004) (quoting United States v. Grinnell 

Corp., 384 U.S. 563, 570-71 (1966)) (internal quotation mark omitted). Thus, for 

the Commission’s conclusion that McWane violated the Federal Trade 

Commission Act to stand, it must have successfully defined the relevant market, 

demonstrated that McWane had monopoly power in that market, and showed that 

McWane’s Full Support Program constituted the illegal maintenance of that 

monopoly power. McWane challenges all three of the Commission’s 

determinations, and we address each of them in turn.

A. Monopoly Power in the Relevant Market

1. Market Definition

“Defining the market is a necessary step in any analysis of market power and 

thus an indispensable element in the consideration of any monopolization . . . case 

arising under section 2.” U.S. Anchor, 7 F.3d at 994. A product market consists of 

Case: 14-11363 Date Filed: 04/15/2015 Page: 22 of 55 
23

“products that have reasonable interchangeability for the purposes for which they 

are produced.” United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 404 

(1956). “The reasonable interchangeability of use or the cross-elasticity of demand 

between a product and its substitutes constitutes the outer boundaries of a product 

market for antitrust purposes.” U.S. Anchor, 7 F.3d at 995 (footnote omitted). 

“Cross-elasticity of demand” measures the extent to which modest variations in the 

price of one good affect customer demand for another good. “[A] high crosselasticity of demand indicates that the two products in question are reasonably 

interchangeable substitutes for each other and hence are part of the same market.” 

Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327, 1337 n.13 (11th Cir. 2010). 

In defining product markets, this Court has long looked to the factors set 

forth by the Supreme Court in Brown Shoe Co. v. United States, 370 U.S. 294 

(1962), including “industry or public recognition of the submarket as a separate 

economic entity, the product’s peculiar characteristics and uses, unique production 

facilities, distinct customers, distinct prices, sensitivity to price changes, and 

specialized vendors.” Polypore Int’l, 686 F.3d at 1217 (quoting U.S. Anchor, 7 

F.3d at 995). Again, we are obliged to review the Commission’s market definition 

for substantial evidence.

A relevant geographic market also must be defined. See, e.g., Am. Key 

Corp. v. Cole Nat’l Corp., 762 F.2d 1569, 1579 (11th Cir. 1985). The Commission 

Case: 14-11363 Date Filed: 04/15/2015 Page: 23 of 55 
24

(and the ALJ) defined the relevant geographic market as the United States. Neither 

party contests this determination.

As for the product market, the Commission, agreeing with the ALJ, found 

that the relevant market was one “for the supply of domestically-manufactured 

fittings for use in . . . projects with domestic-only specifications.” McWane II, 

2014 WL 556261, at *13. It noted that various laws and end-user preferences 

requiring projects to use domestic fittings precluded imported fittings from being 

“reasonable substitutes” for those projects, even though the fittings themselves are 

functionally identical. Id.; see IIB Phillip E. Areeda, Herbert Hovenkamp & John 

Solow, Antitrust Law ¶ 572b, at 430 (3d ed. 2007) (“To the extent that regulation 

limits substitution, it may define the extent of the market.”). The Commission also 

noted that McWane charged higher prices for (and reaped greater profits from)

domestic fittings in domestic-only projects: the ALJ found that McWane charged 

approximately 20%-95% more for its domestic fittings for domestic-only projects 

than for open-specification projects. This price differentiation reflected McWane’s 

ability to target customers with domestic-only project specifications who could not 

avoid the higher prices by substituting imported fittings. Indeed, Brown Shoe

specifically identified “distinct prices” as a factor indicating a separate product 

market. 370 U.S. at 325.

Case: 14-11363 Date Filed: 04/15/2015 Page: 24 of 55 
25

McWane contends, however, that domestic and imported fittings are, in fact,

interchangeable, because some customers (those whose projects’ specifications are 

not dictated by law) can “flip” their projects from domestic-only to open, thereby 

turning imported fittings into a reasonable substitute. However, the Commission 

found, based on testimony in the record, that “flipping typically only occurs when 

domestic fittings are unavailable, rather than as a result of competition between 

domestic and imported fittings.” McWane II, 2014 WL 556261, at *15. This is 

consonant with the ALJ’s finding that end users with domestic-only preferences 

“are aware of, but not sensitive to, the price differential between domestic fittings 

and import fittings.” McWane I, 155 F.T.C. at 999.

McWane also alleges that the Commission’s definition was insufficient as a 

matter of law because it “was unsupported by an expert economic test,” which 

McWane claims is a requirement under Eleventh Circuit caselaw. It is true that in 

some circumstances we have said that a market definition “must be based on expert 

testimony.” Bailey v. Allgas, Inc., 284 F.3d 1237, 1246 (11th Cir. 2002); see Am. 

Key Corp., 762 F.2d at 1579 (“Construction of a relevant economic market . . . 

cannot . . . be based upon lay opinion testimony.”). Such testimony can be 

insufficient when “conclusory” or “based upon insufficient economic analysis.” 

Gulfstream Park Racing Ass’n, Inc. v. Tampa Bay Downs, Inc., 479 F.3d 1310, 

1313 (11th Cir. 2007) (per curiam); see Bailey, 284 F.3d at 1246-47 (finding that 

Case: 14-11363 Date Filed: 04/15/2015 Page: 25 of 55 
26

plaintiff’s expert testimony, which failed to consider alternative products in 

defining relevant market, was insufficient as a matter of law). 

But in this case, the Commission did rely in part on the complaint counsel’s 

expert witness, Dr. Laurence Schumann, who considered a hypothetical 

monopolist test and the lack of interchangeability between domestic and imported 

fittings in domestic-only projects. Nevertheless, McWane claims that the expert’s 

analysis was insufficient because it did not involve an econometric analysis, such 

as a cross-elasticity of demand study. However, there appears to be no support in 

the caselaw for McWane’s claim that such a technical analysis is always required. 

Indeed, as the Commission correctly noted, “[c]ourts routinely rely on qualitative 

economic evidence to define relevant markets.” McWane II, 2014 WL 556261, at 

*14. Thus, for example, in Polypore, the Commission’s market definition was 

affirmed by this Court on the basis of the Brown Shoe factors, apparently without 

an econometric study. 686 F.3d at 1217-18. Given the identification of persistent 

price differences between domestic fittings and imported fittings, the distinct 

customers, and the lack of reasonable substitutes in this case, there was sufficient 

evidence to support the Commission’s market definition.

