See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/264822114

Tying and bundling: Applying EU competition rules for best practices

Article  in  International Journal of Public Law and Policy · January 2013

DOI: 10.1504/IJPLAP.2013.054744

CITATIONS READS
0 2,048

1 author:

Aleksander Maziarz
Kozminski University
6 PUBLICATIONS   0 CITATIONS   

SEE PROFILE

All content following this page was uploaded by Aleksander Maziarz on 20 August 2015.

The user has requested enhancement of the downloaded file.

Int. J. Public Law and Policy, Vol. X, No. Y, xxxx 1

Tying and bundling: applying EU competition rules

for best practices

Aleksander Maziarz
Kozminski University Law School,
57/59 Jagiellońska St.,
03-301 Warsaw, Poland
E-mail: amaziarz@kozminski.edu.pl

Abstract: Tying and bundling are examples of practices that constitute abuse
of a dominant position whiting the meaning of art. 102 TFEU. Such practices
can take many various forms – from technological tying to mixed bundling.
There are many reasons for tying. One of them is that companies can reduce
costs by offering together products and provide customers with products of
better quality or cheaper. On the other hand in most cases the European
Commission of the EU courts had found that tying practices were aimed at
causing damage to competitors or customers. The article presents case law of
the EU Courts and the decisions of European Commission concerning tying
practices. It focuses conditions that have to be met in order to classify the
practice of the company as abuse of dominant position.

Keywords: EU competition rules; tying; bundling; EU courts; TFEU.

Reference to this paper should be made as follows: Maziarz, A. (xxxx) ‘Tying

and bundling: applying EU competition rules for best practices’, Int. J. Public
Law and Policy, Vol. X, No. Y, pp.000–000.

Biographical notes: Aleksander Maziarz is the Deputy Director of the Law

School of the Kozminski University in Warsaw. He obtained his Master’s
degree in Law from Maria Curie-Sklodowska University in Lublin. He holds a
PhD in law form Catholic University of Lublin and MBA degree from the
Warsaw University of Technology. He lectures on EU Competition Law,
Economic Law and Administrative Law. He is attorney at the Warsaw Bar
where he also conducts classes for trainee lawyers

1 Introduction

Tying refers to the sale of two products by a single supplier. One of the products – the
tying product is being sold on condition that it will be combined with another product –
the tied product. However, only the tied product can be bought separately. Bundling
occurs when a package of two products or services is offered together as a single sale.
Tying, as one of the listed behaviour in Article 102 TFEU practices, is one example
of the abuse of a dominant position. According to this regulation, the practice is “the
conclusion of contracts subject to acceptance by the other parties of supplementary
obligations which, by their very nature or according to commercial usage, have no
connection with the subject of such contracts”. Since tying can also occur in mergers of
companies, tying is regulated by several of the provisions found in EU competition law.1

Copyright © 200x Inderscience Enterprises Ltd.

2 A. Maziarz

In general, the goal of tying is to cause damage to one’s competitors or to consumers.

The essence of this behaviour is to exploit the contractor and attain undue profit by a
dominant undertaking. There are also other views that indicate that tying may have
pro-competitive effects.2 Although the practice may often not have any anticompetitive
effects the entrepreneur often provides customers with products of better quality, price, or
better suited in one way or another, by tying. For the entrepreneurs, this practice may
have a purely economic rationale, because in one technological line the entrepreneur can
produce several products and thus reduce production costs.3
In order to determine whether certain behaviour constitutes tying, the existence of
two separate products must first be established. The Guidelines on Vertical Restraint
states that “Two products are distinct if, in the absence of tying, from the buyers’
perspective, the products are purchased by them on two different markets”.4 Such a
position was later confirmed in the DG Competition Discussion Paper, in which the
Commission stated that it is not necessary that both products originate from separate
markets.5 Thus, this practice can be used by entrepreneurs as a contractual provision, as
unilateral conduct, or even as a strategy when merging.6
Tying can take various forms: pure bundling occurs when a contractor is forced to
purchase a set of products or services sold together; mixed bundling, in which the
entrepreneur offers products or services separately, however, significantly with a higher
price for each rather than covering them both in a package or a refusal to supply, which
consists of a refusal to supply the contractor until the tied product ordered is not bound
anymore.7
This article aims to present, based on the views of doctrine and judgements of the EU
courts, which of the dominant undertaking behaviours constitutes tying or bundling. The
article also discusses the present legal evolution of the approach to tying and bundling by
the EU courts and the European Commission and focuses on the specific conditions that
recognise and define such practices.

