The Futility of Antitrust Attacks on Tie-In Sales: An Economic and Legal Analysis

The Supreme Court\u27s treatment of tying arrangements has long been based on an economic theory that tie-ins serve to extend existing monopoly power into new markets. Although this theory has been extensively criticized by economists, the Court has recently reaffirmed, by a narrow margin, the rule that tying arrangements are illegal per se. In light of the Court\u27s persistent adherence to its foreclosure theory, this Article analyzes this antitrust issue from a new perspective. The authors assume that the Court\u27s theory of the monopoly- extending capabilities of tying arrangements is sound. Then they proceed to undermine the Court\u27s implicit assumption that the prohibition of tie-ins forces firms to return to competitive solutions. This is done by demonstrating the availability of legally acceptable, alternative pricing strategies that generate profits approaching those available under even the most lucrative tying arrangement. The authors conclude that the per se rule is futile and unwarranted, and should be replaced by a more sensible rule of reason