Supreme Court of the United States
JEFFERSON PARISH HOSPITAL DISTRICT NO. 2
Decided March 27, 1984
Justice O’Connor, Concurring
|Topic: Economic Activity*||Court vote: 9–0|
Click any Justice for detailJoining O'Connor opinion: Chief Justice BURGER Justice POWELL Justice REHNQUIST
|Citation: 466 U.S. 2||Docket: 82–1031||Audio: Listen to this case's oral arguments at Oyez|
* As categorized by the Washington University Law Supreme Court Database
DISCLAIMER: Only United States Reports are legally valid sources for Supreme Court opinions. The text below is provided for ease of access only. If you need to cite the exact text of this opinion or if you would like to view the opinions of the other Justices in this case, please view the original United States Report at the Library of Congress or Justia. The Sandra Day O'Connor Institute does not in any way represent, warrant, or guarantee that the text below is accurate."
JUSTICE O'CONNOR, with whom THE CHIEF JUSTICE, JUSTICE POWELL, and JUSTICE REHNQUIST join, concurring in the judgment.
East Jefferson Hospital, a public hospital governed by petitioners, requires patients to use the anesthesiological services provided by Roux & Associates, as they are the only doctors authorized to administer anesthesia to patients in the hospital. The Court of Appeals found that this arrangement was a tie-in illegal under the Sherman Act. 686 F.2d 286 (CA5 1982). I concur in the Court's decision to reverse, but write separately to explain why I believe the hospital-Roux contract, whether treated as effecting a tie between services provided to patients or as an exclusive dealing arrangement between the hospital and certain anesthesiologists, is properly analyzed under the rule of reason.
Tying is a form of marketing in which a seller insists on selling two distinct products or services as a package. A supermarket that will sell flour to consumers only if they will also buy sugar is engaged in tying. Flour is referred to as the tying product, sugar as the tied product. In this case, the allegation is that East Jefferson Hospital has unlawfully tied the sale of general hospital services and operating room facilities (the tying service) to the sale of anesthesiologists' services (the tied services). The Court has on occasion applied a per se rule of illegality in actions alleging tying in violation of § 1 of the Sherman Act. International Salt Co. v. United States, 332 U. S. 392 (1947).
Under the usual logic of the per se rule, a restraint on trade that rarely serves any purposes other than to restrain competition is illegal without proof of market power or anticompetitive effect. See, e.g., Northern Pacific R. Co. v. United States, 356 U. S. 1, 356 U. S. 5 (1958). In deciding whether an economic restraint should be declared illegal per se,
[t]he probability that anticompetitive consequences will result from a practice and the severity of those consequences [is] balanced against its procompetitive consequences. Cases that do not fit the generalization may arise, but a per se rule reflects the judgment that such cases are not sufficiently common or important to justify the time and expense necessary to identify them.
Continental T.V., Inc. v. GTE Sylvania Inc., 433 U. S. 36, 433 U. S. 50, n. 16 (1977). See also Arizona v. Maricopa County Medical Society, 457 U. S. 332, 457 U. S. 351 (1982). Only when there is very little loss to society from banning a restraint altogether is an inquiry into its costs in the individual case considered to be unnecessary.
Some of our earlier cases did indeed declare that tying arrangements serve "hardly any purpose beyond the suppression of competition." Standard Oil Co. of California v. United States, 337 U. S. 293, 337 U. S. 305 -306 (1949) (dictum). However, this declaration was not taken literally even by the cases that purported to rely upon it. In practice, a tie has been illegal only if the seller is shown to have "sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product...." Northern Pacific R. Co., 356 U.S. at 356 U. S. 6. Without "control or dominance over the tying product," the seller could not use the tying product as "an effectual weapon to pressure buyers into taking the tied item," so that any restraint of trade would be "insignificant." Ibid. The Court has never been willing to say of tying arrangements, as it has of price fixing, division of markets, and other agreements subject to per se analysis, that they are always illegal, without proof of market power or anticompetitive effect.
