Wednesday, November 26, 2014

Comprehensive Economic and Legal Analysis of Tying Arrangements

Guy Sagi, Netanya Academic College offers Comprehensive Economic and Legal Analysis of Tying Arrangements.

ABSTRACT: The law of tying arrangements as it stands does not correspond with modern economic analysis. Therefore, and because tying arrangements are so widely common, the law is expected to change and extensive academic writing is currently attempting to guide its way. Part II will present a comprehensive economic analysis that demonstrates that tying arrangements, despite their anticompetitive potential, also hold exceedingly significant pro-competitive efficiency potential. Part II will then review and critique the current law relating to tying arrangements. In Part III, I will present the potential legal rules for analyzing tying arrangements and the two leading approaches in academic writing regarding their appropriate implementation—the approach of the Chicago Harvard Schools and the approach of Professor Einer Elhauge. In Part IV, I will discuss various tying scenarios and present my position regarding their appropriate legal analyses. In concurrence with the Chicago- Harvard Schools’ approach, I support the implementation of the legal per se rule for tying arrangements that do not foreclose the tied product’s market. However, for tying arrangements that do foreclose the tied product’s market, I will propose, based on economic theory and empirical evidence, the implementation of a rule of reason analysis that does not raise a presumption against the tying arrangement. Lastly, Part V will conclude the discussion.

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