Tying

Requiring customers who buy one product to also take another, tying, can be ordinary commerce or a lever for extending monopoly power. The line between the two is one of competition law's hardest.

Tying is the practice of selling one product, the tying good, only on the condition that the buyer also purchases a second, the tied good. Closely related to bundling, tying is distinguished by the conditionality, you cannot have the one without the other, and it is a recurring concern in competition law, because a firm with power in one market can use it to extend power into another.

The mechanism of leverage

The competitive worry about tying is leverage. A firm that dominates the market for one product, a must-have good that customers cannot do without, can require buyers of that product to also take a second product, in which the firm faces competition. Customers who need the first are forced to take the second, which can foreclose rival sellers of the second product, who lose access to those customers regardless of how good their offering is. In this way market power in one market is levered into another, harming competition in the tied market.

Efficiency or abuse

Like bundling, tying is not always harmful, and much of it is benign or beneficial. Products are often tied for genuine reasons: to ensure quality and compatibility, to reduce costs, to guarantee that complementary components work together, or simply for convenience. A car sold with its tyres, or a device with its charger, is a form of tying few would object to. The challenge for competition policy is distinguishing this efficient, customer-serving tying from the anti-competitive kind that a dominant firm uses to foreclose rivals and extend its monopoly.

The contested cases

Tying has been at the centre of landmark competition cases, particularly in technology, where dominant firms have been accused of tying additional products to their must-have platforms, bundling software with operating systems being the classic example. These cases are hard because the same conduct can be read as integrating products to benefit users or as leveraging dominance to crush competitors, and because in technology the boundaries between products, and what counts as a separate tied good at all, are themselves contested.

Tying captures one of the central anxieties of competition policy: that power in one market can be used to conquer another. Its difficulty lies in the fact that conditioning one purchase on another is sometimes efficient and customer-friendly and sometimes a weapon of foreclosure, and telling the two apart, especially for dominant firms in fast-moving technology markets, is among the most consequential and contested judgements competition law has to make.