The opinion of the court was delivered by: Whitman Knapp, Senior District Judge.
This action arises out of a claim that the defendant violated
provisions of the antitrust laws, namely section 2 of the
Sherman Act, 15 U.S.C. § 2, sections 4 and 16 of the Clayton
Act, 15 U.S.C. § 15 and § 26, and the common law of the state
of New York*fn1. The gravamen of the complaint is that
defendant exerted monopoly power over the U.S. market for a
product known as the BSU-49, and that it engaged in
anticompetitive conduct, including predatory pricing, to
maintain this power. Plaintiff alleges that it suffered
monetary injury as a result of this anticompetitive conduct,
and prays for an award of damages in excess of $100 million
dollars. Pursuant to Fed.R.Civ.P. 56, defendant moves for the
entry of summary judgment on all claims. For the reasons that
follow, this motion is granted.
After four years, discovery has produced in excess of nine
hundred thousand pages of deposition testimony and documentary
evidence*fn2. A comparison of the parties' papers reveals that
almost every conceivable fact is disputed. For purposes of this
motion, we resolve every disputed fact in plaintiff's favor.
For example, we accept as gospel the testimony of its expert,
Leslie Leiper ("Leiper"). With this as background, we turn to
a statement of the relevant facts.
The BSU-49 is a product used by the United States Air Force
(hereinafter "Air Force") to decelerate the descent of bombs
from low-flying aircraft to give the aircraft time to move
safely out of the bombs' fragmentation range. The BSU-49
consists of two component parts: a ballute, which is a
combination balloon-parachute and acts as the aerodynamic
decelerator, and a tailcone, which is a metal cylinder which
holds the ballute and attaches it to the bomb.
In 1977 the Air Force awarded defendant a research and
development contract to design and produce this product. It
proceeded to develop the necessary specifications for this
device, and in 1982 the Government, in particular the
Army*fn3, awarded it the first major procurement contract for
production of the BSU-49. The Army chose to award defendant
this contract on a sole-source basis, and paid it a per-unit
price of $667.04. In 1983 and 1984 the Army again awarded
defendant a sole-source contract for production of the BSU-49,
paying it $558/unit for 80,000 units in 1983 and $581/unit for
86,004 in 1984.
During these years plaintiff was one of three subcontractors
employed by defendant to manufacture the ballute component of
the BSU-49*fn4. In 1982 plaintiff received from defendant a
subcontract for 7,188 ballutes at a unit price of $187; and in
1983 it received a larger subcontract to supply 10,764 ballutes
at a price of $189.31. In early 1984 defendant instructed
plaintiff to reduce its output to a 7,800 ballute level. When
plaintiff requested that it be given a larger share of the
ballute subcontract business and offered to lower its price for
the ballute if defendant increased the quantity
purchased, defendant refused so to accommodate plaintiff.
Accordingly, in 1984 plaintiff decided that it would seek to
enter the BSU-49 market as a direct competitor of defendant's.
In July it approached the Army to request a copy of the BSU-49
"technical data package" (hereinafter "TDP") which set forth
the necessary specifications and drawings for all components of
this product. Although defendant was under contract with the
Army to keep it supplied with a current TDP, the Army informed
plaintiff that it could not then lay its hand on the most
recent one. Over the course of the next six months plaintiff
made repeated requests to the Army for this package, and in
February 1985 the Army eventually asked defendant whether or
not it had or was willing to give the Army a complete TDP. When
defendant was so requested to produce an updated copy, it
immediately complied. Although the record suggests that
defendant was aware plaintiff was looking for this information,
there is no suggestion that anyone — either plaintiff or the
Army — made any request of defendant before the one just
In the interim, in October 1984 defendant had sent a
memorandum to the Army entitled "Time Required to Develop a
BSU-49 Second Source". This memorandum set forth defendant's
opinion that it would take approximately 4 1/2 to 5 years for
another company to qualify as a producer of the BSU-49*fn5.
The memorandum also advised that defendant did not think it
wise to develop a second source, asserting, inter alia, that
"there is a risk that a new contractor will not be successful
and no qualified product ever will be produced". Defendant also
informed the Army that it was presently developing a new
concept for the ballute component of the BSU-49, namely the
"braided retarder concept" which it anticipated would offer
significant cost reductions over the long term.
In November, after receipt of the October memorandum, the
Army informed plaintiff that it had exercised its option under
the 1984 BSU-49 contract to purchase from defendant its 1985
supply of BSU-49s on a sole-source basis at a unit price of
$608 for 86,004. In response, plaintiff submitted an
unsolicited proposal to produce 36,000 BSU-49s for $520/unit.
In early January 1985 the Army summarily rejected this
proposal. Plaintiff thereupon filed a suit against the
Government seeking the right to compete for the BSU-49
contracts*fn6. It also commenced a lobbying effort to persuade
Congress to support competitive procurements in this area*fn7.
While this suit was pending, defendant took occasion to convey
to the Army its belief that plaintiff was "greedy", and that
plaintiff had been two months late in the delivery of a product
to it in the past*fn8. Nonetheless, in May, in accord with the
terms of a
settlement agreement between plaintiff and the Government, the
Army agreed to hold a competitive procurement to select a
second supplier for the 1985 BSU-49 contract.
Upon receipt of this information, defendant informed its
subcontractors, including plaintiff, that it would consider
discontinuing doing business with any entity which elected to
compete against it as a prime contractor, explaining that it
might not want to be dependent on a competitor. Despite this
announcement, in August plaintiff and another of defendant's
subcontractors, Lanson Industries (hereinafter "Lanson"), along
with six other companies, submitted bids for the interim
procurement contract. Defendant was precluded by the Government
from bidding on this contract, and plaintiff won it with a bid
After plaintiff won the interim procurement contract,
defendant informed it that in order to be permitted to quote on
a subcontract with defendant for production of the ballute
component plaintiff would have to be willing to make a
commitment to provide ballutes for both 1985 and 1986.
Plaintiff asserts that since "it hoped to be ready to compete
head-on" with defendant for the 1986 BSU-49 contract, it
declined to quote under these restrictions. Accordingly,
defendant did not employ plaintiff as a ballute subcontractor
In October defendant informed the Army that unless it was
advised by April 1, 1986 that it would be awarded part of the
1986 BSU-49 contract it would suffer a production break that
would result in "costly start-up costs". It also conveyed its
belief that plaintiff would not be able to demonstrate its
ability to produce the BSU-49 in time to permit a competitive
procurement for the 1986 contract. When the Army inquired of
defendant about decelerating its 1985 production rate to avoid
any breaks in production, it responded that reducing its
monthly production would also increase its costs, but that it
"might consider some . . . reductions . . . if [it] is provided
the  contract sole source."
Thereafter, in March 1986 the Army advised defendant that it
intended to award it a sole source contract for production of
the BSU-49 in 1986, and requested pricing information. On March
18 defendant responded by quoting a price "not to exceed"
$575/unit. When this information was publicly disclosed in May
plaintiff filed a protest with the Comptroller General seeking
to halt the award. Compl. ¶ 75. Thereafter, the Army ...