“Nobody believes that tying is so anticompetitive it must be illegal—yet badly wounded Supreme Court precedent holds otherwise. It’s time to bayonet that caselaw.”
—Zac Morgan, WLF Senior Litigation Counsel

Click here to read WLF’s brief.

(Washington, DC)—Washington Legal Foundation (WLF) today urged the U.S. Supreme Court to grant certiorari and reverse a decision of the U.S. Court of Appeals for the Ninth Circuit holding that “tying arrangements” can be presumptively illegal under federal antitrust law.  

Tying occurs when a producer offers two items in a single sale. Technically speaking, the selling of a pair of shoes along with the shoelaces (an item that can be, and is, sold separately) could be considered a tie. In this case, a software company (SAP) offered two software products for sale in a single bundle. Teradata sued SAP, contending that this bundle constituted a per se illegal “tie” under the Sherman Act.

The Ninth Circuit agreed that Teradata credibly stated a case for SAP’s per se liability. The court could only reach this conclusion because in 1947, in International Salt v. United States, the Supreme Court held that the mere existence of a tying arrangement was sufficient to show that the Sherman Act had been violated. While the Supreme Court has spent the last eighty years slowly backing away from that holding—now only some ties are per se illegal—it has never officially overruled it.

WLF’s brief explains why the Court should grant review and overrule International Salt. It has been undercut by later caselaw and no serious economist truly believes that tying arrangements are inherently anticompetitive. If anything, most ties are likely beneficial to consumers and efficiency-enhancing. The Court’s dysfunctional and badly reasoned tying precedent to the contrary should be overturned so it can no longer confuse courts and chill pro-competitive economic behavior.  

The brief also urges the Court to replace International Salt with a straightforward and judicially policeable line. Rather than presumptively illegal, tying should be presumptively legal—unless the tie causes actual output restrictions. As the brief says, “[u]sing output as the sole measure of wrongdoing will give courts a tangible metric, one less likely to cause lengthy battle-of-the-experts trials that eat up time and money that both courts and market competitors could be (efficiently) applying elsewhere.”