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Competition law
Basic concepts
Anti-competitive practices
Laws and doctrines

United States

Europe

  • European Community
    competition law
  • Irish Competition Law
  • Competition Act 1998 (U. Competition law history refers to attempts by governments to regulate Competitive markets for goods and services leading up to the modern competition or Antitrust The term "monopolization" refers to an offense under Section 2 of the American Sherman Antitrust Act, passed in 1890 In Economics and Business ethics, a coercive monopoly is a business concern that prohibits competitors from entering the field with the natural result being that Natural monopoly is a term used in Economics to refer to two different things In Economics and especially in the theory of Competition, barriers to entry are obstacles in the path of a firm which wants to enter a given Market In Economics, market power is the ability of a firm to alter the Market price of a good or service In Competition law, before deciding whether companies have significant Market power which would justify government intervention the test of Small but Significant and Non-transitory In Competition law the Relevant market defines the market in which one or more goods compete Merger control refers to the procedure of reviewing Mergers and acquisitions under Antitrust / competition law Anti-competitive practices are Business or Government practices that prevent and/or reduce Competition in a Market (see Restraint of trade Collusion is an agreement usually secretive which occurs between two or more persons to deceive mislead or defraud others of their legal rights or to obtain an objective forbidden A cartel is a formal (explicit agreement among firms Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve Price fixing is an agreement between business competitors to sell the same product or service at the same price Product bundling is a Marketing strategy that involves offering several products for sale as one combined product Refusal to deal is one of several Anti-competitive practices forbidden in countries which have Free market economies In Competition law, a group boycott is a type of Secondary boycott in which two or more competitors in a Relevant market refuse to conduct business Exclusive dealing refers to when a retailer or wholesaler is ‘tied’ to purchase from a supplier on the understanding that no other distributor will be appointed or receive supplies Bid rigging is an illegal agreement between two or more competitors Dividing territories (also Market division) is an agreement by two companies to stay out of each other's way and reduce competition in the agreed-upon territories Conscious parallelism is a term used in Competition law to describe Price-fixing between competitors in an Oligopoly that occurs without an actual spoken Predatory pricing (also known as destroyer pricing) is the practice of a firm selling a product at very low price with the intent of driving competitors out of the Market In United States patent law, patent misuse is an Affirmative defense used in patent litigation when a Defendant has been accused to have Copyright misuse is an equitable defense against Copyright infringement in the United States based on the unreasonable conduct of United States antitrust law is the body of Laws that prohibits anti-competitive behavior (monopoly and Unfair business practices. The Sherman Antitrust Act ( Sherman Act, July 2, 1890, ch 647,) was the first United States Federal statute to limit Cartels and The Clayton Antitrust Act of 1914 ( October 15[[ 914]] ch 323, codified at,) was enacted in the United States to add further substance to the U The Robinson-Patman Act of 1936 (or Anti-Justice League Discrimination Act,) is a United States federal law that prohibits what were considered at the time of passage The Federal Trade Commission Act of 1914 (15 USC §§ 41-58 as amended) established the Federal Trade Commission (FTC a Bipartisan body of five members The Merger guidelines are a set of internal rules promulgated by the Antitrust Division of the United States Department of Justice (USDOJ in conjunction with the The essential facilities doctrine (sometimes also referred to as the essential facility doctrine) is a Legal doctrine which describes a particular type of claim of The Noerr-Pennington doctrine is a doctrine of United States Antitrust law set forth by the United States Supreme Court in a pair of cases which The rule of reason is a doctrine developed by the United States Supreme Court in its interpretation of the Sherman Antitrust Act. European Community competition law is one of the areas of authority of the European Union. Irish Competition Law is the Irish body of legal rules designed to ensure fairness and freedom in the Marketplace. The Competition Act 1998 is the current major source of competition policy in the UK along with Enterprise Act 2002. K. )

Australia
Enforcement authorities and organizations
edit box

Tying is the practice of making the sale of one good (the tying good) to the de facto or de jure customer conditional on the purchase of a second distinctive good (the tied good). The Trade Practices Act 1974 is an act of the Parliament of Australia. The International Competition Network is an informal virtual network that seeks to facilitate cooperation between Competition law authorities globally A competition regulator is a Government agency, typically a statutory authority, sometimes called an economic regulator, which regulates and enforces It is often illegal when the products are not naturally related, e. g. , requiring a bookstore to stock up on an unpopular title before allowing them to purchase a bestseller. Tying is related to Freebie marketing, which was pioneered by King C. Gillette and is a common (and legal) method of giving away (or selling at a substantial discount) one item to ensure a continual flow of sales of another related item (for example, the disposable safety razor). Freebie marketing, also known as the razor and blades business model, is the concept of either giving away a sellable item for nothing or charging an extremely low price in order King Camp Gillette ( January 5, 1855 &ndash July 9, 1932) was an American businessman popularly known as the inventor of the

Some kinds of tying, especially by contract, have historically been regarded as anti-competitive practices. A contract is an exchange of promises between two or more parties to do or refrain from doing an act which is enforceable in a court of law Anti-competitive practices are Business or Government practices that prevent and/or reduce Competition in a Market (see Restraint of trade The basic idea is that consumers are harmed by being forced to buy an undesired good (the tied good) in order to purchase a good they actually want (the tying good), and so would prefer that the goods be sold separately. The company doing this bundling may have a significantly large market share so that it may impose the tie on consumers, despite the forces of market competition. The tie may also harm other companies in the market for the tied good, or who sell only single components.