2. Monopoly Power

“As a legal matter, Sherman Act § 2 requires that the defendant either have 

monopoly power or a dangerous probability of achieving it . . .” XI Philip E. 

Case: 14-11363 Date Filed: 04/15/2015 Page: 26 of 55 
27

Areeda & Herbert Hovenkamp, Antitrust Law ¶ 1800c5, at 22 (3d ed. 2011); 

accord Dentsply, 399 F.3d at 187 (“A prerequisite for [a § 2 violation] is a finding 

that monopoly power exists.”). Monopoly power is the ability “to control prices or 

exclude competition.” Grinnell, 384 U.S. at 571 (quotation omitted). However, 

“[b]ecause . . . direct proof [of the ability to profitably raise prices substantially 

above the competitive level] is only rarely available, courts more typically examine 

market structure in search of circumstantial evidence of monopoly power.” United 

States v. Microsoft Corp., 253 F.3d 34, 51 (D.C. Cir. 2001) (en banc) (per curiam). 

Courts regularly ask whether the firm has a predominant market share, see Bailey, 

284 F.3d at 1246 (“Because demand is difficult to establish with accuracy, 

evidence of a seller’s market share may provide the most convenient circumstantial 

measure of monopoly power.”), and look to other circumstantial factors such as 

“the size and strength of competing firms, freedom of entry, pricing trends and 

practices in the industry, ability of consumers to substitute comparable goods, and 

consumer demand,” Dentsply, 399 F.3d at 187.

In determining that McWane had monopoly power, the Commission found 

that McWane’s market share of the domestic fittings market had been 100% from 

2006 until Star’s entry into the market in 2009. McWane’s market share was then 

approximately 95% in 2010 and approximately 90% in 2011, “far exceed[ing] the 

levels that courts typically require to support a prima facie showing of monopoly 

Case: 14-11363 Date Filed: 04/15/2015 Page: 27 of 55 
28

power.” McWane II, 2014 WL 556261, at *16. It also observed that there were

“substantial barriers to entry in the domestic fittings market” both for brand new 

entrants and for those who already supply imported fittings. Id. Although Star 

was able to enter the market, the Commission noted that its share remained below 

10% in 2010 and 2011, and, notably, its entry had no effect on McWane’s prices. 

The Commission reasoned that McWane’s “ability to control prices” in the market 

“provide[d] direct evidence of [its] monopoly power.” Id. at *18.

The difficulty in this case is that the circumstantial evidence does not all 

point in the same direction. McWane’s market share during the relevant time 

period is plainly high enough to be considered predominant. See Eastman Kodak 

Co. v. Image Technical Servs., Inc., 504 U.S. 451, 481 (1992) (80-95% market 

share sufficient to establish monopoly power); Grinnell, 384 U.S. at 571 (87% 

sufficient); Dentsply, 399 F.3d at 188 (market share between 75-80% is “more than 

adequate to establish a prima facie case of [monopoly] power”); Colo. Interstate 

Gas Co. v. Natural Gas Pipeline Co. of Am., 885 F.2d 683, 694 n.18 (10th Cir. 

1989) (“[To establish monopoly power,] lower courts generally require a minimum 

market share of between 70% and 80%.”); Cliff Food Stores, Inc. v. Kroger, Inc., 

417 F.2d 203, 207 n.2 (5th Cir. 1969) (“[S]omething more than 50% of the market 

is a prerequisite to a finding of monopoly”). Standing alone, this would seem to be 

Case: 14-11363 Date Filed: 04/15/2015 Page: 28 of 55 
29

sufficient evidence to support the Commission’s conclusion that McWane had 

monopoly power in the domestic fittings market.

However, there is also evidence that, despite the presence of the Full 

Support Program, Star was still able to enter the domestic fittings market and 

expand its market share from 0% in 2009 to approximately 5% in 2010 to 

approximately 10% in 2011, while McWane’s market share correspondingly 

declined. McWane contends that this “clear and successful entry” and growth by a 

competitor precludes a finding of monopoly power by demonstrating a lack of 

barriers to entry in the market. The Commission disagreed, finding that, despite 

Star’s entry and growth, substantial barriers to entry existed in both the overall 

fittings market and the domestic fittings market. The ALJ found (and the 

Commission agreed) that “a significant capital investment” is required to enter the 

overall fittings market, McWane I, 155 F.T.C. at 1113, as “new entrant[s] must 

overcome existing relationships between existing manufacturers[,] and the 

[d]istributors[,] and [e]nd [u]sers,” in addition to “develop[ing] hundreds of 

patterns and moldings,” id. at 1114. All told, the Commission agreed with the ALJ 

that a de novo entrant would need approximately three to five years to enter the 

fittings market. McWane II, 2014 WL 556261, at *16. Star, as an established 

player in the overall fittings market, did not face all of these obstacles in entering 

the domestic fittings market. (For example, it had pre-existing relationships with

Case: 14-11363 Date Filed: 04/15/2015 Page: 29 of 55 
30

some distributors and did not need to alter its sales team.) Nevertheless, the 

Commission found that significant barriers to entry existed in the domestic market, 

as Star still needed to purchase its own foundry or contract with third-party 

domestic foundries. Id.; see Bailey, 284 F.3d at 1256 (“Entry barriers include . . . 

capital outlays required to start a new business . . . .”). Moreover, the Commission 

found that the Full Support Program itself posed a barrier to entry by shrinking the 

number of available distributors. In support of this argument, the Commission 

observed that two other suppliers of imported fittings, Sigma Corporation and 

Serampore Industries Private, considered entering the domestic fittings market but 

ultimately concluded that the costs and challenges were too high. McWane II, 

2014 WL 556261, at *17.

Some caselaw from other circuits appears to support McWane. See Tops 

Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 99 (2d Cir. 1998) (“We cannot be 

blinded by market share figures and ignore marketplace realities, such as the 

relative ease of competitive entry. . . . [A competitor’s] successful entry . . . refutes 

any inference of the existence of monopoly power that might be drawn from [the 

defendant’s] market share.”).11 But not all courts agree. See Rebel Oil Co. v. Atl. 

