Tying

DEFINITION of 'Tying'

An often illegal arrangement where, in order to buy one product, the consumer must purchase another product that exists in a separate market. Tying falls under the wider legal umbrella of illegal competition that was originally censured by the Sherman Antitrust Act and refined in later acts. The distinction between tying (illegal) and bundling (legal within limits) is an important one for businesses to understand.

BREAKING DOWN 'Tying'

For example, an automaker bundles the tires that are sold with the manufactured automobile. However, the same automaker would likely be guilty of tying if, to purchase the car, you were required to buy a specific brand of toolbox. Other makers of toolboxes would quickly point out that a separate and robust market for toolboxes already exists. The reason that tire makers can't make this argument is that tires – no matter the brand – are necessary to marketing the car, and without cars, there is no market for tires. However, it is court decisions, more than any black and white lines, that form competition laws. Even this latter example may not survive the somewhat unpredictable nature of legal scrutiny.

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