Some Thoughts on Bundled Rebates and Exclusionary Policies

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Ted Frech, Jun 10, 2008

Bundling and related exclusionary practices are both common in the economy and often challenged under the antitrust laws. The following remarks highlight a few issues. This is not a complete discussion of these issues, let alone a complete treatise on the economics of bundling. This paper is organized as follows:

  • Section I: Bundling practice that raise antitrust concerns rarely involve sales to final consumers
  • Section II: The main underlying economic issue is exclusive dealing broadly defined
  • Section III: Exclusive dealing practices can have pro-competitive, anticompetitive, or neutral effects
  • Section IV: The Antitrust Modernization Commission’s three-pronged test
  • Section V: Exclusionary practices often have a cumulative effect
  • Section VI: The “equally efficient rival” idea is tricky in practice
  • Section VII: Distinguishing procompetitive from anticompetitive exclusive dealing is difficult
  • Section VIII: Conclusion

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