Can Identical Products, Bundled Together, Constitute Illegal Tying?

Can bundling identical items constitute anticompetitive behavior? Unlawful tying occurs when a seller has market control and essentially forces the buyer to purchase another product. Bundling differs from tying because, while products are being sold together, the buyer can purchase the items separately. Bundling does not normally constitute anticompetitive behavior; in fact many products are sold in multiples or with complements. Bundling can reduce consumer welfare, however, if the seller pairs an item over which it has market power (product A) with another item (product B), manipulating prices so as to engage in predatory conduct. But what of two identical products being sold in a bundle? Normally, selling in multiples increases consumer welfare by reducing costs. But what if the markets for the two identical bundled products differ? Can the market for a primary medical emergency device differ from the market for a backup? Or the market for viewing first-run entertainment programs differ from subsequent broadcasts? Or for reading newspapers during the week compared with Saturdays? If so, should we conclude that the otherwise identical products are not substitutes and analyze the two separate markets using tying analysis. Federal district courts in three circuits have reached contradictory conclusions, so that the issue is ripe for analysis.

By Melanie Stallings Williams¹

I. INTRODUCTION

After years of relative quiet in antitrust enforcement, the topic of tying and