2 Contractual tying

One of the most common forms of tying is contractual tying. Such practice consists in
introducing provisions in legal contract which force the other party to buy two products.
Of course in such cases there have to be found that such products were two separate
products.
In one of the first contractual tying cases – the Windsurfing case8 the Commission
examined the practice of Windsurfing International a producer of sailboards. Sailboards
are composed of a board and a rig, and Windsurfing International granted several licences
to other producers. The Commission found that in such agreements, there was an
obligation of the licensees not to supply rigs produced under the Windsurfing patent
separately and without the boards approved by Windsurfing. The question also was
whether there was a viable a separate market for the components of the sailboards. The
Commission found that such market did exist and the demand for these components was
greater than the demand for spare parts.9 Such conduct was a tying practice because it
tied the sale of the boards to the sale of the rigs together. Moreover even when the two
complementary products were intended to be used together, the tying practice could still
occur. It can be noted additionally that tying in such a case could be justified by
efficiencies of distribution.10
 Tying and bundling: applying EU competition rules for best practices 3

In the case of Eurofix-Bauco v. Hilti11 the European Commission considered whether

Hilti, the producer of nail guns and the cartridge strips, which were protected by patents,
had abused its dominant market position by conducting tying. This case began with the
fact that the manufacturer had not patented the nails for its nail guns, which resulted in
compatible nails being produced by the company’s competitors. However, Hilti decided
to apply business practices and legal remedies to ensure that their customers would buy
cartridge magazines and nails produced by Hilti and at the same time.
The Commission in recognising the elements of the case found that nail guns, Hilti
compatible cartridges and Hilti compatible nails constituted separate relevant product
markets. What’s more, the Commission stated that in all three markets Hilti held a
dominant position. Through the use of these tying practices, the Hilti aim was to link
their own manufactured products together to prevent or stop using products of other
producers that were compatible. Hilti indicated that these practices were necessary due to
safety requirements and that only their genuine products could ensure safe operation of
its tools. In response to this formulated position, the Commission stated that Hilti had
never informed independent producers that such risks could occur. Moreover, Hilti never
informed any authority about any such dangers relevant to product safety.12 As a result,
the Commission imposed a fine of six million euros on Hilti for conducting such
practises. The Court of First Instance also upheld the Euro Commission’s Decision by
rejecting the position of Hilti.13
In its judgement the Court stated that the abuse of a dominant position is the refusal to
sell products individually by a dominant undertaking, thus forcing contractors to use that
practice or refusing to honour warranties on the tools in which nails from other
manufacturers were used.14 Moreover, the Court shared the same point of view as the
Commission, namely, that the purpose of these practices was to prevent or limit the entry
of competition into the market and thus cause damage or even eliminate existing
competition. This case shows also that in tying cases, the aim of the practice is not only
maximisation of profits by forcing to sell two or more products together. Tying can be
used to limit or even eliminate competition.
Another important case concerning tying was the Tetra Pack case.15 Tetra Pack is a
producer of aseptic packaging machines, aseptic cartons, non-aseptic machines and
non-aseptic cartons for liquid or semi-liquid food products. Tetra Pack in its contracts
with customers who purchased their packaging machines reserved the exclusive right to:
service the machines, deliver replacement parts, have the machines used only on cartons
produced by Tetra Pack and respect the guarantee on the machines only if the used
cartons were produced by Tetra Pack.
In this case, the Court had to assess whether there was a distinctive market for the
products offered by tetra pak and whether Tetra Pack held a dominant position in these
markets. Tetra Pack argued that there was a natural link between packaging machines and
cartons, which formed a unique and integrated distribution system. That natural link was
justified by the need for security for customers or for technical reasons. The Court did not
agree and pointed out that for many years; there were manufacturers and sellers of
cartons that were not producing packaging machines. That production was also used by
users of packaging machines manufactured by different producers.16
The Court also pointed out that for the purposes of competition law, the manufacturer
must also produce packaging cartons suitable for packaging machines built by
other manufacturers until doing so violated the intellectual property rights of the
4 A. Maziarz

