United Shoe Machinery and the antitrust significance of "free'' service

In United States v. United Shoe Machinery Corp., United Shoe Machinery was found guilty of illegal monopolization due to its leasing practices. Existing scholarship on this case largely focuses on the issue of leasing versus selling. In contrast, we examine a particular practice of United's that was condemned: its policy of providing service for its leased machines without a separate service charge. Our analysis demonstrates that this practice served an important insurance function by shifting risk from the shoe manufacturers to United, a more efficient bearer of risk, and concludes that this practice was efficiency enhancing.