Tying Arrangements. Eastman Kodak Co has about a 20 percent share of the highly competitive market for high-volume photocopiers and microfilm equipment and controls nearly the entire market for replacement parts for its equipment (which are not interchangeable with parts for other manufacturers' equipment). Prior to 1985, Kodak sold replacement parts for its equipment without significant restrictions. As a result, a number of independent service organi-zations (ISOs) purchased Kodak parts to use when repairing and servicing Kodak copiers. In 1985, Kodak changed its policy to prevent the ISOs from competing with Kodak's own service organizations. It ceased selling parts to ISOs and refused to sell replacement parts to its cus-tomers unless they agreed not to have their equipment serviced by ISOs. In 1987, Image Tech-nical Services, Inc, and seventeen other ISOs sued Kodak, alleging that Kodak's policy was a tying arrangement in violation of Section 1 of the Sherman Act. Assuming that Kodak does not have market power in the market for photocopying and microfilm equipment, does Kodak's re-strictive policy constitute an illegal tying arrangement? Does it violate antitrust laws in any way? Discuss fully.
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