The Antitrust Theory That Slept for 55 Years

An organization claims you can buy Product A, but not Product B. The only issue is that product A is so expensive that no one would ever choose it. A choice indeed? In Cumulus Media v. Nielsen, the Second Circuit revived an antitrust theory that had largely fallen out of use for more than half a century: constructive tying. Traditional tying is simple: buy A only if you buy B. Constructive tying is more subtle. The products may be technically available on their own, but the economics of the pricing structure can make purchasing them separately infeasible. This episode examines why the doctrine largely faded away following the 1971 American Manufacturers decision, what Cumulus did differently, and why the new ruling may lead to more constructive-tying suits involving data, software, subscriptions, and other bundled products. The ruling does not mean that high standalone prices or bundle discounts are automatically illegal. The more interesting question is when does pricing cease to be ordinary bargaining and become a tool to force customers to buy another product?Read the full article and graphic analysis: https://blog.econworks.com/p/the-antitrust-theory-that-slept-for?r=562wriExplore more visual economics content: https://econworks.comYouTube: https://www.youtube.com/@EconWorks-d3eSubstack: https://blog.econworks.com This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit blog.econworks.com/subscribe