The " per se " doctrine in tying cases has thus always required an elaborate inquiry into the economic effects of the tying arrangement. [ Footnote 2/1 ] As a result, tying doctrine incurs the costs of a rule of reason approach without achieving its benefits: the doctrine calls for the extensive and time-consuming economic analysis characteristic of the rule of reason, but then may be interpreted to prohibit arrangements that economic analysis would show to be beneficial. Moreover, the per se label in the tying context has generated more confusion than coherent law, because it appears to invite lower courts to omit the analysis of economic circumstances of the tie that has always been a necessary element of tying analysis.
The time has therefore come to abandon the " per se " label and refocus the inquiry on the adverse economic effects, and the potential economic benefits, that the tie may have. The law of tie-ins will thus be brought into accord with the law applicable to all other allegedly anticompetitive economic arrangements, except those few horizontal or quasi-horizontal restraints that can be said to have no economic justification whatsoever. [ Footnote 2/2 ] This change will rationalize, rather than abandon, tie-in doctrine as it is already applied.
Our prior opinions indicate that the purpose of tying law has been to identify and control those tie-ins that have a demonstrable exclusionary impact in the tied-product market, see Times-Picayune Publishing Co. v. United States, 345 U. S. 594, 345 U. S. 605 (1953), or that abet the harmful exercise of market power that the seller possesses in the tying product market. [ Footnote 2/3 ] Under the rule of reason, tying arrangements should be disapproved only in such instances.
Market power in the tying product may be acquired legitimately ( e.g., through the grant of a patent) or illegitimately ( e.g., as a result of unlawful monopolization). In either event, exploitation of consumers in the market for the tying product is a possibility that exists and that may be regulated under § 2 of the Sherman Act without reference to any tying arrangements that the seller may have developed. The existence of a tied product normally does not increase the profit that the seller with market power can extract from sales of the tying product. A seller with a monopoly on flour, for example, cannot increase the profit it can extract from flour consumers simply by forcing them to buy sugar along with their flour. Counterintuitive though that assertion may seem, it is easily demonstrated and widely accepted. See, e.g., R. Bork, The Antitrust Paradox 372-374 (1978); P. Areeda, Antitrust Analysis 735 (3d ed.1981).
Tying may be economically harmful primarily in the rare cases where power in the market for the tying product is used to create additional market power in the market for the tied product. [ Footnote 2/4 ] The antitrust law is properly concerned with tying when, for example, the flour monopolist threatens to use its market power to acquire additional power in the sugar market, perhaps by driving out competing sellers of sugar, or by making it more difficult for new sellers to enter the sugar market. But such extension of market power is unlikely, or poses no threat of economic harm, unless the two markets in question and the nature of the two products tied satisfy three threshold criteria. [ Footnote 2/5 ]
First, the seller must have power in the tying product market. [ Footnote 2/6 ] Absent such power, tying cannot conceivably have any adverse impact in the tied product market, and can be only procompetitive in the tying product market. [ Footnote 2/7 ] If the seller of flour has no market power over flour, it will gain none by insisting that its buyers take some sugar as well. See United States Steel Corp. v. Fortner Enterprises, Inc., 429 U. S. 610, 429 U. S. 620 (1977) ( Fortner II ); Fortner Enterprises, Inc. v. United States Steel Corp., 394 U. S. 495, 394 U. S. 503 -504 (1969) ( Fortner I ); United States v. Loew's Inc., 371 U. S. 38, 371 U. S. 45, 371 U. S. 48, n. 5 (1962); Northern Pacific R. Co. v. United States, 356 U.S. at 356 U. S. 6 -7.
