Number range CHAPTER

**Statement of Warren S. Grimes**

Irving D. and Florence Rosenberg Professor of Law

Southwestern Law School

Los Angeles, California

**Tying:**

**Requirements Ties, Efficiency and Innovation**

November 20, 2006

**Single-Firm Conduct and Antitrust Law**

**Department of Justice and Federal Trade Commission**

FTC: Comments Regarding Section 2 Hearings, Project No. P062106

Requirements Ties, Efficiency and Innovation

Amidst the lively discussion about the whether tie-ins should be
assessed under the rule of reason or under the current modified per se
rule, relatively little attention has been paid to the form of tying
that has been most consistently condemned by the United States Supreme
Court. That would be the requirements tie (sometimes referred to as a
metering tie). I offer here a competitive assessment of the requirements
tie. My conclusion is that, whatever rule is applied to tie-ins
generally, requirements ties should be recognized as posing grave risks
to competition.[^1]

I. Requirements Ties

A tie-in occurs when a purchaser of a tying product is forced to
purchase a second product (the tied product). Tying should be
distinguished from the bundled sale of two or more products. The forcing
element is lacking in bundled sales which are, accordingly, generally
procompetitive or benign. Tying conduct can be condemned under Section 2
of the Sherman Act as an abuse of monopoly power or, when the forcing
power is present, as a restraint of trade in violation of Section 1 of
the Sherman Act or Section 3 of the Clayton Act.[^2]

Ties involving the deferred purchase of the tied product are a suspect
category because they raise information problems. Some purchasers of the
tying product may not focus on the cost of subsequent purchases of the
tied product. Moreover, even a savvy and well informed purchaser may
have difficulty projecting future use of the tying product and future
competitive conditions in the tied product market. These issues were
explored in 1982 by Craswell,[^3] and have been developed by Kaplow and
others.[^4] In the Supreme Court's 1992 opinion in Eastman Kodak Co. v.
Image Technical Services, Inc., the Court described life cycle pricing
difficulties that could make it impossible for the purchaser of the
tying product to accurately project future needs and costs.[^5]

The case law suggests that most deferred purchase ties are requirements
ties.[^6] Professor Nalebuff points to two salient characteristics of
the requirements tie that distinguish it from other tie-ins.[^7] The
first is that the tying and tied products stand in a complementary
relationship. A computer printer is of no use without the ink needed to
perform the printing function. A salt injection machine cannot be used
without the proper form of salt. The second and related characteristic
of requirements ties is that the value of the tying product depends on
the intensity of its use. An intensive user of a computer printer is
likely to value it more highly than a less intensive user. The same will
be true for an intensive user of a salt injection machine. Requirements
ties can also be described as metering ties because the sale of the tied
product is a way of metering the use of the tying product.

A final salient characteristic of most requirements ties is that the
seller charges a supra-competitive price for the tied product. Without
this inflated price, the tie may foreclose rival sellers of the tied
product and it may deprive consumers of choice, but it will be difficult
to measure injury to consumers.

Most United States Supreme Court decisions that have condemned tying
arrangements have involved a requirements tie.[^8] The United States
Congress was focused on a requirements tie when it enacted Section 3 of
the Clayton Act in 1914.[^9] In the European Union, the term
"requirements tie" or "metering tie" has not been used, but a 1979
decision of the Commission condemned such a tie under Article 85 (now
Article 81).[^10] A tying seller required users of its process patent
for manufacturing sausage to purchase sausage casings only from the
seller. The Commission declared this arrangement "an unlawful extension
by contractual means of the monopoly given by the patent." The
Commission did not suggest a concern that the patentee would gain a
monopoly in the casings market but did conclude that the patentee would
increase its return through use of the metered tie.

Sellers impose requirements ties to make money. The extra money that a
seller garners could be the result of procompetitive efficiencies or of
anticompetitive gains. A number of possible explanations for tie-ins
have been proposed.[^11] To understand the competitive effects of
requirements ties, both static or allocational efficiencies and dynamic
efficiencies must be considered. Assuming no change in the products or
services being marketed, efficient allocation is achieved if consumers
receive the maximum allocation of these desired items. In contrast,
dynamic efficiency is advanced when new or innovative products and
services are developed and marketed to consumers.

II\. Static or Allocational Analysis of Requirements Ties

Theorists have identified various theories which could explain how
imposition of a requirements tie provides the seller with increased
revenue. The most descriptive of these explanations is the
implementation of metered price discrimination. Other possible theories
include: (1) preserving the seller's reputation for quality; (2)
efficiencies in distribution; (3) efficiencies in risk allocation; and
(4) the leveraging of market power from the tying to the tied market.
Aside from metered price discrimination, none of the other explanations
is credible for most Supreme Court cases involving requirements ties.
The discussion below addresses first the alternate explanations for
imposing a requirements tie, then returns to metered price
discrimination.