manufacturer’s machines. Such a position meant that the EU competition law supported
and protected independent producers from the exclusive behaviour of packaging
machinery manufacturers which did have a dominant position in the marketplace and was
willing to deliver a bundled package of their production – machines and cartons. The aim
of this approach was to protect small businesses and competitors from practices of
companies which force to buy bundled products.17
In this judgement, the Court indicated that markets of aseptic packaging machines,
aseptic cartons, non-aseptic machines and non-aseptic cartons were separate from each
other and were distinct product markets. The Court found that Tetra Pack held a
dominant position in the market for aseptic machines and that the abuse of that dominant
position also related the non-aseptic markets. Moreover the Court stated that a company
that holds a quasi-monopoly position certain markets and leadership in others, which are
very close to one another, is in a situation similar to having a dominant position in both
markets as a whole. The Court held that in such a situation the behaviour of such an
undertaking in the separate markets was prohibited by Art. 102 of the TFEU, without any
need to establish or provide that such an undertaking was in a dominant position on the
separate markets.18
This concept adopted by the Court is a very general one. It assumes only that the
undertaking that is holding a dominant position in one market also holds such dominance
in another market, but on the condition that there is a close relationship between the two
markets. It rightly seems that this concept is quite general and would require a detailed
indication of what such a relationship between the two markets approximately relies on.19
What should be added is that the ECJ did not examine the consequences of behaviour on
the markets for these products, and it should be noted that such an analysis could lead to
two different results – tying could have anti-competitive effects in the market, and it is
also possible that the practice could have pro-competitive effects.20
Moreover, the Court emphasised that the list of practices that constitutes an abuse of a
dominant position in Art. 102 of the TFEU is an open directory. Even if the tied sales of
two products has justification in commercial usage or there is an existence of a natural
link between the products in question, the undertaking may still be an abuse of the
dominant position as prohibited by Article 102 TFEU, unless there is clearly an objective
justification for the behaviour.21
In both the Hilti and Tetra Pack cases, tying was considered to be contractual tying.
Such practice consists of having contracts concluded as an agreement that affects the
reduction of consumer choice to purchase the tied product.22 In both cases the practice
was used also to limit or eliminate competition.
The above mentioned cases shows that very often tying have economic justification.
But when such practice is performed by company which have large market shares the
economic reasons of tying are of secondary importance. The main aim of the practice is
to limit the competition, to harm other competitors than to boosts sales. Such companies
use tying also to gain neighbouring market. What can we see from this cases is that
contractual tying is rather easy to find. Of course in every case there must be proven that
there are two separate products which are offered together but all the provisions which
constitute tying are in legal contracts. By analysing contracts, the Commission is able to
determine if there is suspicion of practice that constitutes tying.
 Tying and bundling: applying EU competition rules for best practices 5

3 Technological tying

Another kind of tying is technological tying. The practice consists on binding the separate
products by technological means. Such products are therefore offered together and the
producers claim that there is no possibility of separation of these products because
technically it will affect their functionality. This kind of tying is most complex. In many
cases it is also very hard for the Commission or the European courts to find that such tied
products consist of two separate products. Very often separate products are tied together
in such way that it makes even impossible to use them separately.
One of the first cases where the European Commission dealt with technological tying
was the IBM case.23 IBM held a dominant position in the market for computer central
processing units and the basic operating systems for the IBM 360 and 370 type computer
systems. IBM was:
a supplying the basic software and the main memory or storage for its central
processing unit together without offering a separate price for these products
b refusing, after informing of the launch of new products, to disclose details of any
interface changes
c refusing to supply its specific software to IBM computer users unless that software
was used with a central processing unit manufactured by IBM.24
The Commission found that such practices constituted tying, but IBM argued that the
case was a failure in procedure. The Court stated that the Commission failed to meet the
minimum legal criteria for the statement of objections. The Court underlined as well that
statement of objections by Commission was not clear enough and contained defects of
substance. That situation was assessed by the Court as a breach of fundamental principle
– the right given to the defence. Because of procedural failure of the Commission the
IBM was not found to have abused dominant position.
Another key technological case on tying was the Microsoft case. Microsoft was
providing its Windows operating system with an enclosed media player – the Windows
Media Player (WMP). Customers who bought the operating system had already installed
the media player. This practice allowed Microsoft to strengthen its dominant position and
significantly weakened the competition in the market for media players.25 In addition, the
practice created barriers to future entries, as it significantly weakened the market entry of
manufacturers of this type of media players.
The Commission found that Microsoft had abused Art. 82 TEC (102 TFEU) by
bundling the WMP26 with its Windows operating system.27 The Commission stated that
there was a reason to think that such tying would lead to lessening of competition and
thus in the future effective market competition might not be ensured or even weakened.28
The Commission obliged Microsoft to deliver its operation system alone without a
preinstalled WMP to provide customers the opportunity to buy the operating system with
or without an installed WMP and perhaps buy a Media player from another company.
In this case, the CFI shared the Commission’s position that Microsoft had applied this
practice to three distinct markets: The operating system market, the market for work
group server operating systems and the market for streaming media players. The practice
used in the operating system market allowed Microsoft to extend its dominant position in
operating systems to two adjacent markets.29
6 A. Maziarz