Richfield Co., 51 F.3d 1421, 1440 (9th Cir. 1995) (“The fact that entry has 

 11 It is worth noting, however, that the defendant in Tops Markets had a lower market share than 

McWane -- 74% as opposed to over 90% -- and the plaintiffs “failed to produce any . . . evidence 

to rebut [the defendant’s] assertion” that the market contained no barriers to entry. 142 F.3d at 

99. In this case, as we noted, the complaint alleged and the Commission found significant entry 

barriers.

Case: 14-11363 Date Filed: 04/15/2015 Page: 30 of 55 
31

occurred does not necessarily preclude the existence of ‘significant’ entry barriers. 

If the output or capacity of the new entrant is insufficient to take significant 

business away from the predator, they are unlikely to represent a challenge to the 

predator’s market power.”); Reazin v. Blue Cross & Blue Shield of Kan., Inc., 899 

F.2d 951, 971 (10th Cir. 1990) (rejecting defendant’s argument that presence of 

multiple competitors demonstrated that entry barriers were insubstantial where “no 

other entrant remotely approached [defendant’s] domination of the market”); Oahu 

Gas Serv., Inc. v. Pac. Res. Inc., 838 F.2d 360, 366-67 (9th Cir. 1988) (“A 

declining market share may reflect an absence of market power, but it does not 

foreclose a finding of such power.” (quotation omitted)). No decision of this Court 

appears to be directly on point.

In addition to McWane’s overwhelming (albeit declining) market share, the 

Commission cited the particular importance of Star’s inability to constrain 

McWane’s pricing for domestic fittings. After Star’s entry, McWane continued to 

sell domestic fittings for domestic-only products at prices that “earned significantly 

higher gross profits than for non-domestic fittings, which faced greater 

competition.” McWane II, 2014 WL 556261, at *17. Indeed, McWane’s prices 

and profits for domestic fittings rose in 2010, the year after Star’s entry.

On this record, we are unprepared to say that Star’s entry and growth 

foreclose a finding that McWane possessed monopoly power in the relevant 

Case: 14-11363 Date Filed: 04/15/2015 Page: 31 of 55 
32

market. Although the limited entry and expansion of a competitor sometimes may 

cut against such a finding, the evidence of McWane’s overwhelming market share

(90%), the large capital outlays required to enter the domestic fittings market, and 

McWane’s undeniable continued power over domestic fittings prices amount to 

sufficient evidence that “a reasonable mind might accept as adequate to support”

the Commission’s conclusion. Schering-Plough, 402 F.3d at 1062 (quotation 

omitted).

B. Monopoly Maintenance

Having established that McWane “possess[es] . . . monopoly power in the 

relevant market,” we turn to the question of whether the government proved that 

McWane engaged in “the willful . . . maintenance of that power as distinguished 

from growth or development as a consequence of a superior product, business 

acumen, or historic accident.” Morris Commc’ns, 364 F.3d at 1293-94 (quoting 

Grinnell, 384 U.S. at 570-71).

As we’ve observed, exclusive dealing arrangements are not per se unlawful, 

but they can run afoul of the antitrust laws when used by a dominant firm to 

maintain its monopoly. Of particular relevance to this case, an exclusive dealing 

arrangement can be harmful when it allows a monopolist to maintain its monopoly 

power by raising its rivals’ costs sufficiently to prevent them from growing into 

effective competitors. See XI Areeda & Hovenkamp, supra, ¶ 1804a, at 116-17 

Case: 14-11363 Date Filed: 04/15/2015 Page: 32 of 55 
33

(describing how exclusive contracts can raise rivals’ costs and harm competition); 

see generally Thomas G. Krattenmaker & Steven C. Salop, Anticompetitive 

Exclusion: Raising Rivals’ Costs to Achieve Power Over Price, 96 Yale L.J. 209 

(1986). The following description seems particularly appropriate here:

[S]uppose an established manufacturer has long held a dominant 

position but is starting to lose market share to an aggressive young 

rival. A set of strategically planned exclusive-dealing contracts may 

slow the rival’s expansion by requiring it to develop alternative outlets 

for its product, or rely at least temporarily on inferior or more 

expensive outlets. Consumer injury results from the delay that the 

dominant firm imposes on the smaller rival’s growth.

XI Areeda & Hovenkamp, supra, ¶ 1802c, at 76; see ZF Meritor, LLC v. Eaton 

Corp., 696 F.3d 254, 271 (3d Cir. 2012); Dentsply, 399 F.3d at 191.

Tracking this economic argument, the Commission’s theory is that 

McWane’s Full Support Program was an exclusive dealing policy designed 

specifically to maintain its monopoly power “by impairing the ability of rivals to 

grow into effective competitors that might erode the firm’s dominant position.” 

McWane II, 2014 WL 556261, at *19. To prevail, the FTC must establish that 

McWane “has engaged in anti-competitive conduct that reasonably appears to be a 

significant contribution to maintaining monopoly power.” Dentsply, 399 F.3d at 

187; accord Microsoft, 253 F.3d at 79 (quoting III Phillip E. Areeda & Herbert 

Hovenkamp, Antitrust Law ¶ 650c, at 69 (1996)).

Case: 14-11363 Date Filed: 04/15/2015 Page: 33 of 55 
34

Neither the Supreme Court nor this Circuit has provided a clear formula with 

which to evaluate an exclusive dealing monopoly maintenance claim, but the D.C. 

Circuit has synthesized a structured, “rule of reason”-style approach to 

monopolization cases that has been cited with approval. See Jacobson, supra, at 

364-69; III Areeda & Hovenkamp, supra, ¶ 651, at 97 n.1. First, the government 

must show that the monopolist’s conduct had the “anticompetitive effect” of 

“harm[ing] competition, not just a competitor.” Microsoft, 253 F.3d at 58-59. If 

the government succeeds in demonstrating this anticompetitive harm, the burden

then shifts to the defendant to present procompetitive justifications for the 

exclusive conduct, which the government can refute. Microsoft, 253 F.3d at 59; 

Dentsply 399 F.3d at 196; see Eastman Kodak, 504 U.S. at 482-84 (describing 

defendant’s proffered “valid business reasons” for its actions and plaintiff’s 

rebuttal). If the court accepts the defendant’s proffered justifications, it must then 

decide whether the conduct’s procompetitive effects outweigh its anticompetitive 

effects. Microsoft, 253 F.3d at 59. This approach mirrors rule of reason analysis. 