Second, there must be a substantial threat that the tying seller will acquire market power in the tied product market. No such threat exists if the tied product market is occupied by many stable sellers who are not likely to be driven out by the tying, or if entry barriers in the tied product market are low. If, for example, there is an active and vibrant market for sugar -one with numerous sellers and buyers who do not deal in flour -the flour monopolist's tying of sugar to flour need not be declared unlawful. Cf. Fortner II, supra, at 429 U. S. 617 -618, and n. 8; Fortner I, supra, at 394 U. S. 498 -499; Times-Picayune Publishing Co. v. United States, 345 U.S. at 345 U. S. 611 ; Standard Oil Co. of California v. United States, 337 U.S. at 337 U. S. 305 -306; International Salt Co. v. United States, 332 U.S. at 332 U. S. 396. If, on the other hand, the tying arrangement is likely to erect significant barriers to entry into the tied product market, the tie remains suspect. Atlantic Refining Co. v. FTC, 381 U. S. 357, 381 U. S. 371 (1965).
Third, there must be a coherent economic basis for treating the tying and tied products as distinct. All but the simplest products can be broken down into two or more components that are "tied together" in the final sale. Unless it is to be illegal to sell cars with engines or cameras with lenses, this analysis must be guided by some limiting principle. For products to be treated as distinct, the tied product must, at a minimum, be one that some consumers might wish to purchase separately without also purchasing the tying product. [ Footnote 2/8 ] When the tied product has no use other than in conjunction with the tying product, a seller of the tying product can acquire no additional market power by selling the two products together. If sugar is useless to consumers except when used with flour, the flour seller's market power is projected into the sugar market whether or not the two products are actually sold together; the flour seller can exploit what market power it has over flour with or without the tie. [ Footnote 2/9 ] The flour seller will therefore have little incentive to monopolize the sugar market unless it can produce and distribute sugar more cheaply than other sugar sellers. And in this unusual case, where flour is monopolized and sugar is useful only when used with flour, consumers will suffer no further economic injury by the monopolization of the sugar market.
Even when the tied product does have a use separate from the tying product, it makes little sense to label a package as two products without also considering the economic justifications for the sale of the package as a unit. When the economic advantages of joint packaging are substantial the package is not appropriately viewed as two products, and that should be the end of the tying inquiry. The lower courts largely have adopted this approach. [ Footnote 2/10 ] See, e.g., Foster v. Maryland State Savings and Loan Assn., 191 U.S.App.D.C. 226, 228-231, 590 F.2d 928, 930-933 (1978), cert. denied, 439 U.S. 1071 (1979); Response of Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307, 1330 (CA5 1976); Kugler v. AAMCO Automatic Transmissions, Inc., 460 F.2d 1214 (CA8 1972); ILC Peripherals Leasing Corp. v. International Business Machines Corp., 448 F.Supp. 228, 230 (ND Cal.1978); United States v. Jerrold Electronics Corp., 187 F.Supp. 545, 563 (ED Pa.1960), aff'd per curiam, 365 U. S. 567 (1961).
These three conditions -market power in the tying product, a substantial threat of market power in the tied product, and a coherent economic basis for treating the products as distinct -are only threshold requirements. Under the rule of reason a tie-in may prove acceptable even when all three are met. Tie-ins may entail economic benefits as well as economic harms, and if the threshold requirements are met, these benefits should enter the rule of reason balance.
[Tie-ins] may facilitate new entry into fields where established sellers have wedded their customers to them by ties of habit and custom. Brown Shoe Co. v. United States, 370 U. S. 294, 370 U. S. 330 (1962).... They may permit clandestine price-cutting in products which otherwise would have no price competition at all because of fear of retaliation from the few other producers dealing in the market. They may protect the reputation of the tying product if failure to use the tied product in conjunction with it may cause it to misfunction.... [Citing] Pick Mfg. Co. v. General Motors Corp., 80 F.2d 641 (C. A. 7th Cir.1935), aff'd, 299 U. S. 3 (1936). And, if the tied and tying products are functionally related, they may reduce costs through economies of joint production and distribution.
Fortner I, 394 U.S. at 394 U. S. 514, n. 9 (WHITE, J., dissenting).
