SYMBIOSIS INTERNATIONAL (DEEMED UNIVERSITY)

PUNE
SYMBIOSIS LAW SCOOL, PUNE

COMPETITION LAW –

1ST INTERNAL ASSIGNMENT

SUBMITTED BY: -
Sanskriti Grewal
PRN: 16010126328
DIVISION D
IVth YEAR
BBA.LLB (Hons.)

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 SCOPE OF TIE-IN AGREEMENTS UNDER COMPETITION LAW

ABSTRACT

Under the Competition Act, Tie-in Arrangement is managed under the head of Vertical Anti-
competitive agreement. Tie-in arrangements have both great and terrible consequences for
the competition. This paper illustrates the history of how competition law in India was the
Monopolies and restrictive Trade Practices Act, 1969 (MRTP Act in brief). Further, this
paper introduces the different concept with the legal background and studies of various laws
on Tying under US law, European law and Indian law as to prevent practices having adverse
effect on competition. On one hand tie-in arrangements may result in value discrimination,
boundaries to new section in the market, imposing business model of the tied and tying items.
Then again tie-in arrangement may profit the customers by providing them with products or
administrations in a package which are required and at bring down cost. a tie in
arrangement is something that is a violation of competition law, and in certain circumstances
it may not necessarily be so.

Keywords: Tie-in Arrangement, Anti-Competitive agreement, MRPT Act.

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 TABLE CONTENTS

I. Introduction………………………………………………………………04

What is Anti-Competitive agreement?

What are Tie-in agreements

II.Research question……………………………………………………….09

III.Desirable law……………………………………………………………10

The Different Legal Rules for Analysing Tying Arrangements

US law on tying

European law on tying

Indian law on tying

IV.Analysis of negative effect of tying on Indian economy…………….15

Conclusion…………………………………………………………………16

References…………………………………………………………………17

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 I. Introduction

Since attaining independence in 1947, India for the better part of half a century thereafter
adopted and followed policies comprising of what are known as “Command-and Control” laws,
rules, regulations and executive orders. As attaining independence in 1947, India for the better
part of a half century adopted the policies compromising of called as “Command and Control”
laws, rules and regulations and executive orders. The competition law was the monopolies and
restrictive Trade Practices Act, 1969 (MRTP Act). Economic liberalisation in India was seeing
the light of the day and the need for an effective competition regime was recognised. The new
competition Act, 2002 was introduced in replacement of the MRTP Act. The Competition Act
of 2002 was introduced as replacement in MRTP Act. The reason for repeal of the MRTP Act
was that the act was not suited to deal with issues of competition that may expected to arise in
the new liberal business environment.

Under the Competition Act, Tie-in Agreement is dealt with under the head of the vertical Anti-
competitive agreement. A tie-in arrangement, under this Act, is not illegal per se but if it has
an appreciable adverse effect on the competition, then it becomes illegal. Tie-in arrangements
have both good and bad effects on the competition. On one hand tie-in arrangements may result
in price discrimination, barriers to new entry in the market, monopolisation of the tied and tying
products. On the other hand, tie-in arrangement may benefit the consumers by providing them
with goods or services in a bundle which are required and at lower price. But tie-in
arrangements are more likely to adversely affect the economy than being beneficial to the
economy. The negative effects on the Indian economy are further discussed in this paper.

Under Competition law a tie-in arrangement, refers to a situation where the seller of a good or
a provider of a service, sells his good or provides his service with the condition that another
good or service shall have to be purchased with the purchase of the first mentioned good or
service. For example: the gas pipeline company insisting on the purchase of a gas stove from
them, barring which they would not provide the gas pipeline in the first place.

There are two products in this system. The ‘tying good’ and the ‘tied good.’ The tying good is
the one the customer wants to procure and the tied good is the one he is forced to purchase. In

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the above example obtaining the service of a gas pipeline is the tying product while, the gas
stove the company forces on buy is the tied product.