A. Alternate explanations of requirements ties

A *reputation for quality* argument was advanced by Trident, the tying
seller in Illinois Tool Works, Inc. v. Independent Ink, Inc.[^12] That
case involved the tied sale of Trident's patented pizzo-electric
printhead with the ink used in the printhead. Trident argued that the
tied sale of its ink insured that customers would not purchase inferior
inks that could cause the printhead to malfunction. But Trident's own
test showed that Independent Ink's product was chemically
indistinguishable from its own.[^13] Moreover, major users of the
printhead would be well-informed and unwilling to tolerate a product
that caused substantial breakdowns or significant quality problems.
Buyers should, in any event, be permitted freedom of choice to opt for
varying levels of quality with corresponding adjustments in price. The
Supreme Court has in the past been skeptical of quality assurance
claims, pointing out that the seller, without the anticompetitive
consequences of a tie, can issue bulletins or provide information that
will allow users to make an informed decision about which aftermarket
product to purchase.[^14]

*Efficiencies in distribution* are most likely to occur when the tying
and tied product are purchased simultaneously. There are no substantial
efficiencies evident when the purchaser makes future purchases of the
tied product at an unknown frequency. If there were substantial
efficiencies in a long term supply relationship, one would expect that
buyers would freely choose to enter into that relationship, without
being forced to do so by the tying seller.

*Risk allocation efficiencies* have also been cited as a justification
for requirements tying. A purchaser of the tying product might be
uncertain of the quality and utility of the product and prefer to pay a
low up-front price while paying a higher per use fee through metered
sale of the tied product. Here again, however, if buyers really
preferred to shift risk in this manner, they would freely choose a
metered pricing arrangement without being forced into it by the
manufacturer. A manufacturer might offer two differing plans to allow
this freedom of choice. The first plan might be an offer to sell at a
relatively high price, but with no metered use of the product. The
second plan might be a lease for a relatively low price, but contingent
on metering, preferably implemented without forced purchase of the tied
product from the manufacturer. This plan should be free of antitrust
concerns as long as the user is offered meaningful risk allocation
choices (a non-competitive offer to sell free of the metering would not
obviate the antitrust risk).

*Leveraging power from the tying product market to the tied product
market* also might explain the seller's gain from a requirements tie.
Older Supreme Court decisions involving requirements ties rested to some
extent on this theory. Leverage theory has been attacked by Bowman and
others,[^15] who argue that the tying seller possessing monopoly power
can shift profits back and forth between the tying and tied products,
but cannot increase its overall return above the optimal monopoly price.
This conclusion, however, will not hold if use of the tie makes entry
into the tied product market more difficult.[^16] Moreover, even if
there is no threat of monopolization in the tied product market, a
requirements tie can have adverse competitive effects when (1) buyers
cannot discern at the time of purchase of the tying product what their
total costs for subsequent purchases of the tied product will be; and
(2) the market for the tied product is oligopolistic, so that the tying
seller will reap higher returns through a tie that exploits the market's
oligopolistic tendencies, perhaps by making discounted sales less
likely.[^17] In *Independent Ink*, it seems unlikely that Trident's tie
will somehow give that firm monopoly power in ink markets. But the tie
will adversely effect the competitive pricing and choices for buyers in
the tied product market (see the discussion of allocative effects in the
tied product market in part 3.2.3 below).

B. How Metered Pricing Might Produce More Efficient Allocation of the
Tying Product

As seems evident from this analysis, the primary impetus for a seller to
impose a requirements tie is likely to be a desire to engage in metered,
discriminatory pricing. There is some discussion, however, whether the
effects of metered pricing are pro- or anticompetitive. Perfect price
discrimination could result in higher output and, in this sense, be
procompetitive. For example, if a seller can determine the reservation
price for every purchaser of its product (the highest price that the
purchaser is willing to pay), it could set a range of prices that would
increase the number of purchasers above the level that would purchase if
only a single uniform price were set. A uniform price on a printhead
might be set at the seller's cost (C) plus a reasonable profit (RP). At
this price (C+RP), the number of purchases would be X. If the same
seller could discriminate perfectly, it could set its price higher than
C+RP for those who valued the product highly, but somewhat lower than
C+RP for those who placed a lower value on the product. The result would
be additional sales of the product (X+Y) and a fuller exploitation of
the market power that the printhead seller possesses. The seller could
increase both sales and revenue and achieve optimal allocative
efficiency.

