The Commerce Requirement in Tying Law

I. INTRODUCTIONCourts condemn arrangements based on the assumption that firms are leveraging their market power in one market (the tying product market) in order to monopolize a second market (the product market).1 A arrangement exists when a seller refuses to sell one product (the tying product) unless the buyer also agrees to purchase another separate product (the product). Tying arrangements may potentially injure competition in numerous ways.2 For example, a seller may employ a tie-in to suppress competition in the market for the tied product.3 Tying arrangements may also create a barrier to entry into the product market.4 Absent proof of a legitimate purpose for the arrangement that cannot be achieved through less restrictive means, scholars have long argued that is a reasonable assumption that the purpose of the seller in using a tie-in is to restrain competition in the tied product.5 The Supreme Court famously asserted in Standard Stations that [t]ying agreements serve hardly any purpose beyond the suppression of competition.6 Historically, the fear that arrangements were almost inherently led courts to condemn some arrangements as per se illegal.7Despite decades of scholarship and hundreds of published opinions, law remains a confusing and controversial area of antitrust jurisprudence.8 This Essay focuses on the least controversial element: that a substantial volume of commerce in the tied product market be affected by the tie-in. An examination of this element demonstrates a flaw in current law. Depending on how the commerce element is articulated, it serves either a substantive or a jurisdictional function, or both. However, courts are neither particularly clear nor consistent in how they are using the element. This ambiguity makes the element difficult to understand and apply. By exposing the awkward evolution of the commerce element and its current duality, this Essay attempts to make this relatively non-controversial element more controversial.II. THE ORIGINAL FUNCTION OF THE COMMERCE ELEMENT IN TYING LAWA. THE LEGAL TEST FOR IDENTIFYING WHICH TYING ARRANGEMENTS ARE ANTICOMPETITIVENot all arrangements necessarily injure competition. Scholars associated with the Chicago School have argued that firms may use arrangements to effect price discrimination in a manner that expands output of the product.9 Other scholars and judges have reasoned that some sellers have imposed requirements to protect an infant industry,10 to protect goodwill by insuring that only high-quality complementary goods are used with the seller's product,11 or simply to increase their sales of the tied product at competitive prices.12 No universal explanation can describe all arrangements, their purposes and effects.13The objective of law should be to distinguish those arrangements that injure competition from those that do not. When evaluating alleged restraints of trade, courts generally employ one of two tests: the per se rule or the Rule of Reason.14 Under the per se rule, courts presume effects. In general, antitrust law's per se rule relieves the plaintiff from having to prove effects.15 The Supreme Court has long noted that a plaintiff does have to prove actual effects.16 For example, the Supreme Court has twice cited International Salt for the proposition that it is deemed irrelevant that there was no evidence as to the actual effect of the clauses upon competition.17 Once the elements of a claim are established, tying arrangements are illegal in and of themselves, without any requirement that the plaintiff make a showing of unreasonable competitive effect.18 Courts do not consider whether competition was in fact unreasonably restrained.19 After the elements are shown, the anticompetitive effects will be presumed. …