The ultimate decision whether a tie-in is illegal under the antitrust laws should depend upon the demonstrated economic effects of the challenged agreement. It may, for example, be entirely innocuous that the seller exploits its control over the tying product to "force" the buyer to purchase the tied product. For when the seller exerts market power only in the tying product market, it makes no difference to him or his customers whether he exploits that power by raising the price of the tying product or by "forcing" customers to buy a tied product. See Markovits, Tie-Ins, Reciprocity and the Leverage Theory, 76 Yale L.J. 1397, 1397-1398 (1967); Burstein, A Theory of Full-Line Forcing, 55 Nw.U.L.Rev. 62, 62-63 (1960). On the other hand, tying may make the provision of packages of goods and services more efficient. A tie-in should be condemned only when its anticompetitive impact outweighs its contribution to efficiency.
Application of these criteria to the case at hand is straightforward.
Although the issue is in doubt, we may assume that the hospital does have market power in the provision of hospital services in its area. The District Court found to the contrary, 513 F.Supp. 532, 541 (ED La.1981), but the Court of Appeals determined that the hospital does possess market power in an appropriately defined market. While appellate courts should normally defer to the district courts' findings on such fact-bound questions [ Footnote 2/11 ] I shall assume for the purposes of this discussion that the Court of Appeals' determination that the hospital does have some power in the provision of hospital services in its local market is accepted.
Second, in light of the hospital's presumed market power, we may also assume that there is a substantial threat that East Jefferson will acquire market power over the provision of anesthesiological services in its market. By tying the sale of anesthesia to the sale of other hospital services the hospital can drive out other sellers of those services who might otherwise operate in the local market. The hospital may thus gain local market power in the provision of anesthesiology: anesthesiological services offered in the hospital's market, narrowly defined, will be purchased only from Roux, under the hospital's auspices.
But the third threshold condition for giving closer scrutiny to a tying arrangement is not satisfied here: there is no sound economic reason for treating surgery and anesthesia as separate services. Patients are interested in purchasing anesthesia only in conjunction with hospital services, [ Footnote 2/12 ] so the hospital can acquire no additional market power by selling the two services together. Accordingly, the link between the hospital's services and anesthesia administered by Roux will affect neither the amount of anesthesia provided nor the combined price of anesthesia and surgery for those who choose to become the hospital's patients. In these circumstances, anesthesia and surgical services should probably not be characterized as distinct products for tying purposes.
Even if they are, the tying should not be considered a violation of § 1 of the Sherman Act, because tying here cannot increase the seller's already absolute power over the volume of production of the tied product, which is an inevitable consequence of the fact that very few patients will choose to undergo surgery without receiving anesthesia. The hospital-Roux contract therefore has little potential to harm the patients. On the other side of the balance, the District Court found, and the Court of Appeals did not dispute, that the tie-in conferred significant benefits upon the hospital and the patients that it served.
The tie-in improves patient care and permits more efficient hospital operation in a number of ways. From the viewpoint of hospital management, the tie-in ensures 24-hour anesthesiology coverage, aids in standardization of procedures and efficient use of equipment, facilitates flexible scheduling of operations, and permits the hospital more effectively to monitor the quality of anesthesiological services. Further, the tying arrangement is advantageous to patients because, as the District Court found, the closed anesthesiology department places upon the hospital, rather than the individual patient, responsibility to select the physician who is to provide anesthesiological services. The hospital also assumes the responsibility that the anesthesiologist will be available, will be acceptable to the surgeon, and will provide suitable care to the patient. In assuming these responsibilities -responsibilities that a seriously ill patient frequently may be unable to discharge -the hospital provides a valuable service to its patients. And there is no indication that patients were dissatisfied with the quality of anesthesiology that was provided at the hospital or that patients wished to enjoy the services of anesthesiologists other than those that the hospital employed. Given this evidence of the advantages and effectiveness of the closed anesthesiology department, it is not surprising that, as the District Court found, such arrangements are accepted practice in the majority of hospitals of New Orleans and in the health care industry generally. Such an arrangement, which has little anticompetitive effect and achieves substantial benefits in the provision of care to patients, is hardly one that the antitrust law should condemn. [ Footnote 2/13 ] This conclusion reaffirms our threshold determination that the joint provision of hospital services and anesthesiology should not be viewed as involving a tie between distinct products, and therefore should require no additional scrutiny under the antitrust law.
