Tying (commerce)

Tying may also be a form of price discrimination: people who use more razor blades, for example, pay more than those who just need a one-time shave.

[citation needed]) Vertical tying is the practice of requiring customers to purchase related products or services together, from the same company.

[7] More recently, the Court has eliminated any presumption of market power based solely on the fact that the tying product is patented or copyrighted.

[8] In recent years, changing business practices surrounding new technologies have put the legality of tying arrangements to the test.

When Apple initially released the iPhone on June 29, 2007,[10] it was sold exclusively with AT&T (formerly Cingular) contracts in the United States.

[12] Related to the concept of bricking, any user who tried to unlock or otherwise tamper with the locking software ran the risk of rendering their iPhone permanently inoperable.

[12] This caused complaints among many consumers, as they were forced to pay an additional early termination fee of $175 if they wanted to unlock the device safely for use on a different carrier.

[13][failed verification] Many questioned the legality of the arrangement,[14] and in October 2007 a class-action lawsuit was filed against Apple, claiming that its exclusive agreement with AT&T violates California antitrust law.

[15] The suit was filed by the Law Office of Damian R. Fernandez on behalf of California resident Timothy P. Smith,[15] and ultimately sought to have an injunction issued against Apple to prevent it from selling iPhones with any kind of software lock.

[17] Apple told regulators that modifying the iPhone operating system leads to the creation of an infringing derivative work that is protected by copyright law.

[17] However, regulators agreed that modifying an iPhone's firmware/operating system to enable it to run an application that Apple has not approved is undoubtedly fair use.

[22][23] In 1970, Congress enacted section 106 of the Bank Holding Company Act Amendments of 1970 (BHCA), the anti-tying provision, which is codified at 12 U.S.C.

The statute was designed to prevent banks, whether large or small, state or federal, from imposing anticompetitive conditions on their customers.

Banks are allowed to take measures to protect their loans and to safeguard the value of their investments, such as requiring security or guaranties from borrowers.

At least four regulatory agencies including the Federal Reserve Board oversee the activities of banks, their holding companies, and other related depository institutions.

While each type of depository institution has a “primary regulator”, the nation's “dual banking” system allows concurrent jurisdiction among the different regulatory agencies.

[35] Some examples of tying practices having an anti-competitive foreclosure effect in case law are the IBM,[36] Eurofix-Bauco v Hilti,[37] Telemarketing v CLT,[38] British Sugar[39] and Microsoft.