Tying occurs when a consumer buys one product (the “tying product”) and is required to either purchase an additional product that exists in a separate market (the “tied product”), or agrees not to purchase the additional tied product from any other seller.  Tied selling is only problematic where the practice is likely to have an anti-competitive effect.

A fundamental requirement of tying is the existence of two products, the tying product and the tied product (the “separate products criterion”).  The separate products criterion is not always straight-forward because all value-adding activity involves a degree of bundling of separate components, however no economic test exists to determine where one product should end and another begin.

One can easily imagine situations where the existence of a stand-alone market for the tied product can coexist with a bundled product.  For example, it is possible to buy shoelaces (tied product) as a stand-alone product in shoe stores, but sellers of new shoes sell their shoes bundled with laces (tying product).  Other examples include cars and GPS systems, cars and satellite radio services, and computers and browsers.  This distinction has led to debate and varying approaches across jurisdictions.

Continue Reading What Constitutes a Separate Product?