Whether or not the hospital-Roux contract is characterized as a tie between distinct products, the contract unquestionably does constitute exclusive dealing. Exclusive dealing arrangements are independently subject to scrutiny under § 1 of the Sherman Act, and are also analyzed under the rule of reason. Tampa Electric Co. v. Nashville Coal Co., 365 U. S. 320, 365 U. S. 333 -335 (1961).
The hospital-Roux arrangement could conceivably have an adverse effect on horizontal competition among anesthesiologists, or among hospitals. Dr. Hyde, who competes with the Roux anesthesiologists, and other hospitals in the area, who compete with East Jefferson, may have grounds to complain that the exclusive contract stifles horizontal competition and therefore has an adverse, albeit indirect, impact on consumer welfare even if it is not a tie.
Exclusive dealing arrangements may, in some circumstances, create or extend market power of a supplier or the purchaser party to the exclusive dealing arrangement, and may thus restrain horizontal competition. Exclusive dealing can have adverse economic consequences by allowing one supplier of goods or services unreasonably to deprive other suppliers of a market for their goods, or by allowing one buyer of goods unreasonably to deprive other buyers of a needed source of supply. In determining whether an exclusive dealing contract is unreasonable, the proper focus is on the structure of the market for the products or services in question -the number of sellers and buyers in the market, the volume of their business, and the ease with which buyers and sellers can redirect their purchases or sales to others. Exclusive dealing is an unreasonable restraint on trade only when a significant fraction of buyers or sellers are frozen out of a market by the exclusive deal. Standard Oil Co. of California v. United States, 337 U. S. 293 (1949). When the sellers of services are numerous and mobile, and the number of buyers is large, exclusive dealing arrangements of narrow scope pose no threat of adverse economic consequences. To the contrary, they may be substantially procompetitive by ensuring stable markets and encouraging long-term, mutually advantageous business relationships.
At issue here is an exclusive-dealing arrangement between a firm of four anesthesiologists and one relatively small hospital. There is no suggestion that East Jefferson Hospital is likely to create a "bottleneck" in the availability of anesthesiologists that might deprive other hospitals of access to needed anesthesiological services, or that the Roux associates have unreasonably narrowed the range of choices available to other anesthesiologists in search of a hospital or patients that will buy their services. Cf. Associated Press v. United States, 326 U. S. 1 (1945). A firm of four anesthesiologists represents only a very small fraction of the total number of anesthesiologists whose services are available for hire by other hospitals, and East Jefferson is one among numerous hospitals buying such services. Even without engaging in a detailed analysis of the size of the relevant markets we may readily conclude that there is no likelihood that the exclusive dealing arrangement challenged here will either unreasonably enhance the hospital's market position relative to other hospitals or unreasonably permit Roux to acquire power relative to other anesthesiologists. Accordingly, this exclusive dealing arrangement must be sustained under the rule of reason.
For these reasons, I conclude that the hospital-Roux contract does not violate § 1 of the Sherman Act. Since anesthesia is a service useful to consumers only when purchased in conjunction with hospital services, the arrangement is not properly characterized as a tie between distinct products. It threatens no additional economic harm to consumers beyond that already made possible by any market power that the hospital may possess. The fact that anesthesia is used only together with other hospital services is sufficient, standing alone, to insulate from attack the hospital's decision to tie the two types of service.
Whether or not this case involves tying of distinct products, the hospital-Roux contract is subject to scrutiny under the rule of reason as an exclusive dealing arrangement. Plainly, however, the arrangement forecloses only a small fraction of the markets in which anesthesiologists may sell their services, and a still smaller fraction of the market in which hospitals may secure anesthesiological services. The contract therefore survives scrutiny under the rule of reason.
The judgment of the Court of Appeals for the Fifth Circuit should be reversed, and the case should be remanded for any further proceedings on respondent's remaining claims. See ante at 466 U. S. 5, n. 2.
