The steps would open up major new opportunities for Kodak to sell film in the flat $3 billion, 35mm film market. They also could help the company regain share lost to Japanese rivals due to their ability to offer lower-price store brand films.
"I'm quite confident that they will" make the moves, said Jerry Hausman, an economics professor at Massachusetts Institute of Technology. Mr. Hausman, a consultant to Eastman Kodak, testified on behalf of the company to get the antitrust decrees lifted.
Last month, Kodak won its motions to have the 1921 and 1954 decrees overturned in U.S. District Court in Rochester, N.Y.
"We're pleased with the judge's decision," a Kodak spokesman said. "We're looking at a broad range of options."
The U.S. government has until July 20 to appeal the ruling.
Kodak has an impressive distribution network among mass retailers, who sell 55% of all film in the U.S. Analysts and competitors acknowledge Kodak could retake market share by offering a store brand.
But there could be a downside.
Kodak's entry into private label sales may spark a pricing war that would diminish industry marginsfor film, said Alex B. Henderson, analyst, Prudential Securities, New York.
"How do you pick up market share without upsetting the apple cart?" he said.
But Paul Gordon, director of marketing and advertising for Konica Imaging USA, said, "We wouldn't lower our prices. Rather, we'd go after some of the smaller chains and stores Kodak has disenfranchised."
To get the decrees overturned, Kodak argued it no longer enjoyed "market power" or "the power to control prices or exclude competition."
As part of the Kodak case, film tests conducted by Popular Photography and American Photo showed that there were no significant quality differences between Kodak's film and any of its top three competitors.
According to Competitive Media Reporting, Kodak spent $38 million on advertising in 1993; Fuji Photo Film USA spent $8 million; Konica, $1 million; and Agfa, $223,000.
"Yes, [Kodak's competitors] need to increase their advertising," said Peter Enderlin, managing director, Smith Barney. Promotions and sponsorships, he added, shouldn't be overlooked.
Executives at Fuji, Konica and Agfa said they have hiked their 1994 ad budgets, but none would disclose how much.
A Kodak executive said it was increasing its film and camera ad budget as well, by 10% this year.
Just last month, Kodak bowed an aggressive new film ad campaign for its premium-price Kodak Royal Gold touting the brands' quality and value and trying to distinguish itself from its Japanese competitors. A new spot broke last week, via J. Walter Thompson USA, New York.