Tying Arrangement Law & Legal Definition
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.
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