Of course, the most important element in this case was to determine whether there
was actually a market for the tied product. The CFI held that since on that market there
were independent producers who specialised in the production of programs similar to
WMP in fact there was a distinct market for such programs and the media players. The
CFI pointed out that by tying Windows to the media player, WMP penetrated PC
computers market at levels consistent with penetration of the Windows operating system.
This situation meant that WMP did not have to compete with other products via its
features. Moreover, no other media player could obtain a similar market penetration,
since WMP could not be removed by the user of the package, so no other program could
be the only one installed on a PC. At the same time a pre-installation of WMP
discouraged consumers from using other similar products as they had already installed
the specific software that allowed them to use multimedia features. Such practice was
aimed at elimination of potential competition on the market. By offering free of charge
media player which Microsoft tied to its operating system even the future competition
was very doubtful to arise.
Moreover, the CFI pointed out that, taking into account the meaning of Art. 102
TFEU and case law, it was not necessary for consumers to actually pay for a tied product
in order to recognise that they were subjected to supplementary obligations within the
meaning of this provision. Furthermore, from this provision, it is clear that neither form
of the case law can result in making consumers forced to use a tied product or prevented
from using a tied product by tying other products to it to rule that the condition of
acceptance of supplementary obligations is involved.30
The CFI pointed out that Microsoft did not provide any objective justification for
tying WMP with Windows. Thus, it rejected Microsoft’s arguments that the result of
tying resulted from an adopted business model that relied on integration of new
functionality into its Windows operating systems. The Court also rejected arguments that
the declared integration was necessary because that integration allowed both the
programmer and web developer to benefit from a stable and well-defined Windows
platform. Microsoft also pointed out that the separation of the multimedia functions of the
operating system created a technical issue, because the Windows operating system was
built using ‘componentisation’. Thus, removal of media functionality would result in a
‘fragmentation’ of the operating system and influence its functionality in a negative
manner.31
The CFI confirmed this decision and found that Microsoft could not influence the
market by simply imposing its products on customers. Moreover it could not limit
computer users from having the individual right to benefit from a choice of a range of
different products, different technology, and different prices.32
This case has become crucial for the assessment of similar practices. In the judgement
formulated conditions were given that need to be met to consider tying as an abuse of
Article 102 TFEU.33 These conditions are the existence of a dominant position in a
distinct product market that can be tied, the practice of forcing an undertaking to buy two
products at the same time, the existence of the limited competition in the market for the
tied good and the lack of objective justification for the typing practice by the dominant
partner.34 Many times in later judgements, these conditions have been used again for the
assessment of similar practices.35
Microsoft’s appeal against that judgement suggested that the Commission’s decision
was based on the finding that WMP and Windows constituted separate product markets.
It noted that in such an assessment it was necessary to establish whether there was a
 Tying and bundling: applying EU competition rules for best practices 7

general demand for the operating system without the tied product. Microsoft also pointed
out that since users could freely download and install other programs on the Windows
operating system, so there was no restriction to basic consumer choice at all.
The Court of First Instance did not agree with Microsoft’s arguments. It pointed out
that the decision of the Commission had no effect on integration and new functionality
since Microsoft was offering a parallel operating system without WMP already
installed.36 The matter did not end in the CFI and its judgement, because Microsoft did
not execute the provisions of the judgement. As a result, the Commission issued a
decision wherein it found that Microsoft had failed to fulfil an obligation imposed by the
first decision – to provide complete and accurate information about interoperability on
reasonable and non-discriminatory terms. The Commission imposed a definitive penalty
of Euro 899 million on Microsoft.37
Microsoft was the first instance in the history of EU competition policy that was
subject to periodic penalty payments because of non-fulfilment of the obligation imposed
in a previous Commission decision.38
Such practice performed by Microsoft would eliminate competition for media players
in the future and will affect quality of existing software by terminating investments in its
development.39 In Microsoft’s case, the Court was assessing the practice without taking
into account if the competitors of Microsoft were efficient or not. The conditions in the
relevant product market were also irrelevant. The Court used the effect-based approach to
analyse tying practice.40 Some can argue that practice of Microsoft did not cause harm to
competition since there were no other similar products. Moreover the practice was not
causing any harm to consumers since they did not have to pay for the tied product.
Taking into account this arguments it should be noted that offering tied product for free
makes harm for potential competition. What is obvious is that no one can compete with
product which is sold for free. In such situation there are barriers of entry into the market
of tied product. No other producer can operate in such market and there is also no
guarantee that tied product will be offered for free in the future.

