Opinion ID: 3016862
Heading Depth: 3
Heading Rank: 2

Heading: “Viability” of Direct Sales

Text: The benefits that dealers provide manufacturers help make dealers the preferred distribution channels – in effect, the “gateways” – to the artificial teeth market. Nonetheless, the District Court found that selling direct is a “viable” method of distributing artificial teeth. FF71, 73, 74-81, CL26. But we are convinced that it is “viable” only in the sense that it is “possible,” not that it is practical or feasible in the market as it exists and functions. The District Court’s conclusion of “viability” runs counter to the facts and is clearly erroneous. On the entire evidence, we are “left with the definite and firm conviction that a mistake has been committed.” United States v. Igbonwa, 120 F.3d 437, 440 (3d Cir. 1997) (citations and internal quotations omitted). It is true that Dentsply’s competitors can sell directly to the dental laboratories and an insignificant number do. The undeniable reality, however, is that dealers have a controlling degree of access to the laboratories. The long-entrenched Dentsply dealer network with its ties to the laboratories makes it impracticable for a manufacturer to rely on direct distribution 24 to the laboratories in any significant amount. See United States v. Visa U.S.A., 344 F.3d 229, 240 (2d Cir. 2003). That some manufacturers resort to direct sales and are even able to stay in business by selling directly is insufficient proof that direct selling is an effective means of competition. The proper inquiry is not whether direct sales enable a competitor to “survive” but rather whether direct selling “poses a real threat” to defendant’s monopoly. See Microsoft, 253 F.3d at 71. The minuscule 5% and 3% market shares eked out by direct-selling manufacturers Ivoclar and Vita, Dentsply’s “primary competitors,” FF26, 36, 239, reveal that direct selling poses little threat to Dentsply.