C. Wealth Transfer Loss as the Primary Injury From Requirements Ties

There are a number of problems with this model of perfect price
discrimination. To begin with, one of the harms from monopoly power is
the wealth transfer losses to buyers who pay the supracompetitive price
for a product. Most, perhaps all, of the seller's increased revenue from
a requirements tie will be in the form of a wealth transfer loss to
buyers. In theory, the seller may also gain revenue from allocation
gains that occur when low intensity users are enticed to purchase more
of the tying product. But this gain will occur only if the seller
lower's the price of the tying product, something that the case law
suggests may not occur at all.[^18] Even if the tying seller does reduce
the price of the tying product, the increased revenue received from
additional sales of the tying product will be minimal because the seller
has reduced its mark up of the tying product. Finally, the increase in
the price of the tied product may result in intensive users purchasing
fewer tying products, so that there may be a net loss in sales of the
tying product. Thus, revenue gains will flow primarily from sales of the
tied product at supracompetitive prices, producing a substantial wealth
transfer loss to intensive buyers who would have purchased these
products regardless of the tie.

Although some scholars reject wealth transfer loss as a concern of
antitrust,[^19] many others believe that wealth transfer loss, which in
most cases will be substantially larger than any deadweight loss, is a
primary, perhaps the paramount, concern of antitrust.[^20] Measures of
damages in antitrust cases are often based on loss to consumers from
supracompetitive surcharges, an indication that, whatever the
theoretical argument, antitrust law as practiced does provide a remedy
for wealth transfer losses. Thus, to condemn metered tying based on
overpayments made by purchasers of the tied product is well within
mainstream U.S. antitrust interpretation. This result is likely to
appeal to the consumer base that supports competition laws and is sound
economic policy.

D. Allocation Effects in the Tying Product Market

Even if one rejects prevention of power-based wealth transfer as a goal
of antitrust, the conclusion that metered price discrimination will
result in more efficient allocation (and therefore be procompetitive) is
still highly problematic. In order for the tie-in to produce more
efficient allocation, there must be substantial transparency in the
market so that buyers understand the costs of the bundled offer and
sellers understand the reservation prices of buyers. If this
transparency exists, it is possible that the tying seller can set the
price of the tying and tied products at a levels that will produce
increased sales of the tying product. However, prescient buyers will
look not just at the price of the tying product, but also at the cost of
the tied product. If combined cost is too high, an intensive user with
adequate information may purchase fewer tying products, undermining an
efficient allocation. Thus, increased sales to low intensity users may
be offset by decreased sales to high intensity users.

If there are information inadequacies for the tying seller and for a
substantial segment of purchasers, the risk of inefficient allocation
grows substantially. Buyers attracted to a low price on the tying
product and not adequately cognizant of the future costs for the tied
product may overbuy the tying product (a misallocation) and end up using
it inefficiently -- less often than they would use it if the tied
product were sold at a competitive price. Consider the user of a Trident
printhead that has a choice between employing the printhead more widely,
or relying on a less attractive technology (for example, pre-printed bar
code labels that are pasted on cartons). As the price for the ink for a
Trident printhead gets higher, the incentive for the purchaser to make
use of Trident's efficient technology is reduced, perhaps forcing this
purchaser to continue use of a less preferred alternative.[^21]

There is yet another reason to doubt that procompetitive price
discrimination will be achieved through a requirements tie's metered
pricing. As the Supreme Court cases demonstrate, many requirements ties
are not enforced against power buyers.[^22] If powerful buyers are
excepted from metered pricing, the buyers who value the tying product
most will likely pay the lowest, not the highest, price. The brunt of
discriminatory pricing ends up falling on smaller and less powerful
firms, creating a competitive disadvantage for them in competing against
firms possessing buyer power.[^23]

E. Allocative effects in the tied product market

A requirements tie will result in the purchaser paying more for the tied
or metering product. Even if this pricing is done in a fully transparent
and open manner, its effect on allocation of tied products may be
negative. The seller may sell more of the tying product and therefore
also sell more of the tied product on which it garners a
supracompetitive return. However, as noted above, the supracompetitive
price for the tied product will create an incentive for buyers to use
the tying product less intensively, and therefore purchase fewer tied
items than would occur under competitive conditions. If buyers are
prescient, they will understand that the high cost for the tied product
is an overall charge for the tying product, and purchase fewer of them
as well.

Additional distortions in allocation are likely because of the
information problems associated with deferred purchase ties (see the
discussion in part I, supra). Even if a prescient buyer is able to fully
and accurately anticipate future needs, price changes, and other market
shifts, the buyer may have limited choice if other sellers of the tying
product are engaging in comparable tying conduct.

Finally, before metered price discrimination can be adjudged
procompetitive, the evasion costs must be considered. Buyers forced to
pay supracompetitive prices for the tied product will not passively
accept this result. As a result of tying or exclusive dealing practices,
automobile owners in the United States are forced to pay
supracompetitive prices for parts that may be available only from the
manufacturer of the vehicle, or a source approved by the
manufacturer.[^24] Consumers seeking a way around these high prices have
indirectly given rise to a booming automobile theft market. Thieves
steal a vehicle, strip its parts in a "chop shop," then sell the parts
at a price that vastly exceeds the street value of the car itself.
Society bears these very substantial costs through higher law
enforcement burdens, higher automobile insurance rates, and uninsured
losses borne by theft victims.

