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October 1, 1991


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 mentioned.

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 of $398/unit.

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 1985.

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 [1986] 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. ΒΆ 75. Thereafter, the Army ...

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