Middle managers who oversee less attractive product lines are frequently responsible for initiating or attempting to initiate the tying of their products to higher quality products in the company's portfolio as a desperate effort to prevent the extinction of the product line and their job.

Tying may also be a form of price discrimination: people who use more blades, for example, pay more than those who just need a one-time shave. Price discrimination exists when sales of identical goods or services are transacted at different Prices from the same provider Though this may improve overall welfare, by giving more consumers access to the market, such price discrimination can also transfers consumer surplus to the producer. Tying may also be used with or in place of patents or copyrights to help protect entry into a market, encouraging innovation. A patent is a set of Exclusive rights granted by a State to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an Copyright is a legal concept enacted by Governments, giving the creator of an original work of authorship Exclusive rights to control its distribution usually for

Tying is often used when the supplier makes one product that is critical to many customers. By threatening to withhold that key product unless others are also purchased, the supplier can increase sales of less necessary products.

In the United States, most states have laws against tying, which are enforced by state governments. The United States of America —commonly referred to as the A US state is any one of the fifty subnational entities of the United States of America that share Sovereignty with the federal government In addition, the United States Department of Justice enforces federal laws against tying through its Antitrust Division. For animal rights group see Justice Department (JD The United States Department of Justice ( DOJ) is a Cabinet department The United States Department of Justice Antitrust Division is responsible for enforcing the antitrust laws of the United States.

Contents

Types of tying

Horizontal tying is the practice of requiring customers to pay for an unrelated product or service together with the desired one, for example, if all of Bic's pens were sold only with Bic lighters. Société Bic is a company based in Clichy, France, founded in 1945 best known for making Disposable products including Cigarette lighters (However, a company may offer a limited free item with another purchase as a promotion. )

Vertical tying is the practice of requiring customers to purchase related products or services from the same company. For example, a company's automobile only runs on its own proprietary fuel and can only be serviced by its own dealers. The word proprietary indicates that a party or proprietor exercises private Ownership, control or use over an item of Property. In an effort to curb this, many jurisdictions require that warranties not be voided by outside servicing; for example see the Magnuson-Moss Warranty Act in the United States. The Magnuson-Moss Warranty Act (PL 93-637 is a United States federal law ( et seq More recently, video game consoles run only software licensed by the console manufacturer and use lockout chips to enforce this.

Tying in United States Law

Certain tying arrangements are illegal in the United States under both the Sherman Antitrust Act,[1], and Section 3 of the Clayton Act. The United States of America —commonly referred to as the The Sherman Antitrust Act ( Sherman Act, July 2, 1890, ch 647,) was the first United States Federal statute to limit Cartels and The Clayton Antitrust Act of 1914 ( October 15[[ 914]] ch 323, codified at,) was enacted in the United States to add further substance to the U [2] A tying arrangement is defined as "an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees he will not purchase the product from any other supplier. "[3] Tying may be the action of several companies as well as the work of just one firm. Success on a tying claim typically requires proof of four elements: (1) two separate products or services are involved; (2) the purchase of the tying product is conditioned on the additional purchase of the tied product; (3) the seller has sufficient market power in the market for the tying product; (4) a not insubstantial amount of interstate commerce in the tied product market is affected. [4]

For at least three decades, the Supreme Court defined the required "economic power" to include just about any departure from perfect competition, going so far as to hold that possession of a copyright or even the existence of a tie itself gave rise to a presumption of economic power. [5] The Supreme Court has since held that a plaintiff must establish the sort of market power necessary for other antitrust violations in order to prove sufficient "economic power" necessary to establish a per se tie. [6] More recently, the Court has eliminated any presumption of market power based solely on the fact that the tying product is patented or copyrighted. [7]