Essentially, the buyer needs to purchase the gas stove forcefully and the same way of force is
never good for competition in the market. In the present case, the provider of the service itself
is forcing to buy gas stove and this is very unlikely that anyone who has brought the gas stove
from the gas pipeline supplier, will actually buy another stove. This affects the competition of
gas stove market and gives an advantage to the gas pipeline company. The argument can be
brought that the fact that both hoods are being provided by the same manufacturer which is a
good thing but on the other hand it is the problem which arises when the buyer already have
the stove and needs only gas pipeline connection. It is to be ensured that the freedom of the
buyer is never taken away. The buyer always has a choice with regard to the product he wishes
to purchase. Thus, competition in market as whole increases efficiency and generally helps to
ensure that the customer get the product at the cheapest rate possible.

What is Anti-Competitive agreement?

An agreement between persons or enterprises o association of enterprises or persons or

association of persons, in regards to production, supply, distribution, storage, acquisition or
control of goods or provisions of services which causes an appreciable adverse effect on
competition in India, is void under section 3(2) of the Competition Act. Anti-competitive
agreements are those agreements that unfavourably affect the process of competition in the
market. As described by an OECD/World Bank Glossary, anti-competitive practices suggest
to an extensive variety of business homes that a firm or gatherings of firm may participate
keeping in mind the end goal to limit between firm competition to increase their relative market
position and take advantages without fundamentally giving products and ventures at a lower
cost or higher quality.1 The basic requirement of any market is the existence of the forces of
supply and demand. A good or service is supplied or demanded only because it has some utility.
Elements or activities that go into creation of utility combine to form forces of supply while
those that ultimately consume that utility represent forces of demand. The end consumer of any
good or service is one who eventually consumes the utility of that product. Anti-competitive
agreements thus refrain the consumer to obtain such utility after consumption of product,

1
World Bank/OECD: “Glossary of Industrial Organization on Economics and Competition Law”.

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because the market forces with respect to production, supply and distribution uses the “price
fixation” scheme which provides the high cost with lower quality.2

The Competition Act enumerates certain kinds of anti-competitive agreements.3 It deals with
certain actions or decision made by a group of association in the form of an understanding,
arrangement or agreement either formal or informal, including cartels4 and further enumerates
certain vertical restrains on trade. The Anti-competitive agreements are categorised in two
ways:

1.Horizontal agreements

These agreements are between competitors operating at the same level in the economic process,
i.e. enterprises engaged and operating in broadly same activity. These are the agreements
between producers or between whole sellers or between retailers, dealing in similar kinds of
products. These agreements are construed as presumed anti-competitive agreements. Hence,
these agreements are subject to per se rule and therefore, they are presumed to have appreciable
adverse effect on competition.5

It thus includes cartels, Bid-rigging agreements, Output restrictions, price fixing and Market
allocation.

2.Vertical Agreements

There is another category of agreements which may be hit by the prohibition against Anti-
competitive agreement, if they cause or is likely to cause an appreciable adverse effect on
competition6 i.e. those agreements that are to be judged by “Rule of Reason as against rule of
per se” and the burden of proof lies on the investigator/prosecutor. These are the agreements
between business entities operating at different level of chain such as distributor, supplier,
manufacturer.

It includes exclusive supply/purchase agreements, Tie-in arrangements, Resale price

maintenance, refusal to deal.

TIE-IN ARRANGEMENTS

2
Shri Neeraj Malhotra and Deutsche Bank and others, 2 December (2010)
3
Section 3(3) & (4) of the Competition Act, 2002
4
Ibid. Section 3(4) of the Competition Act, 2002
5
These are agreements between the persons operating at the same level of the economic process and therefore,
they are entered into between the competitors.
6
Section 3(3) of the Competition Act, 2002

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Under Competition law, section 3 sub-section (4) explanation (a) illustrates any arrangement
requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods.
The product or service which is required by the buyer is known as the tying product or service
and the product is forced on the buyer is called the tied product or service. Tying is commonly
defined as a conduct where a dominant firm sells one product, only on the condition that the
buyer also purchases a different productor agrees that it will not purchase the tied product from
another supplier.7 Tying also includes the sale of products or services that could be viewed as
separate but are only sold together as a bundle. Tie-in agreements are void if it causes
appreciable adverse effect. However, it is to be noted that tie-in agreements can also be an
“abuse” under the provisions of the Competition Act.8

