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Tying

Tying (Jefferson Parish):

Per se illegal (Sherman Act Section 1 and Clayton Act Section 3):
  1. Products are separate: is there a market where the tied product is "at least sometimes" sold separately
    • Not a functional test: test is not whether the products are used together
  2. Market power in the tying product
  3. Buyer is coerced or forced into accepting the tied product
  4. More than a minimum amount of commerce affected in the tied product (this is always satisfied)

Rule of reason: If any of these conditions are not satisfied, then the rule of reason applies (O'Connor's concurrence):

  • P's prima facie case that tying has anticompetitive effects, which will include:
    1. Separate products (coherent economic reason to treat tying and tied markets as distinct): is there a market where the tied product is "at least sometimes" sold separately (same as in per se)
    2. D has market power (or monopoly power under Section 2) in the tying market
    3. Coherent economic theory of exclusion in tied or tying market
  • Burden shifts to D to provide a procompetitive justification for the tie
  • Burden shifts back to P to show on balance the tie is anticompetitive
Additional notes:
  • Same rule of reason as under Sherman Act Section 2, just with a lower market power showing requirement (30% market share is sufficient for tying, while 70% is required under Section 2/plausible attempted monopolization claim)
    • Note there is no per se test under Sherman Act Section 2
  • Courts don't like the per se rule for tying, so they often work hard to find one of (1)-(3) don't apply (commonly products aren't truly separate, there is no market power)
  • Two paths to rule of reason:
    • Failed per se test: in practice, there will be no liability under rule of reason here because failing to meet one (1), (2), or