LePage’s, Inc. v. 3M

Facts

3M dominated the United States transparent tape market with over 90% market share through its Scotch-brand tape, which achieved virtually 100% household penetration. LePage’s entered the private label tape market around 1980 and by 1992 controlled 88% of private label sales, representing a small but growing segment of the overall market. In response to this competitive threat, 3M implemented multi-tiered bundled rebate programs beginning in 1993, including the Executive Growth Fund and Partnership Growth Fund, which offered rebates ranging from 0.2% to 2% based on customers meeting growth targets across six product divisions including transparent tape, home care products, and office supplies. These rebates were substantial, with Kmart receiving $926,287 in 1997 and Wal-Mart receiving over $1.5 million in 1996. The structure created powerful incentives for customers to purchase exclusively from 3M, as failure to meet targets in even one product line resulted in loss of rebates across all purchases. LePage’s lost major customers including Kmart, Staples, and Office Max, saw its market share drop from 14.44% in 1992 to 9.35% in 1997, was forced to close one of two plants in 1997, and suffered large operating losses from 1996 through 1999. The only other domestic competitor, Tesa Tuck, exited the market entirely in 1997.