See Schering-Plough, 402 F.3d at 1064-65 (outlining a substantially similar 

burden-shifting approach in “traditional rule of reason analysis”).

The Commission followed this approach. It found that McWane’s Full 

Support Program was an exclusive dealing policy that harmed competition by 

foreclosing Star’s access to necessary distributors and contributed significantly to 

Case: 14-11363 Date Filed: 04/15/2015 Page: 34 of 55 
35

Star’s lost sales and subsequent inability to purchase its own foundry and expand 

output. It considered McWane’s procompetitive justifications but ultimately found 

them unpersuasive.

McWane challenges each aspect of the Commission’s ruling: first, it says

that its Full Support Program was “presumptively legal” because it was nonbinding and short-term; second, it contends that the government failed to carry its 

burden of establishing harm to competition; third, it argues that the Commission 

wrongly rejected its proffered procompetitive justifications. We address each 

claim in turn. 

1. Presumptive Legality

McWane suggests that the Full Support Program lacked the characteristics 

of anticompetitive exclusive dealing arrangements. Specifically, it urges that the 

Full Support Program was “presumptively legal” and “[could not] harm 

competition” because it was short-term and voluntary (rather than a binding 

contract of a longer term). No binding precedent from the Supreme Court or this 

Court speaks specifically to this issue, but McWane hangs its hat on caselaw from 

other circuits. See, e.g., Omega Envtl. v. Gilbarco, Inc., 127 F.3d 1157, 1163 (9th 

Cir. 1997) (“[T]he short duration and easy terminability of these [one-year] 

agreements negate substantially their potential to foreclose competition.” (footnote 

omitted)); Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 395 (7th Cir. 

Case: 14-11363 Date Filed: 04/15/2015 Page: 35 of 55 
36

1984) (“Exclusive-dealing contracts terminable in less than a year are 

presumptively lawful under section 3 [of the Clayton Act].”); Jacobson, supra, at 

351-52 & n.195.

But not all courts agree. The Third Circuit in Dentsply held that where 

exclusive deals were “technically only a series of independent sales,” they 

nevertheless constituted antitrust violations because “the economic elements 

involved -- the large share of the market held by [the defendant] and its conduct 

excluding competing manufacturers -- realistically ma[d]e the arrangements . . . as

effective as those in written contracts.” 399 F.3d at 193. The Dentsply court noted 

that “in spite of the legal ease with which the relationship can be terminated, the 

[distributors] have a strong economic incentive to continue [buying defendant’s 

product].” Id. at 194; see also ZF Meritor, 696 F.3d at 270 (“[D]e facto exclusive 

dealing claims are cognizable under the antitrust laws.”); Minn. Mining & Mfg. 

Co. v. Appleton Papers, Inc., 35 F. Supp. 2d 1138, 1144 (D. Minn. 1999) 

(evaluating an exclusive dealing arrangement’s “practical effect” rather than 

“merely . . . its form” in determining whether it was terminable at will (internal 

quotation marks omitted)). The Third Circuit distinguished opposing cases by 

noting that those situations primarily involved markets in which firms could viably 

sell directly to consumers even when foreclosed from distributors, Dentsply, 399 

F.3d at 194 n.2, whereas in Dentsply direct sales were not “a practical alternative

Case: 14-11363 Date Filed: 04/15/2015 Page: 36 of 55 
37

for most [competing] manufacturers,” id. at 189. Likewise, in the case at hand, 

both the Commission and the ALJ found that distributors were essential to the 

domestic fittings market: “No evidence supports the existence of viable alternate 

distribution channels, including direct sales to end users.” McWane II, 2014 WL 

556261, at *23.

This approach is consistent with the Supreme Court’s instruction to look at 

the “practical effect” of exclusive dealing arrangements. Tampa Elec. Co. v. 

Nashville Coal Co., 365 U.S. 320, 326-28 (1961); see also Eastman Kodak, 504 

U.S. at 466-67 (“Legal presumptions that rest on formalistic distinctions rather 

than actual market realities are generally disfavored in antitrust law. This Court 

has preferred to resolve antitrust claims on a case-by-case basis, focusing on the 

‘particular facts disclosed by the record.’” (quoting Maple Flooring Mfrs. Ass’n v. 

United States, 268 U.S. 563, 579 (1925))). The Commission adopted this 

approach, looking to “the reality of [the] marketplace” and finding that “the 

practical effect of McWane’s program was to make it economically infeasible for 

distributors to . . . switch to Star.” McWane II, 2014 WL 556261, at *24. Even the 

dissenting commissioner agreed with this approach. Id. at *55 n.38 (Wright, 

dissenting). So do we.

Moreover, the nature of the Full Support Program arguably posed a greater 

threat to competition than a conventional exclusive dealing contract, as it lacked 

Case: 14-11363 Date Filed: 04/15/2015 Page: 37 of 55 
38

the traditional procompetitive benefits of such contracts. As we’ve noted, courts 

often take a permissive view of such contracts on the grounds that firms compete 

for exclusivity by offering procompetitive inducements (e.g., lower prices, better 

service). But not here. The Full Support Program was “unilaterally imposed” by 

fiat upon all distributors, and the ALJ found that it resulted in “no competition to 

become the exclusive supplier” and no “discount, rebate, or other consideration” 

offered in exchange for exclusivity. McWane I, 155 F.T.C. at 1414. This is 

consistent with evidence that McWane’s prices rose, rather than fell, in the wake of 

the program.

We are disposed to follow the Supreme Court’s instruction that we consider 

“market realities” rather than “formalistic distinctions” in rejecting McWane’s 

argument that the specific form of its exclusivity mandate insulated it from 

antitrust scrutiny.

2. Harm to Competition

We turn then to the first step in the monopolization test: the government 

must demonstrate that the defendant’s challenged conduct had anticompetitive 

effects, harming competition.