4 Tying of a product to a related service

One of the last tying practices consists of tying product to a related service. Such practice
has mainly economic reasons. The only producer or service provider ties another service
to gain profits. Of course it affects competition, but in most cases such practice is not
aimed at harming other competitors. It is aimed to explore contractors which are forced to
buy related service.
In the British Sugar case,41 the Commission found that British Sugar (BS) had
committed a practice of tying the sale of sugar, in a market in which it held a dominant
position, to the sale of a delivery service to the customer. Moreover, BS refused to supply
the sugar, if the customer did not buy at the same time transport service from the BS or
one of its subcontractors.
The Commission found that BS abused its dominant position by refusing to supply
industrial sugar to one of its competitors. The Commission stated that the foreseeable
effect of that practice would be the elimination of competition in the market for
distributors of sugar.
8 A. Maziarz

Moreover the Commission found that due to a decrease in the margin for its industrial
and retail sugar prices, there was no reflection of transformation costs, so the practice
also was also an abuse of the dominant position of the company.
The Court underscored that: “ . . . an abuse within the meaning of Article 86 is
committed where, without any objective necessity, an undertaking holding a dominant
position on a particular market reserves to itself or to an undertaking belonging to the
same group, an ancillary activity that might be carried out by another undertaking as part
of its activities on a neighbouring but separate market, with the possibility of eliminating
all competition from such undertaking”.42
In the London European/Sabena Case,43 the Belgian airline Sabena refused to grant
access to their computer reservation systems – Shapir – to the London European airline.
The Commission found that in most European countries, air carriers have signed
agreements that allow them to access each other’s reservation systems. Refusal to grant
access to a computerised reservation system was made by Sabena, because London
European did not want to sign an agreement on the handling of ground service for its
aircraft.
The Commission found that Sabena held a dominant position in the market for the
provision of computerised services to operators of such services to travel agencies and
provision of such services to other air transport companies. Moreover, the Commission
found that the contract for handling was not related to the contract for granting access to
the computer reservation system, and thus the behaviour constituted an abuse of
dominant position. In this case, the Commission concluded that the practice could result
in the withdrawal of London European as carrier for flights to Brussels and thus a major
restriction of competition on that market.
Both these cases indicate that tying can rely on forcing a consumer to use services
that are close to a main service. It can be concluded that from the standpoint of the
company that offers similar services is justified even for economic reasons; yet at the
same time, these decisions indicate that the issues usually comes down to the fact that
such services are offered at a non-competitive price. As a result, these companies aim to
force the contractors and consumers to buy both of the services without the possibility to
choose and perhaps purchase only one of them.
In the Van den Bergh Foods Limited Case,44 the Commission examined the practice
of the ice cream manufacturer in Ireland, Van den Bergh Foods Limited. The
manufacturer was offering to sign agreements with its distributors under which they
received freezers. In return the distributors were obliged to buy only that ice cream and
keep in the designated freezers only products manufactured by Van den Bergh Foods
Limited. The manufacturer stated that this exclusivity provision was justified because
Van den Bergh Foods Limited was protecting its property, i.e., the freezer, from being
used by other ice cream suppliers.
The Commission found that the practice was an abuse of dominant position. The
practice was indeed attractive to distributors because they did not have to bear the cost of
a freezer investment, and the producer was also bearing all the costs of maintenance and
repairs of the freezers. The Commission considered that the practice was harmful to
competition, because it made the penetration and expansion of the ice cream market more
difficult. Moreover, the practice is harmful to the contractors, because it restricted the
freedom to choose those products it wants to store in freezers and make that choice on the
basis of objective criteria, not a prior agreement. In the end, this practice was also
 Tying and bundling: applying EU competition rules for best practices 9

harmful to the consumers as well because they were deprived of a reasonable choice of
ice cream products.
In the Alsatel/Novasam case45, the Court assessed the practice of the French
telecommunication company Société alsacienne et lorraine de télécommunications et
d’électronique (Alsatel), which was leasing telecommunication equipment to its
customers. The company imposed on its clients the obligation to deal exclusively with the
installer for any modification of its equipment. This practice was found be in order with
competition rules because it was justified by the fact that the equipment was already the
property of the telecommunications company. If the customers had been owners of the
equipment, then the practice would indeed be a tying practice contrary to the
Commission’s competition rules.46
All this cases shows that tying was used by dominant company to gain economical
profits from their main activity. Contractors were forced to use related service on worse
conditions that were offered by competition. In such cases establishing is often obvious
because it is easier to recognise tying of product and service that tying of two products.

