Although the plaintiff has been manufacturing and distributing instrument panels since about 1962, it recently entered into the "customized" instrument panel market. The customized panel is so named, because it is manufactured to the design specifications of each boat builder. Thus, a typical boat builder may desire to include "full instrumentation" in a more expensive model, while perhaps prescribing a more spartan panel for his modestly priced line. The plaintiff would then manufacture the instrument panels in accordance with the size, color, instrumentation and switch array as required by each boat builder.
Similarly, additional panels or panel designs may be dictated by the boat builder, if the craft is to be equipped with a flying bridge, or if the craft is to be propelled by dual engines.
The Kiekhaefer Mercury Division of the defendant Brunswick Corporation has manufactured marine propulsion systems since about 1938, in three basic configurations -- inboard, outboard and stern drive.
In this action we are concerned only with the latter. The stern drive utilizes an inboard engine mounted in the aft section of the craft with power transmitted to the propeller by way of a "stern drive" or outboard unit, which is located outside the craft, through an opening in the transom. This system is said to incorporate the stability and reliability of an inboard system, with the maneuverability and efficiency of the outboard system.
The defendant started manufacturing and marketing the stern drive system in about 1962, under the "MerCruiser" trade name. Today, it is the largest and dominant manufacturer of this type of system, with at least 50% of the total sales of stern drives of the United States, which is the relevant market. In 1967, this market consisted of about 46,000 units, representing total sales of about $60,000,000. Three other major manufacturers -- Outboard Marine Corp., Chrysler Corp. and Eaton, Yale and Towne, Inc. - have approximately 33%, 8% and 8% of the market respectively. The selling prices of MerCruiser stern drive systems range from $1978.63 for the 120 horsepower model, to $4,133.18 for the 325 horsepower model. Eight models are listed in their 1968 price list (D 21).
Recently, the defendant began rigorously enforcing a "policy" which required purchasers of its MerCruiser stern drive unit to also purchase its instrument panel. Although the defendant claims that it has always sold its inboard-outboard engines as a "package", which included the instrument panels, the existence of this policy was substantially discredited by numerous witnesses.
The plaintiff contends that this policy as presently enforced exemplifies a classic tying agreement, expressly proscribed by Section 3 of the Clayton Act, 15 U.S.C. § 14. To justify its policy, the defendant essentially asserts that the technological interdependence between the engine and the instruments which monitor the operation of the engine (listed in the first category above) justified their inclusion in the "package", as an integral part of the stern drive system. Very persuasively, the defendant has demonstrated that the failure of any one of the four critical monitoring instruments,
could ultimately result in a malfunction or failure of the engine. When this occurs, the ultimate consumer will look to Kiekhaefer Mercury for appropriate redress. The instrument manufacturers, boat builder, or dealers are neither qualified nor necessarily interested in isolating and rectifying the malfunction. Thus, in order to protect its goodwill, reputation, and ultimately its position of dominance in the industry, the defendant prefers to market the instrument panel as an integral part of the stern drive system, thereby assuring that all critical instrumentation is mechanically and functionally compatible, and of comparable quality with the engine itself.
As this Court set forth in an earlier decision, in order to prevail the plaintiff must demonstrate:
(1) that the conduct to be enjoined is in furtherance of the alleged violations of the Sherman [Acts]; (2) that there is substantial likelihood the allegations of the complaint will be sustained at the trial of the cause; (3) that irreparable harm to the plaintiff will result if the injunction pendente lite is denied.