As with many areas of antitrust law, the federal judiciary’s approach to 

evaluating exclusive dealing has undergone significant evolution over the past 

century. Under the approach laid out by the Supreme Court in Standard Oil Co. of 

Case: 14-11363 Date Filed: 04/15/2015 Page: 38 of 55 
39

California and Standard Stations, Inc. v. United States (Standard Stations), 337 

U.S. 293 (1949), all that was required for an exclusive deal to violate the Clayton 

Act was proof of substantial foreclosure -- “proof that competition ha[d] been 

foreclosed in a substantial share of the line of commerce affected.” Id. at 314. The 

Supreme Court amended that approach in Tampa Electric, in which it continued to 

emphasize the importance of substantial foreclosure, but opened the door to a 

broader analysis. See 365 U.S. at 328-29.

Lower federal courts have burst through that door over the past 50 years, 

interpreting Tampa Electric as authorizing a rule of reason approach to exclusive 

dealing cases. See, e.g., ZF Meritor, 696 F.3d at 271 (characterizing Tampa 

Electric as standing for the proposition that “exclusive dealing agreements . . . [are] 

judged under the rule of reason”); Jacobson, supra, at 322 (noting that “later cases 

have suggested” that Tampa Electric “authorize[d] full-scale rule of reason 

analysis”); XI Areeda & Hovenkamp, supra, ¶ 1820b, at 177 (“Most decisions 

follow the language in the Supreme Court’s Tampa Electric decision indicating 

that a complete rule of reason analysis is essential, and foreclosure percentages 

represent only a first step in the inquiry.”). This Court, without specifically citing 

Tampa Electric, has joined the consensus that exclusive dealing arrangements are 

“reviewed under the rule of reason.” DeLong Equip. Co. v. Washington Mills 

Abrasive Co., 887 F.2d 1499, 1508 n.12 (11th Cir. 1989).

Case: 14-11363 Date Filed: 04/15/2015 Page: 39 of 55 
40

The difference between the traditional rule of reason and the rule of reason 

for exclusive dealing is that in the exclusive dealing context, courts are bound by 

Tampa Electric’s requirement to consider substantial foreclosure. See Microsoft, 

253 F.3d at 69. But foreclosure is usually no longer sufficient by itself; rather, it 

“serves a useful screening function” as a proxy for anticompetitive harm. Id. 

Thus, foreclosure is one of several factors we now examine in determining whether 

the conduct harmed competition. See Jacobson, supra, at 361-64; XI Areeda & 

Hovenkamp, supra, ¶ 1821d, at 197 (“[Foreclosure percentages] are seldom 

decisive in and of themselves. Rather, they provide the jumping-off point for 

further analysis.”). We will also look for direct evidence that the challenged 

conduct has affected price or output, along with other indirect evidence, such as the 

degree of rivals’ exclusion, the duration of the exclusive deals, and the existence of

alternative channels of distribution. XI Areeda & Hovenkamp, supra, ¶ 1821d, at 

197-209. The ultimate question remains whether the defendant’s conduct harmed 

competition.

To effect anticompetitive harm, a defendant “must harm the competitive 

process, and thereby harm consumers. In contrast, harm to one or more 

competitors will not suffice.” Microsoft, 253 F.3d at 58; see also Brooke Grp. Ltd. 

v. Brown & Williamson Tobacco Co., 509 U.S. 209, 224 (1993). This distinction 

makes good sense, particularly in a competitive market where injury to a single 

Case: 14-11363 Date Filed: 04/15/2015 Page: 40 of 55 
41

competitor may not have a significant effect on overall competition due to the 

persistence of other rivals. However, competitors and competition are linked,

particularly in the right market settings: “in a concentrated market with very high 

barriers to entry, competition will not exist without competitors.” Spirit Airlines, 

Inc. v. Nw. Airlines, Inc., 431 F.3d 917, 951 (6th Cir. 2005). Indeed, this is one 

reason that the behavior of monopolists faces more exacting scrutiny under the 

antitrust statutes. See Eastman Kodak, 504 U.S. at 488 (Scalia, J., dissenting)

(“Behavior that might otherwise not be of concern to the antitrust laws . . . can take 

on exclusionary connotations when practiced by a monopolist.”); Dentsply, 399 

F.3d at 187 (“Behavior that otherwise might comply with antitrust law may be 

impermissibly exclusionary when practiced by a monopolist.”); IIIB Areeda & 

Hovenkamp, supra, ¶ 806e, at 423.

Before we proceed, we address a point of disagreement between the 

Commission, the dissenting commissioner, and the amici: the government’s burden 

of proof in demonstrating harm to competition. The dissenting commissioner 

insisted that, given the high likelihood that an exclusive dealing arrangement is 

actually procompetitive, a plaintiff alleging illegal exclusive dealing must show 

“clear evidence of anticompetitive effect.” McWane II, 2014 WL 556261, at *51 

(Wright, dissenting). Applying that standard, Commissioner Wright concluded 

that the government had not met its burden for several reasons, including that it 

Case: 14-11363 Date Filed: 04/15/2015 Page: 41 of 55 
42

had not sufficiently established that the Full Support Program caused the observed 

price effects. The Commission countered that Commissioner Wright sought “a 

new, heightened standard of proof for exclusive dealing cases” that had “no legal 

support.” Id. at *26 & n.12 (majority). Although McWane does not articulate its 

proposed burden of proof using the dissenting commissioner’s language, it agrees 

in substance that the Commission did not prove harm to competition with 

sufficient certainty. 

We agree with the Commission. Putting aside the possible economic merits 

of raising the standard of proof for exclusive dealing cases, we can find no

foundation for this conclusion in the caselaw. The governing Supreme Court 

precedent speaks not of “clear evidence” or definitive proof of anticompetitive 

harm, but of “probable effect.” Tampa Elec., 365 U.S. at 329 (instructing courts to 

weigh the “probable effect of the [exclusive dealing] contract on the relevant area 

of effective competition” (emphasis added)); accord ZF Meritor, 696 F.3d at 268 

(“Under the rule of reason, an exclusive dealing arrangement will be unlawful only 

if its ‘probable effect’ is to substantially lessen competition in the relevant market.” 