5 Bundling

Another kind of practice that harms competition is bundling. In bundling, companies

offer two separate products together, while in tying the companies are claiming that in
fact there is only one product offered. So in bundling there in no doubt that offered
products are separate from each other, companies do not have any reason to hide it.
Very important case concerning bundling was GE/Honeywell case.47 In that case CFI
did not agree to a merger of two undertakings – General Electric Company and
Honeywell. General Electric is a diversified industrial corporate undertaking that
produces in numerous fields: aircraft engines, domestic appliances, information services,
power systems, lighting, industrial systems, medical systems, plastics, broadcasting,
financial services, and transportation systems. Honeywell International, Inc. is an
undertaking in markets like aeronautical products and services, automotive products,
electronic materials, specialty chemicals, performance polymers, and transportation and
power systems. GE and Honeywell decided to merge in a way that GE would acquire the
whole of Honeywell’s capital.
The Commission did not agreed to this merging, stating that it was ‘incompatible with
the common market’.48 The decision was appealed by producers to the CFI, which upheld
the Commission’s decision. One of the reasons why CFI supported the Commission
decision was that the merger would reinforce existing dominance and create a dominant
position in the markets operated by both producers. The Commission found that as a
result of the merger, the new entity could bundle products, e.g., through offers that
incorporated both aircraft engines and avionics products or non-avionics products which
were earlier produced and offered separately.
The Commission also found that after the merger, “the merged entity will be able to
offer a package of products that has never been put together on the market prior to the
merger and that cannot be challenged by any other competitor on its own”.49 Moreover,
the new entity would be able to bundle broader packages’ comprising engines and GE’s
ancillary services, such as maintenance, leasing, finance, training, and so forth.
10 A. Maziarz

Such a practice wherein a new entity will be offering packages of complementary

products can take several forms. It can be either mixed bundling whereby complementary
products are sold together with a discount price that is lower than when they sold
separately or pure bundling where the products are sold only as a bundle and not offered
to separately. Pure bundling may also be a technical bundling, which consists of selling
products that are technically connected with each other and function effectively as part of
the new bundled system. Such products are not compatible if they are used separately
with products made by different producers.
The Commission underlined that as a consequence of any merger, the new entity will
be able to sell its bundled products at lower prices compared to its competitors. Such a
situation will induce customers to buy GE/Honeywell products and increase its market
share in different markets. Such a situation will be allowable because the new entity will
be able to cross-subsidise discounts on products that do compose the bundled package. In
addition, bundling often results in only temporary price reductions for certain packages of
products. The reason is that no appreciable efficiencies result from creation of a new
entity. So the merger and the reduction of prices can eliminate competition based on
merit in a number of markets.
The CFI stated that the Commission had not sufficiently established that, the merger
would result in bundling practices that included former GE engines and the former
Honeywell’s avionics and non-avionics products. Since there are no such practices in the
market, the fact that new entity offered a wider range of products than its competitors
cannot be automatically understood as a creation or strengthening of dominant positions
in the different concerned markets.50
Although the CFI did not support the Commission finding on bundling in this
instance, it did uphold their decision on the basis that as a result of the merger, a
pre-existing dominant position in the market for jet engines for large regional aircraft
would be strengthened as well as dominant positions created for the new entity in the
markets for engines for corporate jet aircraft and small marine gas turbines. CFI also
stated that for each of the mentioned markets the creation or strengthening of a dominant
position would be a threat for effective competition in the common market.51
Another kind of tying is called mixed bundling. The Commission was faced with this
practice for the first time in 1989 regarding the case of Coca-Cola. In this case it found
that Coca-Cola, which was holding a dominant position in cola-flavoured drinks, gave
loyalty rebates to those distributors who agreed not to sell cola-flavoured soft drinks
other than Coca-Cola. The Commission considered the purpose of this practice was to get
distributors to sell only Coca-Cola soft drinks, thus producing entry barriers for
competing producers of cola-flavoured soft drinks.52 During these proceedings, Coca-
Cola proposed an obligation that was accepted by the Commission. Coca-Cola agreed not
to offer loyalty rebates or discounts to its retailers for buying Coca-Cola soft drinks.
When we examine the bundling practices, we can see that many of them cannot be
interpreted as an abuse of dominant position. Very often bundling will be a consequence
of merger. In such situation the merger will create dominant position on one market,
which could be used by company to affect neighbouring market. This is the case when
two different but complementary products are sold together. On the one hand they can be
technologically better but on the other hand such practice limits the choice of consumers
which naturally leads to harming competition. Second group of bundling cases are
classical examples of tying products. In such cases it is very often obvious that offered
together products are separate from each other. The producers even do not hide that fact.
 Tying and bundling: applying EU competition rules for best practices 11

Of course bundling in such cases have purely economic reasons. It is used to boost sales
of different products offered by producer.

