The Antitrust Economics of Tying : A Farewell to Per Se Illegality

We describe the main features of U.S. and E.C. tying law and consider their recent evolution. We then review the economic literature on tying and summarize its main implications for the analysis of tying cases: First, recent advances in economic theory unambiguously endorse a rule-of-reason approach to tying such as that adopted by the D.C. Circuit Court of Appeals in Microsoft III. Second, there is no economic basis for a per se prohibition of tying. And third, the modified per se rule adopted by the U.S. Supreme Court in Jefferson Parish does not accurately screen pro-competitive from anticompetitive tying. Drawing on the findings of the economic models developed by the Chicago and post-Chicago Schools, we conclude by proposing a three-step test to implement rigorously a rule-of-reason analysis to tying cases