(quoting Tampa Elec., 365 U.S. at 327-29)). Indeed, this Court has often 

articulated the rule of reason -- the governing standard for evaluating exclusive

dealing claims, DeLong Equip. Co., 887 F.2d at 1508 n.12 -- by quoting the 

Supreme Court’s instruction in Board of Trade of Chicago v. United States, 246 

Case: 14-11363 Date Filed: 04/15/2015 Page: 42 of 55 
43

U.S. 231, 238 (1918), to analyze the effects of the challenged conduct, “actual or 

probable.” E.g., Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327, 1334 n.8 (11th 

Cir. 2010); Schering-Plough, 402 F.3d at 1064 n.12.

Of course, the FTC’s allegation is not merely that McWane engaged in 

exclusive dealing, but that it used exclusive dealing to maintain its monopoly 

power. In the monopolization context, courts have articulated the government’s 

burden in terms of the causality that must be shown between the defendant’s 

conduct and the anticompetitive harm. These formulations, too, are framed in 

terms of probability: “unlawful maintenance of a monopoly is demonstrated by 

proof that a defendant has engaged in anti-competitive conduct that reasonably 

appears to be a significant contribution to maintaining monopoly power.” 

Dentsply, 399 F.3d at 187 (emphasis added); accord Microsoft, 253 F.3d at 79. In 

Microsoft, the D.C. Circuit found no case supporting the proposition that Sherman 

Act § 2 liability requires plaintiffs to “present direct proof that a defendant’s 

continued monopoly power is precisely attributable to its anticompetitive conduct.” 

Microsoft, 253 F.3d at 79. It noted that “[t]o require that § 2 liability turn on a 

plaintiff’s ability or inability to reconstruct the hypothetical marketplace absent a 

defendant’s anticompetitive conduct would only encourage monopolists to take 

more and earlier anticompetitive action.” Id.; see also III Areeda & Hovenkamp, 

supra, ¶ 657a2, at 162 (“[T]he government suitor need not show that competition is 

Case: 14-11363 Date Filed: 04/15/2015 Page: 43 of 55 
44

in fact less than it would be in some alternative universe in which the challenged 

conduct had not occurred. It is enough to show that anticompetitive consequences 

are a naturally-to-be-expected outcome of the challenged conduct.”).

We agree with the Commission and our sister circuits that in these 

circumstances the government must show that the defendant engaged in 

anticompetitive conduct that reasonably appears to significantly contribute to 

maintaining monopoly power. As we’ve already discussed, because this 

determination is an economic conclusion, the Commission’s finding on this count 

must be supported by substantial evidence.

a) Substantial Foreclosure

“Substantial foreclosure” continues to be a requirement for exclusive dealing 

to run afoul of the antitrust statutes. Foreclosure occurs when “the opportunities

for other traders to enter into or remain in [the] market [are] significantly limited” 

by the exclusive dealing arrangements.” Microsoft, 253 F.3d at 69 (quoting Tampa 

Elec., 365 U.S. at 328) (internal quotation marks omitted). Traditionally a 

foreclosure percentage of at least 40% has been a threshold for liability in 

exclusive dealing cases. Jacobson, supra, at 362. However, some courts have 

found that a lesser degree of foreclosure is required when the defendant is a 

monopolist. See Microsoft, 253 F.3d at 70 (“[A] monopolist’s use of exclusive 

contracts . . . may give rise to a § 2 violation even though the contracts foreclose 

Case: 14-11363 Date Filed: 04/15/2015 Page: 44 of 55 
45

less than the roughly 40% or 50% share usually required in order to establish a § 1 

violation.”).

In this case, both the Commission and the ALJ found that the Full Support 

Program foreclosed Star from a substantial share of the market. Although the 

Commission did not quantify a percentage, it did note that the two largest 

distributors, who together controlled approximately 50-60% of distribution, 

prohibited their branches from purchasing from Star (except through the Full 

Support Program exceptions) following the announcement of the Full Support 

Program. Indeed, HD Supply went so far as to cancel pending orders for domestic 

fittings that it had placed with Star. The Commission also observed that the thirdlargest distributor was initially interested in purchasing domestic fittings from Star, 

but followed suit soon after the Full Support Program was announced. Testimony 

in the record supports the Commission’s conclusion that this pattern recurred with 

other dealers, even when Star promised lower prices than McWane. Thus, for 

example, U.S. Pipe refused to purchase domestic fittings from Star, despite a 

promise of lower prices, until September 2010. Likewise with TDG distributors. 

Executives at Groeniger and Illinois Meter also testified that the Full Support 

Program deterred them from dealing with Star. Although the Commission did not 

place an exact number on the percentage foreclosed, it found that the Full Support 

Case: 14-11363 Date Filed: 04/15/2015 Page: 45 of 55 
46

Program “tie[d] up the key dealers” and that the foreclosure was “substantial and 

problematic.” McWane II, 2014 WL 556261, at *24 n.10.

These factual findings are all consistent with the ALJ’s determinations, and 

all pass our deferential review. Nevertheless, McWane challenges the 

Commission’s conclusion by arguing that Star’s entry and growth in the market 

demonstrate that, as a matter of law, the Full Support Program did not cause

substantial foreclosure. As before, when McWane raised a substantially similar 

claim to rebut the Commission’s finding of monopoly power, this argument is 

ultimately unpersuasive. Again, “[t]he test is not total foreclosure, but whether the 

challenged practices bar a substantial number of rivals or severely restrict the 

market’s ambit.” Dentsply, 399 F.3d at 191. Our sister circuits have found 

monopolists liable for anticompetitive conduct where, as here, the targeted rival 

gained market share -- but less than it likely would have absent the conduct. See

Conwood Co. v. U.S. Tobacco Co., 290 F.3d 768, 789-91 (6th Cir. 2002). As 

noted above, exclusive dealing measures that slow a rival’s expansion can still 

produce consumer injury. See XI Areeda & Hovenkamp, supra, ¶ 1802c, at 76; 

accord Dentsply, 399 F.3d at 191; ZF Meritor, 696 F.3d at 271. Given the ample 

evidence in the record that the Full Support Program significantly contributed to 

key dealers freezing out Star, the Commission’s foreclosure determination is 

supported by substantial evidence and sufficient as a matter of law. 