6 Conclusions

It should be noted that tying is a non-pricing practice; on the other hand, tying is
generally aimed at causing damage to a company’s competitors or to consumers. The
essence of the intent of this behaviour is thus to exploit the contractor and attain undue
profit via a dominant undertaking. So even if tying does not affect the prices of the tying
product, it still enables companies to make profits on the tied products. That is why such
a practice is so profitable so desired in many instances.
There are many reasons for tying. By tying, entrepreneurs can provide their customers
with products of better quality, price, or products better suited one to another. This
practice may have purely economic rationale, because on for one technological line the
practices can produce several products and thus reduce overall production costs. Such
consideration leads one to the conclusion that tying can be practiced when it produces a
pro-competitive effect.
However, when looking at case law, many of these practices are aimed at limiting
competition in the marketplace. By forcing contractors to buy a tied product or service,
consumers are deprived from another choice for these products or services.
Tying practices can take many various forms. This paper presented some of the most
typical practices that constitute tying. Among them, one of the most typically used
practices is contractual tying. However, it should be noted that the catalogue of such
practices is still open, and the Court or the Commission can add new practices that they
believe also constitute tying. One of the most dangerous tying practices is the one
performed by company which holds a monopoly on a specific market. By use of its
economic power and tying it can ensure existence of monopoly on one market and limit
the competition on a neighbouring. Such practice is very harmful because it affects at
least two markets. In Tetra Pack case the Court stated that when a company holds a
dominant position on a market which is very close to another is in situation similar to
holding a dominant position on those both market as a whole. Such finding cannot be
general. The Commission have to analyse both product markets and indicate why they are
so close to each other. Of course the practice of company has to be analysed in details,
especially in terms of affecting the other market.
What is most important in any assessment of tying cases is to determine whether
these tying and tied products constitute separate product markets. Very often producers
tie products because of technological reasons, saying that their products used together
works better or it is necessary. Such practice occurred in Microsoft case, which claimed
that removing tied product WMP form its operating system would cause technical
problems. Another example of tying practice is situation where company ties sale of
products or services offering one on a regular price and the second which is tied on a
price with greater margin. By such practice company can cover losses resulted from
offering the tying product or service. Very often tying occurs in such situation when
product is offered together with a related service. Such practice enables companies to
increase their profit by forcing customers to use both the product and the service.
12 A. Maziarz

What is also worth mentioning tying can occur in mergers. The Court of First
Instance in GE/Honeywell case found that merger would result in bundling products. The
new entity will offer bundled products which were sold separately. Such situation will
cause elimination of competition on different products markets.

Notes
1 Schmidt, H. (2009 Competition Law, Innovation and Antitrust: An Analysis of Tying and
Technological Integration, p.56, Edward Elgar Publishing. Comment [t1]: Author: Please
provide the place of publication.
2 Commission Notice of 13 October 2000: Guidelines on vertical Restraints, OJ (2000) C 291.
3 DG Competition discussion paper on the application of Article 82 of the Treaty to
exclusionary abuses (2005), Brussels, p.177.
4 Commission Notice of 13 October 2000: Guidelines on Vertical Restraints, para. 215.
5 DG Competition discussion paper on the application of Article 82 of the Treaty to
exclusionary abuses (2005), Brussels, p.177.
6 Schmidt, H. op. cit., p.57.
7 Kjaersgaard, N. (2010) The EU Commission Guidance on Exclusionary Abuse of Dominance –
and its Consequences in Practice, ECLR Volume 31, p.15. Comment [t2]: Author: Please
provide the publisher and the place of
8 Case 193/83 Windsurfing International Inc. v Commission (1986) ECR 611. publication.
9 Case 193/83 Windsurfing International Inc. v Commission (1986) ECR 611, para. 65.
10 Faull, J. and Nickpay, A. (2007) The EC Law of Competition, p.372, Oxford. Comment [t3]: Author: Please
provide the publisher.
11 Case T-30/89 Hilti AG v Commission (1991) ECR II-01439.
12 Case T-30/89 Hilti AG v Commission (1991) ECR II-01439 para. 108.
13 Case T-30/89 Hilti AG v Commission (1991) ECR II-01439 para. 133.
14 Case T-30/89 Hilti AG v Commission (1991) ECR II-01439 para 5.
15 Case C-333/94 P, Tetra Pak International SA v Commission (1996) ECR I-5951.
16 Case C-333/94 P, Tetra Pak International SA v Commission (1996) ECR I-5951, para. 36.
17 Jones, A. and Surfin, B. (2008) EC Competition Law. Text, Cases, and Materials, p.521,
Oxford University Press. Comment [t4]: Author: Please
provide the place of publication.
18 Case C-333/94 P, Tetra Pak International SA v Commission (1996) ECR I-5951, para 2.
19 Garcia-Gallego, A. and Georgantzis, N. (1999) ‘Dominance in the Tetra Pak case: an
empirical approach’, European Journal of Law and Economics, p.147. Comment [t5]: Author: Please
provide the volume number and issue
20 Gustafsson, D. (2007) Tying under EC Competition Law. The Tetra Pak II Case, p.39 [online] number.
http://biblioteket.ehl.lu.se/olle/papers/0002369.pdf (accessed 15 June 2012).
21 Case C-333/94 P, Tetra Pak International SA v Commission (1996) ECR I-5951, para. 3.
22 O’Donoghue, R. and Padilla, J. (2006) The Law and Economics of Article 82 EC, p.541, Hart
Publishing. Comment [t6]: Author: Please
provide the place of publication.
23 Case 60/81 International Business Machines Corporation v Commission (1981) ECR 2639.
24 Case 60/81 International Business Machines Corporation v Commission (1981) ECR 2639,
para. 2.
25 Ezrachi, A. (2008) EC Competition Law. An Anatytical Guide to the Leading Cases, p.177,
Hart Publishing. Comment [t7]: Author: Please
provide the place of publication.
26 In that time, Microsoft was alleged by US competition authorities for illegal tying its product –
internet explorer browser with its operating system Windows. District Court have found
Microsoft to have illegaly bundlied its browser to the operating system but the Court of
Appeals had doubt whether a rule of reason should be taken into account and send it back to
the lower court. Finally the tying claim was withdrawn by the US Department of Justice.
 Tying and bundling: applying EU competition rules for best practices 13

