Mercedes-Benz Tying Cases

In two separate cases, independent warehouse part distributors Mozart and Metrix challenged Mercedes-Benz’s policy of requiring its dealers to use genuine, factory-authorized parts, claiming this policy was an illegal tying agreement.

In two separate cases, independent warehouse part distributors Mozart and Metrix challenged Mercedes-Benz’s policy of requiring its dealers to use genuine, factory-authorized parts, claiming this policy was an illegal tying agreement. Mercedes-Benz retained Dr. Michael Keeley, a senior vice president of Cornerstone Research, in both cases to provide testimony. In the Mozart case the jury found no liability or damages because Mercedes-Benz had a legitimate business justification for the challenged practice—to protect its reputation and goodwill. The Metrix case settled at the beginning of the damages trial after Dr. Keeley’s deposition showed that the plaintiff’s damages claim was severely flawed and greatly overstated damages.

The Superior Court granted summary judgment and the Court of Appeal affirmed the lower court’s decision in an opinion that closely followed the reasoning in Dr. Keeley’s declaration.

In a third case, Lloyd Design, an independent producer of floor mats, claimed that Mercedes-Benz’s decision to include floor mats as standard equipment constituted a tying agreement. Dr. Keeley submitted a declaration in support of summary judgment in which he showed that the practice was procompetitive, that Mercedes-Benz did not have market power, and that the practice did not foreclose competition in the alleged tied product market. The Superior Court granted summary judgment and the Court of Appeal affirmed the lower court’s decision in an opinion that closely followed the reasoning in Dr. Keeley’s declaration.