Elusive Antitrust Standard on Bundling in Europe and in the United States at the Aftermath of the Microsoft Cases, The

Interoperability and Competition Policy and Antitrust

Article Snapshot

Author(s)

Nicholas Economides and Ioannis Lianos

Source

Antitrust Law Journal, Vol. 76, No. 3, 2009

Summary

This paper compares competition law in Europe and the United States.

Policy Relevance

Firms might find their business practices get different legal treatment overseas, adding to risk; understanding these differences helps control the risk.

Main Points

  • “Tying” happens when a firm requires customers to purchase product B if they buy product A.

  • In the United States, antitrust authorities sued Microsoft for tying Internet Explorer to Windows; in the European Union, for tying Windows Media Player to Windows.

  • Some economists argue that antitrust authorities should have to prove that the tying firm was driving prices below its costs and rivals’ costs, to avoid false positives.
    • The authors disagree, because it would make it too hard to prove violations to insist that rival’s cost data be produced, and because the dominant firm can affect its rivals’ costs.
    • In the United States and Europe, courts are moving to a theory that tying is bad when it blocks competition (the “foreclosure test”).

  • In the U.S., it is harder to prove that a firm that dominates one market can easily dominate a related market (“leveraging”), but easier in Europe.

  • In Europe, harm to competition is assumed to imply harm to consumers; in the United States one must show harm to consumers separately.

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