The most prominent recent case involving a tying claim (among many others) was United States v. Microsoft. [8] By some accounts, Microsoft ties together Microsoft Windows, Internet Explorer, Windows Media Player, Outlook Express and Microsoft Office. Microsoft Corporation is an American multinational Computer technology Corporation, which rose to dominate the Home computer Microsoft Windows is a series of Software Operating systems and Graphical user interfaces produced by Microsoft. Windows Internet Explorer (formerly Microsoft Internet Explorer abbreviated MSIE) commonly abbreviated to IE, is a series of graphical Windows Media Player ( WMP) is a digital media player and media library application developed by Microsoft that is used for playing Outlook Express is an e-mail / News client that was included with Internet Explorer versions Internet Explorer 4 Microsoft Office is a set of interrelated desktop applications servers and services collectively referred to as an Office suite, for the Microsoft Windows and The United States claimed that the bundling of Internet Explorer (IE) to sales of Windows 98, making IE difficult to remove from Windows 98 (e. g. , not putting it on the "Remove Programs" list), and designing Windows 98 to work "unpleasantly" with Netscape Navigator constituted an illegal tying of Windows 98 and IE. [9] Microsoft's counterargument was that a web browser and a mail reader are simply part of an operating system, included with other personal computer operating systems, and the integration of the products was technologically justified. A web browser is a software application which enables a user to display and interact with text images videos music games and other information typically located on a An operating system (commonly abbreviated OS and O/S) is the software component of a Computer system that is responsible for the management and coordination A personal computer ( PC) is any Computer whose original sales price size and capabilities make it useful for individuals and which is intended to be operated Just as the definition of a car has changed to include things that used to be separate products, such as speedometers and radios, Microsoft claimed the definition of an operating system has changed to include these formerly separate products. A speedometer is a device that measures the instantaneous Speed of a land vehicle The United States Court of Appeals for the District of Columbia Circuit rejected Microsoft's claim that Internet Explorer was simply one facet of its operating system, but the court held that the tie between Windows and Internet Explorer should be analyzed deferentially under the Rule of Reason. The United States Court of Appeals for the District of Columbia Circuit, known informally as the D The rule of reason is a doctrine developed by the United States Supreme Court in its interpretation of the Sherman Antitrust Act. [10] The U. S. government claim settled before reaching final resolution.

As to the tying of Office, parallel cases against Microsoft brought by State Attorneys General included a claim for harm in the market for office productivity applications. The state attorney general in the United States is an executive office in all 50 State governments. [11] The Attorneys General abandoned this claim when filing an amended complaint. The claim was revived by Novell where they alleged that computer OEMs were charged less for their Windows bulk purchases if they agreed to bundle Office with every PC sold but that if they gave computer purchasers the choice whether or not to buy Office along with their machines, the OEM's bulk prices for Windows would rise, making their computer prices less competitive in the market. Novell Inc ( is a global Software Corporation based in the United States specializing in enterprise operating systems such as SUSE The Novell litigation is still ongoing. [12]

Criticism of laws banning tying

Scholars from various schools of antitrust policy have been consistently critical of the per se rule against tying contracts. Some, particularly those in the Chicago School of economic thought, argue that such contracts are generally employed to effect otherwise lawful price discrimination. Chicagoans have also argued that a firm with power in the market for the tying product cannot enhance its profit by employing power over the tying product to gain influence in the market for the tied product. Thus, these scholars assumed that firms employed market power to impose tying contracts, but that such contracts were nonetheless harmless or even beneficial.

Other scholars argue that ties can be methods of overcoming market failures that unbridled rivalry might otherwise produce. Market failure is a concept within economic theory wherein the allocation of goods and services by a Free market is not efficient. For instance, some economists have argued that a franchiser may employ tying contracts to ensure that franchisees with little repeat business purchase inputs of sufficient quality. Franchising refers to the methods of practicing and using another person's Philosophy of business. Absent such agreements, it is said, some franchisees will have an incentive to use the franchise system's trademark to lure unsuspecting customers and then provide the customer substandard service, to the detriment of the reputation associated with the trademark. A trademark or trade mark, represented by the symbols ™ and ®, or mark is a distinctive sign or indicator used by an individual These scholars argue that courts should analyze tying contracts under the Rule of Reason. The rule of reason is a doctrine developed by the United States Supreme Court in its interpretation of the Sherman Antitrust Act.

Notes

  1. ^ See N. Pac. Ry Co. v. United States, 356 U. S. 1 (1958); International Salt Co. v. United States, 332 U.S. 392 (1947)
  2. ^ 15 U. International Salt Co v United States, 332 US 392 ( 1947) was a case in which the United States Supreme Court held that the Sherman Case citation is the system used in many countries to identify the decisions in past Court cases either in special series of books called reporters S. C. s. 14
  3. ^ N. Pac. Ry. Co. v. United States, 356 U. S. 1, 5-6 (1958)
  4. ^ Eastman Kodak Co. v. Image Technical Servs. , Inc. , 504 U. S. 451, 461–62 (1992)
  5. ^ See Fornter Enterprises v. United States Steel, 394 U. S. 495 (1969); United States v. Loew's, Inc. 372 U. S. 38 (1962)
  6. ^ See Jefferson Parish Hospital District No. 2 v. Hyde, 466 U. S. 2 (1985)
  7. ^ See Illinois Tool Works v. Independent Ink, 547 U. S. 28 (2006)
  8. ^ See United States v. Microsoft, 253 F. United States v Microsoft There were many civil actions taking place in May 18 1998 3d 34 (D. C. Cir. 2001).
  9. ^ Id. at 64-67, 84-86.
  10. ^ See United States v. Microsoft, 253 F. United States v Microsoft There were many civil actions taking place in May 18 1998 3d 34 (D. C. Cir. 2001).
  11. ^ See Complaint filed in New York v. Microsoft Corp. PP 88-95, 98, 117-19, No. 98-1233 (D. D. C. filed May 18, 1998)
  12. ^ See Civil No. JFM-05-1087.

See also

Bibliography

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