Tying arrangements raise concerns for competition law as such agreements deny competitors
free access to the market for the tied product, not because the party imposing the tying
requirements has a better product or a lower price but because of power or leverage in another
market. At the same time buyers are forced to forego their free choice between competing
products. The wording of the section 4(2)(d) does not require factual evidence of foreclosure
but it is enough to show that tying may have a possible foreclosure effect on the market.

The basic objection that would arise from the point of view of the buyer is that he is required
by compulsion to buy a product or service that he does not need and so is forced to incur
unnecessary cost. From the point of view of the law protecting competition in the market, this
would be objectionable on the ground that it reduces competition in the supply of the tied
product. An example of ‘tie-in’ or ‘tying’ arrangement is when manufacturer of product ‘A’
and ‘B’ requires an intermediate buyer who wants to purchase product ‘A’ to also purchase
product ‘B’.9 Tying may result on lower production costs and may also reduce transactions and
information costs for producers and provide them with increased convenience and variety.

Tie-in arrangements need not necessarily be anti-competitive. In India, due to the absence of
the per se rule, tying cannot be per se illegal. It can have negative effects on competition if they
fence off market efficiency In case of tie-in arrangements, competition with regard to the tied
product may be affected as the purchaser may be forced to purchase the tied product at prices
other than those at which it is available in a competitive market or he may be forced to purchase

7
Eastman Kodak v Image Technical Services, Inc [1992]
8
Section 4(2)(d) of the Competition Act, 2002.
9
Antitrust in distribution-Tying, Bundling and Loyalty Discounts, Resale Pricing Restraints, Price
Discrimination, Part I, The Metropolitan Corporate Counsel, April 2006, at p. 11

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a product which he does not require. But in case the tied product is being sold at a lower price
or at the same price at which it is available in the market or if the tied product is required by
the purchaser, then such tie-in arrangement cannot be said to be anti-competitive. It is for this
reason that tie-in arrangement cases are decided on the basis of rule of reason after taking into
consideration the benefits and detriments of the arrangement on the market. It is yet another
requirement that the seller of the tied product has dominance over the market, so that the sale
of the tied product has appreciable adverse effect on the competition in the market.

The competitors were denied by the tying arrangements to free access to the market for the tied
product, not because the party imposing the tying requirements has a better product or a lower
price but because of his power or leverage in another market. At the same time, buyers were
forced to forgo their free choices between competing products.10 For such reasons, tying
arrangements fare harshly under the laws forbidding restraints of trade.

Types of Tie-in agreements

Tying can be classified into two types. They are: -

1.Static Tying – Static tying can be thought of as an exclusive arrangement. In a static tied-
sale, the buyer who wants to buy product ‘A’ must also purchase product ‘B’. It is possible to
buy product ‘B’ without product ‘A’ which explains why it is a tie. Thus, the items for sale are
product ‘B’ alone or an ‘A-B’ package.11

For example: the video game Halo is exclusive to the Xbox format. A buyer who wants to buy
halo must also purchase the Xbox hardware. The tie could arise from the manufacturer’s power
in the market of the Xbox hardware.

2.Dynamic tying – In case of this type of tying, in order to purchase product ‘A’ the customer
is also required to purchase product ‘B’. In dynamic tying the quantity of product ‘B’ vary from
customer to customer. Thus, the item for sale are a package of ‘A-B’, ‘A-2B’, ‘A-3B’ etc.

For example: A seller of a photocopy machine (product A) may require the purchaser of the
machine to use a specific brand of paper i.e. (product B). The paper sales occur over time and
vary across users, based on their demand for the copies. A customer would not need to

10
Northern Pacific Railway Co. V. United States, 356 U.S. 1 (1958)
11
Barry Nalebuff (Yale University), Bundling, Tying and Portfolio Effects, DTI Economics Paper No. 1 Part 1,
February 2003.