Case: 14-11363 Date Filed: 04/15/2015 Page: 46 of 55 
47

b) Evidence of Harm to Competition

Having concluded that the Commission’s finding of substantial foreclosure

is supported by substantial evidence, we turn to the remainder of the Commission’s 

evidence that McWane’s Full Support Program injured competition. The record 

contains both direct and indirect evidence that the Full Support Program harmed 

competition. The Commission relied on both, and taken together they are more 

than sufficient to meet the government’s burden. The Commission found that 

McWane’s program “deprived its rivals . . . of distribution sufficient to achieve 

efficient scale, thereby raising costs and slowing or preventing effective entry.” 

McWane II, 2014 WL 556261, at *22. It found that the Full Support Program 

made it infeasible for distributors to drop the monopolist McWane and switch to 

Star. This, the Commission found, deprived Star of the revenue needed to 

purchase its own domestic foundry, forcing it to rely on inefficient outsourcing 

arrangements and preventing it from providing meaningful price competition with 

McWane. Id. at *25.

Perhaps the Commission’s most powerful evidence of anticompetitive harm

was direct pricing evidence. It noted that McWane’s prices and profit margins for 

domestic fittings were notably higher than prices for imported fittings, which faced 

greater competition. Thus, these prices appeared to be supracompetitive. Yet in 

states where Star entered as a competitor, notably there was no effect on 

Case: 14-11363 Date Filed: 04/15/2015 Page: 47 of 55 
48

McWane’s prices. Indeed, soon after Star entered the market, McWane raised 

prices and increased its gross profits -- despite its flat production costs and its own 

internal projections that Star’s unencumbered entry into the market would cause 

prices to fall. Id. at *27. Since McWane was an incumbent monopolist already 

charging supracompetitive prices (as demonstrated by the difference in price and 

profit margin between domestic and imported fittings), evidence that McWane’s 

prices did not fall is consistent with a reasonable inference that the Full Support 

Program significantly contributed to maintaining McWane’s monopoly power.

McWane claims, however, that the government did not adequately prove 

that the Full Support Program was responsible for this price behavior. But as

we’ve noted, McWane demands too high a bar for causation. While it is true that 

there could have been other causes for the price behavior, the government need not 

demonstrate that the Full Support Program was the sole cause -- only that the 

program “reasonably appear[ed] to be a significant contribution to maintaining 

[McWane’s] monopoly power.” Dentsply, 399 F.3d at 187. Moreover, under our 

deferential standard of review, the mere fact that “two inconsistent conclusions” 

could be drawn from the record “does not prevent [the Commission’s] finding 

from being supported by substantial evidence.” Consolo, 383 U.S. at 620.

The Commission also drew on testimony from Star executives that the Full 

Support Program deprived Star of the sales and revenue needed to invest in a

Case: 14-11363 Date Filed: 04/15/2015 Page: 48 of 55 
49

domestic foundry of its own. These estimates were based in part on distributors’ 

withdrawn requests for quotes or orders in the wake of the Full Support Program. 

Indeed, Star had identified a specific foundry to acquire and had entered 

negotiations to purchase it, but after the announcement of the Full Support 

Program, decided not to move forward with the purchase. Without a foundry of its 

own with which to manufacture fittings, Star was forced to contract with six thirdparty domestic foundries to produce raw casings -- a “more costly and less 

efficient” arrangement on account of higher shipping, labor, and logistical costs; 

smaller batch sizes; less specialized equipment; and various other factors. 

McWane II, 2014 WL 556261, at *25. Star estimated that with its own foundry, it 

could have reduced costs and substantially lowered its domestic fittings prices. 

Moreover, as the ALJ found, some customers, including HD Supply and 

Ferguson, were reluctant to purchase from a supplier that lacked its own foundry, 

thereby further inhibiting any challenge to McWane’s market dominance. 

McWane I, 155 F.T.C. at 1157, 1160. Thus, the record evidence suggests that the 

Full Support Program stunted the growth of Star -- McWane’s only rival in the 

domestic fittings market -- and prevented it from emerging as an effective 

competitor who could challenge McWane’s supracompetitive prices.

We also consider it significant that alternative channels of distribution were 

unavailable to Star. In cases where exclusive dealing arrangements tie up 

Case: 14-11363 Date Filed: 04/15/2015 Page: 49 of 55 
50

distributors in a market, courts will often consider whether alternative channels of 

distribution exist. See Dentsply, 399 F.3d at 193; Omega Envtl., 127 F.3d at 1162-

63; XI Areeda & Hovenkamp, supra, ¶ 1821d4, at 203-09. If firms can use other 

means of distribution, or sell directly to consumers, then it is less likely that their 

foreclosure from distributors will harm competition. In Denstply, the Third Circuit 

found exclusive deals with distributors to be anticompetitive where direct sales of 

the market’s products (artificial teeth) to consumers was not “practical or feasible 

in the market as it exists and functions.” 399 F.3d at 193. The Commission found 

the same in the domestic fittings market, and the dissent agreed. Thus, Star’s 

foreclosure from the major distributors was particularly likely to harm competition 

in this market.

Finally, the clear anticompetitive intent behind the Full Support Program 

also supports the inference that it harmed competition. Anticompetitive intent 

alone, no matter how virulent, is insufficient to give rise to an antitrust violation. 

See Microsoft, 253 F.3d at 60. But, as this Court has said, “[e]vidence of intent is 

highly probative ‘not because a good intention will save an otherwise objectionable 

regulation or the reverse; but because knowledge of intent may help the court to 

interpret facts and to predict consequences.’” Graphic Prods. Distribs., Inc. v. 

ITEK Corp., 717 F.2d 1560, 1573 (11th Cir. 1983) (quoting Bd. of Trade of Chi., 

246 U.S. at 238). For a monopolization charge, intent is “relevant to the question 

Case: 14-11363 Date Filed: 04/15/2015 Page: 50 of 55 
51

whether the challenged conduct is fairly characterized as ‘exclusionary’ or 

‘anticompetitive’ . . . . [T]here is agreement on the proposition that ‘no monopolist 

monopolizes unconscious of what he is doing.’” Aspen Skiing Co. v. Aspen 

Highlands Skiing Corp., 472 U.S. 585, 602 (1985) (quoting United States v. 

