A tying arrangement is an agreement requiring that a buyer to purchase
other goods or services through the seller as a prerequisite to purchasing
the desired goods or services, or requiring that the buyer will not purchase
that product from any other supplier. Tying arrangements can violate a
number of antitrust laws. However, some are permissible, such as banks
and other lending institutions requiring borrowers to purchase credit life
or disability insurance as a precondition of a loan.
The elements of an illegal tying arrangement include:
- There must be two separate products or services.
- There must be a sale or an agreement to sell one product
(or service) on the condition that the buyer purchase another product or
service (or the buyer agrees not to purchase the product or service from
another supplier).
- The seller must have sufficient economic power with
respect to the tying product to appreciably restrain free competition in
the market for the tied product.
- The tying arrangement must affect a "not insubstantial"
amount of commerce.
Related Terms
Terms with 'Tying' or 'Arrangement'
