Antitrust Analysis of Tying Arrangements and Exclusive Dealing

Competition Policy and Antitrust

Article Snapshot


Alden Abbott and Joshua Wright


George Mason Law & Economics Research Paper No. 08-37; Chapter in Antitrust Law & Economics, Keith N. Hylton, ed., Edward Elgar Publishing, April 2010


This paper surveys competition cases and studies involving major firms’ contracts and prices.

Policy Relevance

Antitrust cases today recognize that contracts once considered harmful can benefit consumers. The law should continue to evolve in this direction.

Main Points

  • When used by a dominant firm, some contracts and pricing arrangements might harm competition and consumers, but the same practices benefit consumers in other contexts.

  • Two controversial practices are tying and exclusive dealing, both practices that can arguably make it hard for competitors to sell their products.

  • Tying is when a firm requires customers to purchase product B when they buy product A. Bundling is when a firm sells products only in combinations, such as a pair of shoes.

  • Most courts, studies, and scholars today support the view that tying can help consumers, and is rarely harmful. The trend is for courts to consider consumer harm on a case by case basis (the “rule of reason”).

  • Exclusive dealing is when a producer will offer his product through a retailer only if the retailer agrees to offer only or mostly this product, excluding rivals. In cases today, how long the exclusive deal lasts is significant.

  • Economics models show that exclusive dealing can harm consumers under certain conditions. But exclusive dealing makes sense to solve some business problems in a range of contexts, and studies confirm that many exclusive contracts do not reduce competition.

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