There are few circumstances in which tying can be profit-enhancing for the firm concerned. Accordingly firms with market power will often have no incentive to engage in a tying strategy.
In recognition of this, the courts in the United States have developed a four-part test for analyzing allegations of tying (see Figure 1).
Figure 1: Test for Alleged Tying
In addition to the tests illustrated in Figure 1, some courts require that the alleged harm exceed any efficiencies produced by the alleged tying, before allowing a complaint to proceed.
Bundling is generally a pro-competitive, and customer friendly, strategy. As such bundling does not call for regulatory intervention.
RELATED INFORMATION
Tying and Bundling