Article by Christopher R. Leslie
The antitrust debate over the purpose and competitive effects of tying arrangements has been dominated by two schools of thought. The traditional Leverage School has argued that tying arrangements necessarily restrain competition and should be condemned as per se illegal. In response, the Chicago School has argued that tying arrangements cannot possibly injure competition, that tying is a mechanism for price discrimination, and that tie-ins should be treated as per se legal. In this Article, Professor Leslie posits an alternative explanation, Volume Tying Theory. This new theory argues that, in some instances, sellers are taking their monopoly power in one market (the tying product market) and using it to increase sales volume in a separate, competitive market (the tied product market). This Article explains how, under specific market conditions, a seller can impose a tying arrangement without sacrificing any profits in the market for the tying product while still increasing sales revenue in the market for the tied product. By linking monopolized and competitive markets, without altering the price structure of either, a tying seller can maximize her overall profits without injuring competition. Although both the Leverage School and the Chicago School claim to be universal theories that explain all tying arrangements, Professor Leslie examines tie-ins that neither of the schools can explain and he shows how Volume Tying Theory represents a more plausible explanation for some tie-ins. Finally, the Article examines the implications of Volume Tying Theory for antitrust doctrine and concludes that the new theory counsels against per se rules in tying cases altogether and in favor of a meaningful Rule of Reason analysis for tying arrangements.
About the Author
Christopher R. Leslie. Associate Professor of Law, Chicago-Kent College of Law.
Citation
78 Tul. L. Rev. 727 (2004)