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Levinson v. Maison Grande: Federal Court Rules That Plaintiff Must Show "Market Power" for Tying Claims

In Levinson v. Maison Grande, the district court addressed unlawful tying arrangements with regard to sales of real estate. The court held that in determining market power with respect to land, the inherent uniqueness of real estate is not controlling, and the facts and circumstances of each case are to be considered. The court further held that because the plaintiff could not establish market power, there was no tying arrangement, and no violation of the Sherman Antitrust Act.

Siegel, GAC Realty (GAC), and Maison Grande, Inc. (Maison) planned, developed, and constructed the Maison Grande, a 500-plus unit condominium, in Miami Beach, FL. Prior to completion, Siegel and GAC sold a small area of the property to Dorten, Inc. (Dorten) and the Siegel Family Trust (Trust). Siegel and Maison then sold condominium units making it a condition of each sale that the purchaser agree to a 99-year lease of the common interest in the small area of land. This portion of land was to contain a swimming pool, parking lot, and pool deck. All income from the small lot would go to Dorten and the Trust. The plaintiffs allege that conditioning the unit sales upon the lease agreement constituted an unlawful tying arrangement under Section 1 of the Sherman Antitrust Act.

The district court found that the plaintiffs were unable to establish the "market power" requirement for a Section 1 violation. The plaintiffs contended that the defendants had sufficient market power in the tying product (large area of land) to restrain free trade in the tied product (services connected with the small area of land). The plaintiffs based this on the theory that land is unique and always provides sufficient market power to make it a tying arrangement violation under the Act.

However, the district court chose to take a facts and circumstances approach to determine market power. The court stated that land is unique for purposes of specific performance, but beyond that, the law does not demand any special uniqueness analysis for real estate. The court further stated that the real estate in question was not unique, as there were ample alternatives in the Miami Beach area where a prospective purchaser could obtain similarly developed property. This was established by evidence that residents of the development inspected properties from West Palm Beach to Miami Beach before selecting a unit in the defendant's building. Thus, because the market power requirement was not met, there was no tying arrangement, and no Sherman Act violation.

Levinson v. Maison Grande, 517 F. Supp. 963 (S.D. Fla. 1981).