ANALYZE THIS CASE USING IRAC METHOD SEE THE ATTACHED FILE IT HAS THE CASE AND THE INSTRUCTIONS.

13 Jun ANALYZE THIS CASE USING IRAC METHOD SEE THE ATTACHED FILE IT HAS THE CASE AND THE INSTRUCTIONS.

Analyze this case using IRAC method see the attached file it has the case and the instructions.

This is the case

Sand is an Ohio corporation and has been in business since 1982. It makes a variety of products for automotive body repair, including automotive sandpaper (technically speaking, coated abrasives), which consumers use before, during or after painting a car or truck. Sales of automotive sandpaper accounted for one-half of Sand’s revenue in 1996. General is a Delaware corporation in business since 1985. In addition to making a variety of other products, General produces automotive sandpaper.

Sand “largely developed” the market for do-it-yourself automotive sandpaper, increasing the number of products offered in the market from 20 in 1987 to 80 in 2000. The development of the market,

Sand claims, was “fueled primarily by [its] superior marketing, superior packaging, innovation, and

superior value.” Between 1987 and 2000, just two companies supplied automotive sandpaper (and

related products) in the national market: Sand and General. As of 1995, Sand was the dominant

player, holding a 67% share of the market. Sand and General did not sell their automotive

sandpaper products directly to consumers; they instead relied on retailers to distribute the products

through a “highly concentrated” retail market, just six large retailers—Advance Auto Parts, AutoZone,

CSK Auto, Kmart, Pep Boys, Wal–Mart—controlled 80% of the retail market, while smaller retailers

divided up the remaining 20% of the market.

Perhaps due to the relatively “small value” of the market, five of the six large retailers sold just one

brand of the product at a time, meaning they permitted Sand or General, but not both, to sell its

products at the stores. “In order to simplify planning and reduce costs,” the large retailers also renegotiated

these single-brand agreements just once a year, giving the supplier a year-long “de facto

exclusive agreement” with each retailer.In order to replace an existing supplier of automotive

sandpaper, a new supplier not only had to offer favorable prices but also had to (1) produce a full

line of do-it-yourself automotive sandpaper, (2) provide racks and other display equipment for the

retailer, (3) provide a discount on the retailer’s first order and (4) purchase the retailer’s existing

supply of the sandpaper. Because the large retailers typically restocked the full line of sandpaper

products five to seven times a year, buying out a retailer’s existing supply of the sandpaper could

cost a supplier up to 14% to 20% of its annual revenues from that retailer.

Sand complied with these requirements in seeking to obtain the large retailers’ business, and by

every measure it succeeded. By 1996, it was the exclusive supplier for four of the large retailers:

Kmart, Advance Auto, CSK Auto and AutoZone. And along with General it supplied Pep Boys, the

one large retailer that did not insist on an exclusive agreement.

General was the sole supplier of the sixth large retailer—Wal-Mart. Sand did not—and could not—

compete for this business, because Wal–Mart sought a single supplier that could meet all of its

sandpaper needs, which included providing two products that Sand did not make: sandpaper for

Wal–Mart’s power tool and paint departments.

Sand made substantial profits on its exclusive-sales agreements with four of the six large retailers. In

1996, Sand’s annual sales to Kmart totaled $475,000 with profit margins of 38%. In 1997, its sales to

Advance Auto totaled $550,000 with margins of 49%, and its sales to CSK Auto totaled $369,000

with margins of 44%. In 1999, its sales to AutoZone totaled $2,200,000 with margins of 39%.

According to Sand, General sought to monopolize the market for do-it-yourself automotive

sandpaper beginning in 1997. To that end, General offered Kmart $300,000 in 1997 as an incentive

to switch suppliers and to enter into an “explicit or sub rosa” exclusive-dealing agreement for

“several years.” Kmart accepted General’s offer and told Sand that it would not review price quotes

from Sand for a “few years.”

One year later, General did the same thing with Advance Auto and CSK Auto, offering the one

$285,000 and the other $200,000 to switch suppliers and to enter into “multi-year” exclusive-dealing

agreements. Advance Auto and CSK Auto accepted General’s offers and refused to discuss

switching suppliers with Sand “for at least a few years.”

Two years later, in 2000, General offered a similar deal to AutoZone, which long had been Sand’s

largest customer. General offered AutoZone $1,000,000 to switch suppliers and to enter a “multiyear”

exclusive-dealing agreement. AutoZone accepted the offer. When contacted by Sand,

AutoZone refused to discuss switching back to Sand as a supplier “for at least a few years.”

Sand’s only remaining customers were Pep Boys (which sold Sand and General products) and

several smaller retailers. With a significant drop in its sales volume, Sand lost its economies of scale;

its “raw material costs increased dramatically,” and it could no longer “fill existing orders at an

appropriate cost,” Because Sand could “no longer … compete,” it left the market for do-it-yourself

automotive sandpaper in 2001 and sought to reorganize under Chapter 11 of the Bankruptcy Code.

Since leaving the market, Sand alleges that retailers (though it makes no allegations about suppliers like General) have raised consumer prices for do-it-yourself automotive sandpaper by as much as

70%.