Sherman Act Product Tying

The video tutorial explains product tying as a potentially anticompetitive activity that may violate the Sherman Act or Clayton Act. It involves a seller tying another product to the sale of a primary product, limiting consumer options. For product tying to be illegal, the seller must have substantial market power, and the activity must show a noticeable commercial impact. The FTC evaluates such cases using the rule of reason, considering pro-competitive justifications like maintaining product quality or when products are inherently linked.

What is product tying in the context of antitrust laws?

• A technique to improve product quality through bundling

• A strategy to increase product sales by offering discounts

• A practice where a seller requires the purchase of a second product

• A method to enhance customer loyalty through rewards

Which of the following is necessary for product tying to be considered illegal?

• The seller must have a small market share

• The tied products must be unrelated

• The seller must have substantial market power

• The products must be sold at a discount

What is the role of the FTC when all elements of anticompetitive product tying are present?

• To evaluate if a pro-competitive justification exists

• To automatically penalize the seller

• To ignore the case if the market impact is small

• To enforce a mandatory product recall

Which of the following is a pro-competitive justification for product tying?

• Reducing the quality of the tied product

• Limiting consumer choice to a single brand

• Maintaining the brand reputation of the primary product

• Increasing the price of the tied product

When can two products be considered a single product in the context of product tying?

• When they are sold by different sellers

• When they are unrelated in function

• When they are so related that they function as one

• When they are priced the same