Antitrust Laws in the United States Generally Forbid Tie-In Arrangements

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The Answer is Firms seeking to tie-in goods will clearly see the profit potential for the tie-in. It makes demand for the tied product less elastic, permitting a higher price and profit. Price discrimination becomes more likely with tying. In addition, a firm may argue that one product works better when used with another produced by the same firm. An example might be applications software tied-in with a particular operating system software, such as Windows. The firm may be able to offer a group of products at a savings, compared to offering each separately. There may be legitimate quality control issues for requiring a tie-in.
Antitrust regulation is concerned with tying because it may lead to less competition in the tied-in product and serve as an entry barrier. Bundling that serves a legitimate business purpose is generally permitted. Tie-ins that are seen as creating an entry barrier are less likely to pass antitrust scrutiny.

Antitrust Laws in the United States Generally Forbid Tie-In Arrangements

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