[ Footnote 2/1 ]
This inquiry has been required in analyzing both the prima facie case and affirmative defenses. Most notably, United States v. Jerrold Electronics Corp., 187 F.Supp. 545, 559-560 (ED Pa.1960), aff'd per curiam, 365 U. S. 567 (1961), upheld a requirement that buyers of television systems purchase the complete system, as well as installation and repair service, on the grounds that the tie assured that the systems would operate, and thereby protected the seller's business reputation.
[ Footnote 2/2 ]
Tying law is particularly anomalous in this respect, because arrangements largely indistinguishable from tie-ins are generally analyzed under the rule of reason. For example, the " per se " analysis of tie-ins subjects restrictions on a franchisee's freedom to purchase supplies to a more searching scrutiny than restrictions on his freedom to sell his products. Compare, e.g., Siegel v. Chicken Delight, Inc., 448 F.2d 43 (CA9 1971), cert. denied, 405 U.S. 955 (1972), with Continental T.V., Inc. v. GTE Sylvania Inc., 433 U. S. 36 (1977). And exclusive contracts that, like tie-ins, require the buyer to purchase a product from one seller are subject only to the rule of reason. See infra at 466 U. S. 44 -45.
[ Footnote 2/3 ]
See n. 4, infra.
[ Footnote 2/4 ]
Tying might be undesirable in two other instances, but the hospital-Roux arrangement involves neither one.
In a regulated industry, a firm with market power may be unable to extract a supercompetitive profit because it lacks control over the prices it charges for regulated products or services. Tying may then be used to extract that profit from sale of the unregulated, tied products or services. See Fortner Enterprises, Inc. v. United States Steel Corp., 394 U. S. 495, 394 U. S. 513 (1969) (WHITE, J., dissenting).
Tying may also help the seller engage in price discrimination by "metering" the buyer's use of the tying product. Cf. International Business Machines Corp. v. United States, 298 U. S. 131 (1936); International Salt Co. v. United States, 332 U. S. 392 (1947). Price discrimination may be independently unlawful, see 15 U.S.C. § 13. Price discrimination may, however, decrease, rather than increase, the economic costs of a seller's market power. See, e.g., R. Bork, The Antitrust Paradox 398 (1978); P. Areeda, Antitrust Analysis 608-610 (3d ed.1981); O. Williamson, Markets and Hierarchies: Analysis and Antitrust Implications 11-13 (1975). United States Steel Corp. v. Fortner Enterprises, Inc., 429 U. S. 610, 429 U. S. 617 (1977) ( Fortner II ), did not hold that price discrimination in the form of a tie-in is always economically harmful; that case indicated only that price discrimination may indicate market power in the tying product market. But there is no need in this case to address the problem of price discrimination facilitated by tying. The discussion herein is aimed only at tying arrangement as to which no price discrimination is alleged.
[ Footnote 2/5 ]
Wholly apart from market characteristics, a prerequisite to application of the Sherman Act is an effect on interstate commerce. See, e.g., McLain v. Real Estate Board of New Orleans, 444 U. S. 232, 444 U. S. 246 (1980); Burke v. Ford, 389 U. S. 320, 389 U. S. 322 (1967). It is not disputed that such an impact is present here.
[ Footnote 2/6 ]
The Court has failed in the past to define how much market power is necessary, but, in the context of this case, it is inappropriate to attempt to resolve that question. In International Salt Co. v. United States, supra, the Court assumed that a patent conferred market power, and therefore sufficiently established "the tendency of the arrangement to accomplishment of monopoly." Id. at 332 U. S. 396. In its next tying case, Times-Picayune Publishing Co. v. United States, 345 U. S. 594 (1953), the Court distinguished International Salt in part by finding that there was no market "dominance," 345 U.S. at 345 U. S. 610 -613, after a careful consideration of the relevant market. Then, in Northern Pacific R. Co. v. United States, 356 U. S. 1, 356 U. S. 6 -8, 356 U. S. 11 (1958), the Court required only a minimal showing of market power. More recently, in Fortner II, supra, the Court conducted a more extensive analysis of whether the tie was actually an exercise of market power, considering such factors as the size and profitability of the firm seeking to impose the tie, the character of the tying product, and the effects of the tie -the price charged for the products, the number of customers affected, the functional relation between the tied and tying product.