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determine how much paper to buy at the time the machine was bought. But under the tying
contract, whatever paper was required would have to be bought from the machine seller.

The dynamic tied sale is different from the static tie in another way. The good involved in a
dynamic tie are required to use the product. For example, one cannot use a photocopy machine
without a paper but one can enjoy Xbox without the Halo game. Therefore, all the customers
that buy the product ‘A’ must also buy product ‘B’ in a dynamic tie.

Tie-in agreements may take diverse types of forms. The various types of tie-in agreements
include:12

(I)Contractual tying- The tie may be the consequence of a specific contractual stipulation. For
example, in the case of Hilti v Commission13 where Hilti required users of its nail guns and nail
cartridges to purchase nails exclusively from it.

The commission held that this requirement of Hilti exploited customers and harmed
competition and was an abuse of dominant position. A fine of 6 million was imposed for this
and other infringements.

2. Refusal to supply – the effect of tie may be achieved where a dominant undertaking refuses
to supply the tying product unless the customer purchased the tied product.

3. Withdrawal of a guarantee – a dominant supplier may achieve the effect of a tie by

withdrawing or withholding the benefits of a guarantee unless the customer uses the supplier’s
components as opposed to those of a third party.

4. Technical tying – this occurs where the tied product is physically integrated in to the tying
product, so that it is impossible to take one product without the other. This is what happened
in the Microsoft case.

II.RESEARCH QUESTION

What is the scope of Tie-in agreements under Competition Law?

12
Reliance has been placed upon the data collected while preparing the report Anisha Gupta, Concept of tying
And Bundling and its Effect on Competition: A Critical Study of it in Various Jurisdictions, under the
supervision of Mr. Suresh Mishra, July 2012.
13
Hilti v Commission, ECLI:EU:T:1991:70 (1991)

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 III.THE DESIRABLE LAW

This part of the paper will first review the different legal rules for analysing tying arrangements,
and then present the study of various law on Tying in different countries and further this paper
will explain the negative effects of tying on the Indian economy.

A. The Different Legal Rules for Analysing Tying Arrangements

1.The per se rule

It is intended to prevent activity that is in its vast majority harmful. In contrast the legal per se
rule is based upon an absolute legal presumption whereby a particular behaviour is always, or
at least almost always, efficient and pro-competitive. Therefore, to prevent unnecessary
litigation and to prevent over-deterrence, the behaviour is sweepingly permitted.

3. The Rule of Reason

The rule of reason analysis is widely used in antitrust law. It is implemented in scenarios where
a certain behaviour can be beneficial and competitive in certain circumstances, but harmful and
anticompetitive in other circumstances, and where there is no clear bias in favour of the
anticompetitive and harmful scenarios14.

In principle, this legal rule examines each case individually, in depth, by conducting an
extensive economic analysis regarding the examined conduct’s competitive effects.15
According to the rule of reason, the plaintiff at first must prove that the defendant’s conduct
harms competition. For this purpose, the plaintiff must present the theory that shows that
competition could be harmed as a result of the tested behaviour; demonstrate that the theory
suits the circumstances of the case at hand; and prove that the threat to competition is
significant. Should the plaintiff succeed in this onus, then in the second stage, the defendant
must prove an efficiency justification for its conduct.16 If the defendant does so, the burden
shifts back to the plaintiff, who must prove that in the final outcome, the conduct’s
anticompetitive effects outweigh the beneficial effects. Alternatively, the plaintiff must prove

14
the test is applied to most of the horizontal arrangements (except arrangements constituting “naked
restraints”), to vertical arrangements (including vertical price fixing, vertical geographical market division,
exclusivity arrangements, etc.), and also to the analysis of mergers.
15
supra note 14
16
This means that the examined conduct actually promotes efficiency, expressed for instance in improving the
product, reducing manufacturing or marketing costs, protecting reputation, etc.

