June 28, 2012 Articles

Economics and the Attribution Test for Bundled Discounting

The method for determining anticompetitive bundle pricing is flawed and can yield false negatives.

By Sean Durkin

Antitrust laws are designed to benefit consumers. As a result, antitrust enforcement should encourage discounting to the extent that those discounts benefit consumers. But bundled discounting by a firm with monopoly power in one market can, under certain conditions, allow the firm to extend its monopoly to a second market. At the same time, bundled discounting is pervasive even in markets without monopoly power, and it is generally recognized that bundled discounting can have procompetitive effects. As a result, economists and courts have struggled to adopt a rule that will create the incentive to offer procompetitive bundled discounts without undermining the ability of courts and plaintiffs to identify bundled discounting with the potential to harm competition.

Premium Content For:
  • Litigation Section
Join - Now