27 Case COMP/C-3/37.792 Microsoft, O.J. (2007) L 32/2.

28 Case COMP/C-3/37.792 Microsoft, O.J. (2007) L 32/2, para 794.
29 Case T-201/04 Microsoft Corp. v. Commission (2007) ECR II-3601, para 1344.
30 Case T-201/04 Microsoft Corp. v. Commission (2007) ECR II-3601, paras. 969-970.
31 Case T-201/04 Microsoft Corp. v. Commission (2007) ECR II-3601, para. 1118.
32 Hildebrand, D. (2002) The Role of Economic Analysis in the EC Competition Rules, p.361,
Kluwer Law International. Comment [t8]: Author: Please
provide the place of publication.
33 Dolmans, M. and Graf, T. (2004) Analysis of Tying Under Article 82 EC: The European
Commission’s Microsoft Decision in Perspective, World Competition Vol. 27, p.225. Comment [t9]: Author: Please
34 Case T-201/04 Microsoft Corp. v. Commission (2007) ECR II-3601, para. 15. provide the publisher and the place of
publication.
35 Case T-83-91 Tetra Pak International v. Commission (1994) ECR II-00755.
36 Case T-83-91 Tetra Pak International v. Commission (1994) ECR II-00755, paras. 1049-1050.
37 Case COMP/C-3/34.792 – Microsoft [online] http://ec.europa.eu/competition/antitrust/cases/
dec_docs/37792/37792_3997_9.pdf (accessed 15 June 2012).
38 Report on Competition Policy 2008 (2009) Brussels, p.23.
39 Kühn, K-U., Stilmann, R. and Caffarra, C. (2005) ‘Economic theories of bundling and their
policy implications in abuse cases: an assessment in light of the Microsoft case’, European
Competition Journal, Vol. 85, p.102. Comment [t10]: Author: Please
provide the issue number.
40 Rousseva, E. (2010) Rethinking Exclusionary abuses in EU Competition Law, p.256, Hart
Publishing. Comment [t11]: Author: Please
41 Case IV/30.178 Napier Brown – British Sugar, O.J. (1988) L 284. provide the place of publication.

42 Case IV/30.178 Napier Brown – British Sugar, O.J. (1988) L 284, para. 72.
43 Case IV/32.318, London European – Sabena, O.J. (1988) L 317.
44 Case IV/34.073, IV/34.395 and IV/35.436 Van den Bergh Foods Limited, O.J. L 246,
4.9.1998.
45 Case 247/86 Société alsacienne et lorraine de télécommunications et d’électronique (Alsatel)
and SA Novasam (1998) ECR 5987, para. 10.
46 Ritter, L. and Braun, W. (2005) European Competition Law: A Practitioner’s Guide, p.451,
Aspen Publishers. Comment [t12]: Author: Please
provide the place of publication.
47 Case T-210/01, General Electric Company v Commission (2005) ECR II-5575.
48 Case COMP/M.2220 General Electric/Honeywell, O.J. (2004) L48/1.
49 Case COMP/M.2220 General Electric/Honeywell, O.J. (2004) L48/1, para. 350.
50 Case T-209/01 Honeywell v Commission (2005) ECR II-5527, para. 470.
51 Case T-209/01 Honeywell v Commission (2005) ECR II-5527, para. 732.
52 XIX Report on Competition Policy (1990) Brussels, p.50.

View publication stats