A tying arrangement is a selling arrangement in which the availability of one item (the "tying" item) is conditioned upon purchase or rental of another item (the "tied" item) or the agreement to not purchase or lease the tied item from the seller’s competitors. Like other agreements in restraint of trade, these arrangements may be subjected to antitrust scrutiny under the Sherman Act.
Proving tying arrangements requires proof of the following four basic elements:
- The tied and tying items entail separate products or services and are not simply integral components of some larger product or service.
- Availability of the tying item has to be conditioned upon purchase or rental of the tied item or on not dealing with the defendant’s competitors in the market for the tied item.
- The party imposing the tie has to have sufficient market power for the tying item to "appreciably restrain free competition" in the tied market
- A "not insubstantial" amount of commerce in the tied item has to be affected by the arrangement. The party imposing the tie must have an economic interest in both the tied and the tying items.
Even assuming that the above elements are met, the defendant may still justify the restriction by proving its overall competitive reasonableness. The courts afford a lot of room for potential defendants to get out of the antitrust suit if the defendant can prove commercial reasonableness.
If you are a small business owner and believe you are the victim of an illegal tying arrangement, you should contact a business lawyer. Antitrust issues are very complex, sometimes expensive, and very difficult to understand. If you have competitors in your business who use the same supplier you may want to contact them and file suit against your supplier jointly. If your issue is big enough you should notify both the company who you believe is operating the illegal tying arrangement, and the proper state or federal authorities about this illegal activity.