Friday, July 27, 2012
Tying Having No Impact on Competition as Abuse of Market Dominance: A Comparative Analysis of Korean and American Tying Laws
Posted by D. Daniel Sokol
Nam Woo Kim, Yonsei Institute of Legal Studies discusses Tying Having No Impact on Competition as Abuse of Market Dominance: A Comparative Analysis of Korean and American Tying Laws.
ABSTRACT: A recent decision of the U.S. Court of Appeals for the Ninth Circuit on tying, Brantley v. NBC Universal, Inc. (2012), moved tying doctrine in the direction to reduce error costs by bringing an overly prohibitory liability rule, which was established by the U.S. Supreme Court in Jefferson Parish Hosp. Dist. v. Hyde (1984), reflecting economic learning. The Ninth Circuit, affirming the district court, held that plaintiffs’ claims of ‘higher prices’ and ‘reducing choice’ were not enough to establish anticompetitive harm and thus there should be no tying liability without substantial tied market foreclosure or exclusion.
In contrast, the Monopoly Regulation and Fair Trade Act (MRFTA) of Korea, a counterpart of the Sherman Act, prohibits exploitative abuse of monopolists. ‘Substantial’ injury to consumers through higher prices and reduced choices even without an impact on competition might still be able to trigger the MRFTA. As a result, certain types of tying, which are not subject to the Sherman Act violation, could still conflict with the MRFTA.
This article, juxtaposing two jurisdictions, suggests in the conclusion that it be a better competition policy to tolerate monopolists’ tying having no impact on competition in order to protect competitive process. Monopoly is generally blamed for charging higher prices or reducing outputs but monopoly profits can be regarded as rewards for an entrepreneur who achieved success in markets through competition. It is also rational conduct in the economic sense for a monopolist to charge monopoly price, which maximizes its profits. Therefore, condemning monopolists’ tying having no injury to competition, should be held back because it could hurt competitive process in the long term.