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that similar efficiency benefit can be achieved through other means that are less harmful to
competition.17

The relevant portion of the competition law which deals with tie in arrangements is under
section 3 of the Competition Act, 2002. Prohibition of anti-Competitive Agreements has been
provided under Section 3 Chapter II of the Competition Act, 2002. Tie in arrangement is a kind
of vertical agreement and has been defined under section 3.

It includes any agreement requiring a purchaser of goods, as a condition of such purchase, to

purchase some other goods.18 Sec. 3(1) of the Act is general and broad in scope. It prohibits
any agreement between enterprises or persons in respect of production, supply, distribution,
storage, acquisition or control of goods or provision of services, which causes or is likely to
cause an appreciable adverse effect on competition within India. There are no hard and fast
rules for anti-competitive practices or conduct i.e. each case is to be decided on the basis of
facts, under the rule of reason, which means that adverse effect on competition has to be
established as a fact in each case.

Sec. 3(2) of the Act declares all such agreements as void, which are entered into by persons or
enterprises in contravention of the provisions laid down in sub-section (1) of Sec. 3.

Sec. 3(4) deals with vertical restraints. These are restrictions among enterprises at different
stages or levels of production chain in different markets. This covers supply of goods as well
as services. Vertical agreements at various levels of the generation or supply chains regularly
have solid productivity bases and improve competition. Be that as it may, they may likewise
have hostile to aggressive impacts, unreasonably wiping out opponents or making them less
viable contenders, or diminishing competition between purchasers or dealers. Since, there is an
incredible possibility that vertical enemy of aggressive agreements may not be anticompetitive,
controllers require a deliberate financial evaluation of whether ace focused or hostile to focused
impacts of a vertical understanding will overwhelm when these agreements include
undertakings with a noteworthy piece of the overall industry. Vertical restraints are to be
examined under the rule of reason and appreciable adverse effect has to be established in each
case.

Once an agreement is determined as causing or is likely to cause an appreciable adverse effect

on competition, such agreement being void cannot be enforced by parties in a court of law.

17
United States v. Microsoft Corp., 584 U.S. ___ (2018)
18
cci.gov.in

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This could lead to serious difficulties for a party in trying to enforce any claim under such
agreements in a court of law. Therefore, the consequences of an agreement being held be
anticompetitive could be far reaching for the enterprises. This is why anti-competitive
agreements are prohibited by law.

US LAW ON TYING
Concepts of tying is under section1 of the Sherman Act, 1890 and also under section 3 of the
Clayton Act, 1914. The Sherman Act prohibits ‘every’ agreement in “restraint of trade”
depending upon unreasonableness of such a restraint. The Clayton Act forbids tying
agreement when the effect may be substantially lessening competition or which tend to create
a monopoly.

The assessment of tying arrangements under U.S. law has been defined as an agreement by a
party to sell one product but only on the condition that the buyer also purchases a different (or
tied) product, or at least agrees that he will not purchase that product from any other supplier”.
The assessment of tying arrangements under U.S. Antitrust law has undergone significant
changes over the time. There are three periods describing the change.

First, the early period of the per se approach: early cases reflect a strong hostility towards tying
arrangements that were regarded as having hardly any purpose beyond the suppression of
competition.”

Second, the modified per se illegality approach: Jefferson Parish19 moved to an approach in
which the criteria for tying are used as proxies for competitive harm and, arguably, efficiencies.

Third, the rule of-reason approach: Microsoft III20 introduced a rule-of-reason approach
towards tying; recognizing that, at least in certain circumstances, even the modified per se
approach would lead to an overly restrictive policy towards tying arrangements. In the early
cases the per se approach played an important role. In United States Steel v. Fortner, the court
held that tying arrangements “generally serve no legitimate business purpose that cannot be
achieved in some less restrictive way.”

