Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Friday, June 13, 2008

Some Thoughts on Bundled Rebates and Exclusionary Policies

Posted by D. Daniel Sokol

Frech_2 H.E. Frech III (University of California at Santa Barbara Department of Economics) offers Some Thoughts on Bundled Rebates and Exclusionary Policies.

ABSTRACT: Bundling and related exclusionary practices are both common in the economy and often challenged under the antitrust laws. The following remarks highlight a few issues. This is not a complete discussion of these issues, let alone a complete treatise on the economics of bundling.

This paper is organized as follows:

  • Section I: Bundling practice that raise antitrust concerns rarely involve sales to final consumers
  • Section II: The main underlying economic issue is exclusive dealing—broadly defined
  • Section III: Exclusive dealing practices can have pro-competitive, anticompetitive, or neutral effects
  • Section IV: The Antitrust Modernization Commission's three-pronged test
  • Section V: Exclusionary practices often have a cumulative effect
  • Section VI: The "equally efficient rival" idea is tricky in practice
  • Section VII: Distinguishing procompetitive from anticompetitive exclusive dealing is difficult
  • Section VIII: Conclusion

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