The Antitrust Review of the Americas 2009

Standards for Assessing Bundled Discounts

01 January 2009

Since the US Third Circuit Court's LePage's decision in 2003,1 antitrust attorneys and economists have increasingly debated the appropriate liability test for distinguishing anti-competitive bundled discounts from pro-competitive bundled discounts. This debate was further fuelled by a 2007 report by the US Antitrust Modernization Committee (AMC),2 which recommended an alternative test, and the Ninth Circuit Court's PeaceHealth3 decision, which partly adopted and partly rejected the AMC's recommended test. This article describes the economics behind bundled discounts, the criteria that are necessary to distinguish pro-competitive bundled discounts from anti-competitive bundled discounts, and the reasons that the tests adopted by the appellate courts and recommended by the AMC fail to do so.

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