Raising Rivals Costs Theory – force 2 stage entry; denies potential rivals needed experience to enter Modern Test for per se violation– Jefferson Parrsih 2 distinct products/services Conditional sale Seller must have “appreciable economic power” in tying product, such that Forcing is likely Arrangement must affect “subst volume of commerce in tied mkt” – proxy for adverse a/c effects Jefferson Parish Hospital District No. 2 v. Hyde (1984) Not a per se violation b/c there is no forcing; also unreasonable under RoR Whether one or two products exists depends on the character of demand (not their functional relationship_ - is there suffic demand for purchase of anestehesiological services separate from other hospital services? – YES Essential char of invalid tying is exploitation of control over tying product, enabling forcing the purchase of tied product Pref for closest hospital doesn’t estab forcing – 70% residents go elsewhere Lack of price/quality competition does not create forcing Lack of price consciousness (3d party payors will not force consumers to take services they don’t want. US v. Microsoft Corp (DC Cir 2001) – software platform tying should be eval’d under RoR Not enough experience to classify these restraints as per se illegal Separate Products Inquiry Answer turns on whether there is suffic demand for tied product separate from tying product – efficient to offer products separately? Eval based on direct evidence (what do consumers do when faced w/ a choice) and indirect (how do firms w/o mkt power behave) If competitive firms always bundle, then single product – if there were no efficiencies then firms wouldn’t do it All major O/S producers bundle browsers – also sell non-tied versions If a per se analysis were used, first to merge 2 prev distinct functions or elim the need for the second risks being condemned PRODUCT DESIGN AND DEVELOPMENT Liability for deliberate efforts to alter design/interface when there is no valid tech justification Berkey Photo v. Eastman Kodak (2d Cir 1979) – generally firms have broad freedom to design and intro products as they wish IBM – rejected case where design choice made to improve quality of machines, even though one aim was to frustrate culpability (design was okay) No duty to reveal new interface designs.
Raising Rivals Costs Theory – force 2 stage entry; denies potential rivals needed experience to enter Modern Test for per se violation– Jefferson Parrsih 2 distinct products/services Conditional sale Seller must have “appreciable economic power” in tying product, such that Forcing is likely Arrangement must affect “subst volume of commerce in tied mkt” – proxy for adverse a/c effects Jefferson Parish Hospital District No. 2 v. Hyde (1984) Not a per se violation b/c there is no forcing; also unreasonable under RoR Whether one or two products exists depends on the character of demand (not their functional relationship_ - is there suffic demand for purchase of anestehesiological services separate from other hospital services? – YES Essential char of invalid tying is exploitation of control over tying product, enabling forcing the purchase of tied product Pref for closest hospital doesn’t estab forcing – 70% residents go elsewhere Lack of price/quality competition does not create forcing Lack of price consciousness (3d party payors will not force consumers to take services they don’t want. US v. Microsoft Corp (DC Cir 2001) – software platform tying should be eval’d under RoR Not enough experience to classify these restraints as per se illegal Separate Products Inquiry Answer turns on whether there is suffic demand for tied product separate from tying product – efficient to offer products separately? Eval based on direct evidence (what do consumers do when faced w/ a choice) and indirect (how do firms w/o mkt power behave) If competitive firms always bundle, then single product – if there were no efficiencies then firms wouldn’t do it All major O/S producers bundle browsers – also sell non-tied versions If a per se analysis were used, first to merge 2 prev distinct functions or elim the need for the second risks being condemned PRODUCT DESIGN AND DEVELOPMENT Liability for deliberate efforts to alter design/interface when there is no valid tech justification Berkey Photo v. Eastman Kodak (2d Cir 1979) – generally firms have broad freedom to design and intro products as they wish IBM – rejected case where design choice made to improve quality of machines, even though one aim was to frustrate culpability (design was okay) No duty to reveal new interface designs.