The Analysis of Tying Cases: A Primer

Competition Policy and Antitrust

Article Snapshot

Author(s)

Jean Tirole

Source

Competition Policy International, Vol. 1, No. 1, pp. 1-25, Spring 2005

Summary

This paper looks how selling two products together (“tying”) affects consumers.

Policy Relevance

Consumers can save money by buying two products together, even though sometimes firms sell two products together to harm competition. Regulators should have to prove that such sales hurt more than they help.

Main Points

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

  • Tying can make sense because of cost savings, to protect intellectual property, or to improve pricing. Tying is most likely to harm consumers when it is used by a firm to drive out competitors, and it should not be a separate offense.

  • An antitrust analysis of tying should look at whether tying will reduce competition, considering:
    • The cost of making units of the tied product.
    • Whether rivals can add different features.
    • Whether the product serves more than one group of users.
    • Whether users can use different versions of the tied product (such as more than one media player).

  • The best rule for tying is a “rule of reason,” in which the court considers, on balance, whether tying is good or bad for consumers in that particular case.

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