EUROPIAN RULE ON TYING

Article 81(1) of the EC Treaty includes as agreements that which are incompatible with the
common market and the agreements that make the conclusion of contracts subject to acceptance

19
Jefferson Parish Hospital Dist. No. 2 et al. v. Hyde, [ 466 U.S. 2 (1984)]
20
United States v. Microsoft Corp., [253 F.3d 34 (D.C. Cir. 2001)]

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by the other parties of supplementary obligations which, by their nature or according to
commercial usage, have no connection with the subject of such contracts. Article 82 includes
tying as an abuse of dominant Position; thus Article 81 is attracted when tying is part of an
agreement concluded by a non-dominant supplier and a buyer.

Tying agreements are not illegal per se. An illegal tying agreement takes place when a seller
requires a buyer to purchase another, less desired or cheaper product, in addition to the desired
product, so that the competition in the tied product would be lessened. Sherman act also pointed
out that there should be separateness of products which are tied because if the products are
identical and market is same then there is no unlawful tying agreement.

The European Commission and European Courts have adopted a “unified” approach to the
different forms of tying and bundling. In other words, contractual tying (including the tying of
primary products and consumables) and integration of products have been assessed in the same
way without taking into account the different underlying effects of them on competition. The
formal framework of the tying analysis is almost a carbon copy of the U.S. per se approach,
following a four-stage assessment:

1) To establish market power (dominance) of the seller in relation to the tying product;

2) To identify tying which means to demonstrate that (a) customers are forced (b) to purchase
two separate products (the tying and the tied product);

3) To assess the effects of tying on competition;

4) To consider whether any exceptional justification for tying exists.

THE INDIAN LAW ON TYING

One of the objects of the Competition Act in India was to prevent practices having adverse
effect on competition. They seek to achieve these by various means. Agreement for price
fixing, limited supply of goods or services, dividing the market etc. is some of the usual modes
of interfering with the process of competition and ultimately, reducing or eliminating
competition. The law prohibiting agreements, practices and decisions that are anticompetitive
is contained in Section 3(1) of the Act. Sec. 3(4) of the Companies Act deals with vertical anti-
competitive agreements.

Sec. 3(4) says that “Any agreement amongst enterprises or persons at different stages or levels
of the production chain in different markets, in respect of production, supply, distribution,

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storage, sale or price of, or trade in goods or provision of services, including (a) tie-in
arrangement shall be an agreement in contravention of sub-section (1) if such agreement causes
or is likely to cause an appreciable adverse effect on competition in India.”

The Explanation to Section 3(4) defines “tie-in arrangements” as “any agreement requiring a
purchaser of goods, as a condition of such purchase, to purchase some other goods.”

There are two important issues to be noted at this stage:

1) That tying is not an infringement of section 4, i.e. it is not an abuse of dominant position in
the Indian law.

2) That the definition excludes services since the word “goods” is explicitly defined in section
2(I).

Vertical restraints are subject to the Rule of Reason test. So, the benefits and the harm have
to be weighted before an act of tying can be declared anti-competitive or to have an appreciable
adverse effect on competition, in terms of the language of the law. Under section 19(3) of the
competition act, 2002 six factors are provided for consideration of competition by the authority
before coming to any conclusions.

IV.NEGATIVE EFFECTS OF TYING ON THE INDIAN ECONOMY

The negative effects of tying on the Indian economy are discussed under following heads-

(1) Price discrimination – Price discrimination that increases monopoly profits is possible if
the buyers do not use the tied product in a fixed proportion to the tying product. Here, the
discrimination is between the persons having different levels of usage of the tied product.
The monopolist could in such a situation lower the cost of the printer to marginal cost
contingent on the buyers purchasing all their paper from him. The monopolist could then
set the price of the paper well above the marginal cost and profit from that transaction.
This way, the consumers using more paper shall pay a higher price than those using a lesser
amount of paper. Hence, the monopolist engages in price discrimination between persons
depending on their usage of the tied product in situation where all consumers do not use
the same ascertained amount of the tied product
(2) Another worrisome outcome of Tie-in arrangement is when there is a demand for multiple
units of the tying product and not the tied product. In such a scenario, the seller might use

