They were great but he did not want them. He already has many pairs of those. “All or nothing,” said the pretty sales representative with a smile that heavily imposed on most customers. “This phone comes with the earphones that match its design nicely. If you don’t want them, can give them as gift to someone.” Just like that, he got sold.

The issue was not that the earphones weren’t nice, they were really nice. What bothers many customers was that the price of the phone was high because the earphones were effectively being sold together with it. Whatever your religious faith is, please, do not believe that the seller was kindly giving you a pair of earphones for free. He just wanted the phone but was forced to purchase it by also paying for an unnecessary product.

When a customer is forced to buy an item tied to another, this immediately raises eyebrows for anyone interested in competition law. And smart lawyers would, theoretically speaking, begin by needing to understand two markets and the position the seller holds in each.

Does the seller have a strong market power in the main tying-product? In other words, can the seller readily influence that market by either playing with pricing or with the output? If the answer is yes, then the seller seems to hold a real power there.

If you have read my previous articles, you must have noticed that possessing a dominant market position can be problematic, the very reason why Google and Facebook are always under the watchful eyes of law enforcement agencies in the US. The seller at fault must be shown to possess a strong market power in the tying market because otherwise the customers would have no pressure to buy from that seller at all and, therefore, could avoid buying the tied item altogether.

The next relevant question is, does the tying arrangement by the seller cause any anticompetitive effect in the market of the tied-product?

Experience elsewhere has demonstrated that it can cause such effects in various scenarios. For instance, certain customers might have planned on buying earphones from another manufacturer but ended up paying for them instead because they had to buy that phone. American lawyers would characterise this forced combined purchase as harmful (therefore, anticompetitive) to the tied market because the tying arrangement was possible principally due to the seller’s strong power in the phone market and the exploitation of such power.

Moreover, sometimes tying arrangements can go as far as driving certain competitors in the tied market out of business or at least serve as a barrier to potential new entrants. How would you expect to make profits by trying to sell just earphones when so many users have already got them at the time they bought their phone? To put more bluntly, a tying arrangement may anticompetitively help the seller to create, maintain or even expand the seller’s position in the tied market itself. And who wouldn’t love to control two markets rather than one?

Apparently, legal theorists tend to make things rather complicated. Plus, they often change their theories too. I am sorry; I really am but do not despair. In fact, if you would just love math, there is an easy way of looking at this whole issue by simply figuring out how many customers would dislike the idea of being forced to buy something with a separate product tied to it. If the percentage of such customers keeps growing, then there would be a good chance of proving the existence of a coercive tying.

One obvious reason why coercive tying brings trouble, let us not forget, is because those two products are actually “separate” products and can easily be sold separately as two distinct products without forcing your aunt to buy them both when in fact she just needs one of them. Of course, needless to say, almost nobody would buy a motorbike without its engine.

Although the body and the engine clearly are separate parts and may be sold separately, it is universally acknowledged that the majority of buyers would expect the motorbike to immediately function as a vehicle and it can’t function that way without its engine.

Are you still with me? There is much more to say about what our American friends agree and disagree among themselves after enforcing their competition laws for over a hundred years. Suffice is to mention that our own 2021 Competition Law in its Article 8 condemns any forced package selling of “unrelated” products/services (perhaps a frying pan and a bag of sugar sold together as a package?).

Just to define what “unrelated” actually refers to could take years and there is no guarantee that concepts won’t change. At any rate, tying and its related practice of bundling will never go away. I dare say that the American theories on tying will help us see what lies behind the seller’s smile next time we go shopping for a frying pan.

Virak Prum, LLB, LLM, PhD (2006 Nagoya University) teaches law at CamEd Business School. The views expressed are solely his own.