Tying

Tying is a sometimes-unlawful requirement by a company that customers buy another product in order to acquire the one they want. This can be a violation of federal antitrust laws.

In determining whether a violation of Section I of the Sherman Act, 15 U.S.C. § 1, has occurred as a result of a tie between two products or services, four elements are typically required:

plaintiff must show that: (1) the tying arrangement is between two distinct products or services, (2) the defendant has sufficient economic power in the tying market to appreciably restrain free competition in the market for the tied product, and (3) a not insubstantial amount of interstate commerce is affected. [N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5-6, 78 S. Ct. 514, 2 L. Ed. 2d 545 (1958)]; Moore v. Matthews & Co., 550 F.2d 1207, 1212 (9th Cir. 1977). In addition, this circuit has held that an illegal tying arrangement will not be found where the alleged tying company has absolutely no economic interest in the sales of the tied seller, whose products are favored by the tie-in.

Reifert v. S. Cent. Wis. MLS Corp., 450 F.3d 312, 316-317 (7th Cir. Wis. 2006). The additional "economic interest" is required by the Second, Third, Fourth, Fifth, Sixth, Ninth, and Eleventh Circuits.

The Seventh Circuit has backed away from the traditional per se approach to tying agreements, and instead applies a more lenient rule of reason test, noting that "the Supreme Court recently adopted Justice O'Connor's reasoning in Jefferson Parish Hosp. Dist. No. 2 and held that tying arrangements involving patents should be evaluated based upon their market power 'rather than under the per se rule.' Ill. Tool Works, Inc. v. Indep. Ink, Inc., 126 S.Ct. 1281, 164 L. Ed. 2d 26 (2006). Although the per se analysis of the Jefferson Parish Hosp. Dist. No. 2 majority has not been expressly over-ruled, in the intervening twenty-one years since Carl Sandburg Vill. Condo. Ass'n No. 1, the Supreme Court has not found occasion to disagree with this Circuit's approach." Id. at 317 n.2.

In practice, a plaintiff must prove the following:

(1) a tie exists between two separate products or services;

(2) the tying seller has sufficient economic power in the tying product market to restrain free competition in the tied product market;

(3) the tie affects interstate commerce in the tied product; and

(4) the tying seller (defendant) has some economic interest in the sales of the tied product.

See also[edit]

• Sherman Act Section One