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 bundling as a means to push off slow moving products as tied products. Alternatively, a
monopolist of the tying product can thus maximize profits by squeezing out that consumer
surplus without losing customers by making the tying product unavailable unless buyers
take a tied product form it at a price above the tied market price.
(3) Tying can also increase market power in the tied market by foreclosing enough of the tied
market to reduce rival entry, efficiency, existence or expandability. Tying can create the
afore-mentioned anticompetitive effects if one relaxes the unrealistic assumption that tied
market rivals face no fixed costs, have constant marginal costs that do not at all depend on
output, and can expand instantaneously to supply to the whole market.
(4) Tying can increase tying market power by impeding entry and expansion from the tied
market or buyer substitution to it.

CONCLUSION

This research paper attempts to explain the basic concept of tying along with a critical study of
it across various jurisdictions. The U.S. and E.U. positions have been considered along with
the difference in their approaches, to bring out the advantages and disadvantages of these
approaches. Case laws have been analysed to understand the working and enforcement of the
Competition/Antitrust Laws.

It can be concluded from this research that the initial Per-Se Illegality Approach in respect of
tying is not a correct stand. Every case of tying should be judged on its own merits and demerits
and not in regard with straight- line jacket formulae. A Per Se Approach prohibits certain acts
without regard to the particular effects of the acts, i.e. no investigation into the question of
possible pro-competitive effects. The Per-Se prohibition is justified for types of conduct that
have manifestly anti-competitive implications and a very limited potential for precompetitive
benefits. A Rule of Reason Approach on the other hand is about investigating the effects of the
challenged conduct, taking into account the particular facts of the case. The Courts decide
whether the questioned practice imposes an unreasonable restraint on competition taking into
account a variety of factors. The Rule of Reason Approach which considers the pros and cons
of each case is more favourable to the Indian legal system. This paper also highlights the
various effects that a tying arrangement has on the competition and economy of the country. It

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can be said that tying arrangement has widespread adverse-effect on the economy of the
country.’

On a concluding note I would like to say that a tie in arrangement is something that is a
violation of competition law, and in certain circumstances it may not necessarily be so. In the
US some conditions when met, make a tie in arrangement per se illegal, while in India, the
same never happens. It is always treated as a case of the rule of reason, as provided for in
section 3(4) of the Competition Act, 2002. As time evolves law needs to evolve too. There will
always be elements in society who will try to find ways of bypassing laws by exploiting
loopholes. I am honestly of the opinion that in the case of some of the free products that are
given along with the purchase of another product is often of the nature of a tie-in arrangement,
and are the result of the creative imagination of the Management and legal teams of big
corporate houses.

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 REFRENCES

Books and Articles:

 World Bank/OECD: “Glossary of Industrial Organization on Economics and Competition

Law”.

 Competition Law in India, 3rd ed. T. Ramappa p. 121-122

 Malik, Vikramaditya S., ‘The Doctrines of Tying and Bundling – Concept and the Indian
Case’ (2010) Pg 21.

 IoannisLianos, Vertical Restraints, and the Limits of Article 81(1) EC: Between Hierarchies
and Networks, 3 J. Competition L. & Econ. 625 in Sundararajan, Preethi, ‘An Analytical Study
of Nature and Types of Vertical Anti-Competitive Agreements’, Pg. 21.

 Gupta, Anisha, ‘Concept of Tying and Bundling and its Effect on Competition: A Critical
Study of it in Various Jurisdictions’ (2010) Pg. 24

 Article 82 Staff Discussion Paper, point 205 in Gupta, Anisha, ‘Concept of Tying and
Bundling and its Effect on Competition: A Critical Study of it in Various Jurisdictions’ (2010)

Case laws:

1.Shri Neeraj Malhotra and Deutsche Bank and others

2.Eastman Kodak v Image Technical Services, Inc

3.Northern Pacific Railway Co. V. United States

4.United States v. Microsoft Corp.

5.Jefferson Parish Hospital Dist.

6.United States v. Microsoft Corporation

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