Aluminum Co. of Am., 148 F.2d 416, 432 (2d Cir. 1945)); see also Microsoft, 253 

F.3d at 59 (“Evidence of the intent behind the conduct of a monopolist is relevant 

only to the extent it helps us understand the likely effect of the monopolist’s 

conduct.”).

In this case, the evidence of anticompetitive intent is particularly powerful. 

Testimony from McWane executives leaves little doubt that the Full Support 

Program was a deliberate plan to prevent Star from “reach[ing] any critical market 

mass that will allow them to continue to invest and receive a profitable return” by 

“[f]orc[ing] Star[] to absorb the costs associated with having a more full line before 

they can secure major distribution.” Indeed, the plan was implemented as a 

reaction to concerns about the “[e]rosion of domestic pricing if Star emerges as a 

legitimate competitor.” Although such intent alone is not illegal, it could 

reasonably help the Commission draw the inference that the witnessed price 

behavior was the (intended) result of the Full Support Program.

Not all of the evidence adduced in this case uniformly points against 

McWane. For example, as we’ve previously noted, Star was not completely 

Case: 14-11363 Date Filed: 04/15/2015 Page: 51 of 55 
52

excluded from the domestic fittings market; it was able to enter and grow despite 

the presence of the Full Support Program. However, it is still perfectly plausible to 

conclude on this record that Star’s growth was meaningfully (and deliberately)

slowed and its development into a rival that could constrain McWane’s monopoly 

power was stunted. Cf. Microsoft, 253 F.3d at 71 (stating that defendant’s 

exclusionary conduct kept the rival’s product “below the critical level necessary 

for [the targeted rival] or any other rival to pose a real threat to [the defendant’s] 

monopoly”). Also, the Full Support Program was not a binding contract of a 

lengthy duration. As noted above, these characteristics do not render the program

presumptively lawful, but they also do not point in the FTC’s favor as an indirect 

indicator of anticompetitive harm. Nevertheless, the direct and indirect evidence 

of anticompetitive harm is more than sufficient to pass our deferential review. 

Again, the Commission’s conclusion that the Full Support Program harmed 

competition is supported by substantial evidence and sound as a matter of law.

3. Procompetitive Justifications

Having established that the defendant’s conduct harmed competition, the 

burden shifts to the defendant to offer procompetitive justifications for its conduct. 

As the Commission explained, “[c]ognizable justifications are typically those that 

reduce cost, increase output or improve product quality, service, or innovation.”

McWane II, 2014 WL 556261, at *30 (collecting cases); see also XI Areeda & 

Case: 14-11363 Date Filed: 04/15/2015 Page: 52 of 55 
53

Hovenkamp, supra, ¶ 1822a, at 213 (“A justification is reasonable if it reduces the 

defendant’s costs, minimizes risk, or lessens the danger of free riding . . . .”). Such 

justifications, however, cannot be “merely pretextual.” Morris Commc’ns, 364 

F.3d at 1296; see Eastman Kodak, 504 U.S. at 483-84.

McWane offers two; neither is persuasive. First, McWane says that the Full 

Support Program was necessary to retain enough sales to keep its domestic foundry 

afloat. The Commission rightly rejected this argument; as other courts have 

recognized, such a goal is “not an unlawful end, but neither is it a procompetitive 

justification.” Microsoft, 253 F.3d at 71. And as the Commission noted, the steps 

McWane took to preserve its sales volume “were not the type of steps, such as a 

price reduction, that typically promote consumer welfare by increasing overall 

market output.” McWane II, 2014 WL 556261, at *30. McWane’s sales “did not 

result from lower prices, improved service or quality, or other consumer benefits,” 

but rather from reducing the output of its only rival. Id.

Second, McWane offers the more sophisticated argument that the Full 

Support Program was needed to keep Star from “‘cherrypick[ing]’ the core of [the] 

domestic fittings business by making only the top few dozen fittings that account 

for roughly 80% of all fittings sold,” while leaving McWane alone to sell the 

remaining 20%. But even if McWane had good business reasons to adopt such a 

strategy, and such conduct could result in increased efficiency in the right market 

Case: 14-11363 Date Filed: 04/15/2015 Page: 53 of 55 
54

conditions, McWane offers no reasons to think that such conditions exist in this 

case. As the Commission noted, a full-line supplier like McWane could instead 

compete “by lowering its price for [the more common] products and increasing its 

price for the less common products.” Id. at *31. Again, McWane has not 

explained why such a strategy would not work, how the collapse of the full line of 

products would harm consumers, or why full-line forcing was instead necessary. 

Thus, this argument is also unpersuasive.

Moreover, McWane’s internal documents belie the notion that the Full 

Support Program was designed for any procompetitive benefit. As the 

Commission noted, McWane executives discussed the Full Support Program in 

terms of maintaining domestic prices and profitability by preventing Star from 

becoming an effective competitor. For example, McWane executive Richard 

Tatman said that his “chief concern” with Star becoming a domestic fittings 

supplier was that “the domestic market [might] get[] creamed from a pricing 

standpoint,” and identified the biggest risk factor of Star’s entry as the “[e]rosion 

of domestic pricing if Star emerged as a legitimate competitor.” In a document 

encouraging the adoption of an exclusive dealing arrangement, Tatman opined that 

not doing so would allow Star to “drive profitability out of our business.” And in 

an e-mail, he stated, with regard to Star, “we need to make sure that they don’t 

reach any critical mass that will allow them to continue to invest and receive a 

Case: 14-11363 Date Filed: 04/15/2015 Page: 54 of 55 
55

profitable return.” The Supreme Court has looked to evidence that proffered 

justifications for conduct “are merely . . . an excuse to cover up different and 

anticompetitive reasons.” Jacobson, supra, at 367-68 (citing Eastman Kodak, 504 

U.S. at 483). McWane’s damning internal documents seem to be powerful 

evidence that its procompetitive justifications are “merely pretextual.”

IV.

All told, the Commission’s factual and economic conclusions are supported 

by substantial evidence and its legal conclusions comport with the governing law. 

The Commission’s determination of the relevant market and its findings of 

monopoly power and anticompetitive harm pass our deferential review, and we 

agree that the conduct amounts to a violation of Section 5 of the Federal Trade 

Commission Act. 

Accordingly, we AFFIRM.

Case: 14-11363 Date Filed: 04/15/2015 Page: 55 of 55