Question

Grinnell Corporation manufactured plumbing supplies and fire sprinkler systems. It also owned 76 percent of the stock of ADT Co., 89 percent of the stock of AFA, Inc., and 100 percent of the stock of Holmes, Inc. ADT provided burglary-protection and fire- protection services. AFA provided only fire protection services. Holmes provided only burglary protection services. Each of the three firms offered a central station service under which hazard-detecting devices installed on the protected premises automatically transmitted an electronic signal to a central station. Other companies provided forms of protection service other than the central station variety. Subscribers to an accredited central station service (i.e., one approved by insurance underwriters) received substantially greater insurance premium reductions than the premium reductions received by users of other protection services. At the relevant time in question, ADT, AFA, and Holmes were the three largest central station service companies in terms of revenue. Together, they accounted for approximately 87 percent of the central station services provided. Contending that Grinnell, ADT, AFA, and Holmes had taken various anticompetitive actions that amounted to willful acquisition or maintenance of monopoly power, the U.S. government brought a monopolization action against Grinnell under § 2 of the Sherman Act. Concerning the first element of a monopolization claim (monopoly power in the relevant market), were fire-protection services and burglary-protection services too different to be part of the same market? What was the relevant market in this case? Were protection services other than those of the central station variety part of it?



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  • CreatedJuly 16, 2014
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