[ Footnote 2/7 ]
A common misconception has been that a patent or copyright, a high market share, or a unique product that competitors are not able to offer suffices to demonstrate market power. While each of these three factors might help to give market power to a seller, it is also possible that a seller in these situations will have no market power: for example, a patent holder has no market power in any relevant sense if there are close substitutes for the patented product. Similarly, a high market share indicates market power only if the market is properly defined to include all reasonable substitutes for the product. See generally Landes & Posner, Market Power in Antitrust Cases, 94 Harv.L.Rev. 937 (1981).
Nor does any presumption of market power find support in our prior cases. Although United States v. Paramount Pictures, Inc., 334 U. S. 131 (1948), considered the legality of "block-booking" of motion pictures, which ties the purchase of rights to copyrighted motion pictures to purchase of other motion pictures of the same copyright holder, the Court did not analyze the arrangement with the schema of the tying cases. Rather, the Court borrowed the patent law principle of "patent misuse," which prevents the holder of a patent from using the patent to require his customers to purchase unpatented products. Id. at 334 U. S. 156 -159. See, e.g., Mercoid Corp. v. Mid-Continent Investment Co., 320 U. S. 661, 320 U. S. 665 (1944). The "patent misuse" doctrine may have influenced the Court's willingness to strike down the arrangement at issue in International Salt as well, although the Court did not cite the doctrine in that case.
[ Footnote 2/8 ]
Whether the tying product is one that consumers might wish to purchase without the tied product should be irrelevant. Once it is conceded that the seller has market power over the tying product it follows that the seller can sell the tying product on noncompetitive terms. The injury to consumers does not depend on whether the seller chooses to charge a supercompetitive price, or charges a competitive price, but insists that consumers also buy a product that they do not want.
[ Footnote 2/9 ]
Cf. Areeda, supra, n. 4, at 735; Ross, The Single Product Issue in Antitrust Tying: A Functional Approach, 23 Emory L.J. 963, 1010 (1974); Bowman, Tying Arrangements and the Leverage Problem, 67 Yale L.J.19, 21-23 (1957).
[ Footnote 2/10 ]
The examination of the economic advantages of tying may properly be conducted as part of the rule of reason analysis, rather than at the threshold of the tying inquiry. This approach is consistent with this Court's occasional references to the problem. The Court has not heretofore had occasion to set forth any general criteria for determining when two apparently separate products are components of a single product for tying analysis. In Times-Picayune Publishing Co., the Court held that advertising space in a morning newspaper was the same product as advertising space in the evening newspaper -access to readership of the respective newspapers -because the subscribers had no reason to distinguish among the readers of the two papers. 345 U.S. at 345 U. S. 613 -616. In Fortner I, the Court, reversing the grant of a motion for summary judgment, rejected the contention that credit could never be separate from the product for whose purchase credit was extended. 394 U.S. at 394 U. S. 506 -507. The Court disclaimed any determination of "the standards for determining exactly when a transaction involves only a single product." Id. at 394 U. S. 507. These cases indicate that consideration of whether a buyer might prefer to purchase one component without the other is one of the factors in tying analysis and, more generally, that economic analysis, rather than mere conventional separability into different markets, should determine whether one or two products are involved in the alleged tie.
[ Footnote 2/11 ]
See Fed.Rule Civ.Proc. 52(a); Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U. S. 844, 456 U. S. 855 -858 (1982).
[ Footnote 2/12 ]
While the record appears to be devoid of factual findings on this point the assumption is a safe one, and certainly one that finds no contradiction in the record.
[ Footnote 2/13 ]
The Court of Appeals disregarded the benefits of the tie because it found that there were less restrictive means of achieving them. In the absence of an adequate basis to expect any harm to competition from the tie-in, this objection is simply irrelevant.
Header photo: United States Supreme Court. Credit: Patrick McKay / Flickr - CC.