Legal Resources

Unpacking Antitrust: What Is a Negative Tying Agreement Under the Federal Antitrust Laws?

April 20, 2023

1. Two distinct products: the tying product and the tied product aren’t substitutes for one another—in other words, they’re different products sold in two different relevant markets. In our example, you cannot substitute a printer for ink cartridges, so they constitute two separate products.
2. A coerced tie: the seller “forces or coerces” a buyer to accept the tie, i.e., to not purchase the negatively-tied product from a competing seller. A contractual requirement to accept the tie can satisfy this element.
3. A “not insubstantial amount of commerce” is affected: a more than de minimus amount of interstate commerce must be affected by the tie. The bar here is low: a few hundred dollars may not be enough, but amounts as low as $10,000 have been deemed sufficient.

Can There Be More Than One Negatively-Tied Product?

Yes. A seller could condition the sale of a Tying Product on the buyer’s agreement not to purchase Products A, B, C or D from a competing seller. This is the “negative” version of “full-line forcing” or “bundling” where a seller conditions the sale of a Tying Product on the buyer’s agreement to buy a complete line of products or a bundle of products from the seller who created the tie.

Are Negative Tying Arrangements Illegal Per Se?

Under Section 1, a negative tie may be illegal per se if its anticompetitive effects are obvious and the plaintiff can meet the elements of a per se tying claim (two distinct products, appreciable economic power over the Tying Product, coercion, and affected interstate commerce).

Commonly, tying arrangements are judged according to the the rule of reason—a balancing test that weighs harm to competition against the procompetitive justifications behind the restraint.

According to the FTC,

Although the Supreme Court has treated some tie-ins as per se illegal in the past, lower courts have started to apply the more flexible "rule of reason" to assess the competitive effects of tied sales. Cases turn on particular factual settings, but the general rule is that tying products raises antitrust questions when it restricts competition without providing benefits to consumers.

Offering products together as part of a package can benefit consumers who like the convenience of buying several items at the same time. Offering products together can also reduce the manufacturer's costs for packaging, shipping, and promoting the products. Of course, some consumers might prefer to buy products separately, and when they are offered only as part of a package, it can be more difficult for consumers to buy only what they want.

Negative tying may also constitute the anticompetitive conduct necessary to support a Section 2 claim of monopolization or attempted monopolization.