In the *Independent Ink* case, efforts to avoid the tie were unlikely to
produce the array and extent of external costs that occur with
automobile parts. However, buyers are likely to expend resources seeking
alternative sources of ink. Whatever efficiencies might flow from the
metered pricing scheme may be offset by Trident's own costs in
attempting to enforce its tie and in customers' costs incurred in
seeking a way to avoid supracompetitive tied product prices.

Although requirements ties may in some cases be the most efficient way
of implementing metered pricing, they are laden with anticompetitive
risks that could be entirely avoided if the metered pricing could be
implemented without a tie. For example, if the manufacturer of a
printhead could incorporate a usage meter, something that sophisticated
computer technology could easily accomplish, the manufacturer can
implement a metered usage charge without the use of any tying and with
no anticompetitive effects on the tied product market. Buyers will
retain a full range of choice to purchase the most competitive
aftermarket product. Such direct metering charges may be unpopular with
buyers, but that is hardly an argument for why the same metering should
be allowed through the use of a tying mechanism that has very
substantial additional anticompetitive consequences.

III\. Dynamic efficiency analysis: will a requirements tie increase
innovation?

Proponents of maximum exploitation of IP rights argue that the increased
revenues achieved through tying a patented product to an unpatented
product provide a desirable increased incentive for innovation. There is
little doubt that increased return from a requirements tie creates a
higher reward for an owner of a patent on the tying product. But the
effect of the increased return achieved through a requirements tie, in
contrast to the direct patent reward, (1) is arbitrary because it has no
direct correlation to the value of the underlying patented tying
product; and (2) may actually decrease overall innovation because of the
constricting impact on the tied product market.

The direct nature of a the basic IP reward can be simply illustrated. If
an inventor discovers a novel way to manufacture a solar powered
cigarette lighter, the inventor may receive a patent that grants
exclusive rights to market this invention. If consumers deem this
invention a valuable addition to their portfolio of goods at the price
at which it is offered, they will purchase it and reward the patentee.
The price and quantity of sales (and therefore the value of the patent
reward) will correlate directly with the value that purchasers place on
this new invention.

Contrast this with the additional reward that a requirements tie might
provide the patentee if, for example, the lighter uses disposable wicks
that must be replaced after a number of uses. The patentee's ability to
enforce this requirements tie will depend on a variety of factors that
have no correlation to the value of the underlying invention. For
example, if similar wicks are already widely available in the market
from a number of producers, the patentee will likely have difficulty
imposing a tie that sets a premium price on the wick. Instead, the
patentee will probably have to set the price for its wicks at or near
the market price for similar wicks. On the other hand, if it happens
that wicks of the necessary type are not available at all, or are
available only at high oligopolistic prices, the patentee can easily
impose a premium price on the wick that earns a much higher return. The
point is that the amount of this return will depend on extrinsic factors
(for example, the state of competition in the wick market) that have no
correlation with the underlying value of the cigarette lighter.

There is an additional wrinkle to this story. If requirements ties are
lawful, the inventor has an incentive to design the patented lighter in
a way that functions with a special wick that only the patentee can
readily provide. The additional cost incurred in designing the lighter
with a difficult-to-replicate wick would not improve the technology, but
instead would be a rent-seeking cost incurred by the patentee in an
effort to enhance returns. Encouraging such rent-seeking design changes
is decidedly not a legitimate purpose of IP laws, but it is an
inevitable result of a competition policy tolerant of requirements ties.

This leads to the second reality about requirements ties and the
likelihood that they will increase innovation. Because the patentee
employing a requirements tie has an incentive to build and maintain
sales of wicks, it will do everything possible to obstruct entry in that
market, especially if the would-be entrant offers new or improved
technology not offered by the patentee. As long as requirements ties are
lawful, the patentee will have an incentive to restrain competition and
entry in the tied product market. If requirements ties are unlawful, the
patentee is more likely to welcome improvements in wicks that could
increase the utility and value of its patented lighter.

These concerns give greater weight to the policy goals underlying
Congress' 1914 enactment of Section 3 of the Clayton Act, designed to
prohibit anticompetitive requirements ties whether the tying product is
"patented or unpatented."[^25] The case for anticompetitive effects of
requirements ties is a strong one, reflected in venerable decisions of
the Supreme Court, and consistent with correlating IP rewards with the
value of the patented product. The Justice Department and the Federal
Trade Commission had an opportunity to steer the law in a positive
direction when *Illinois Tool Works* came before the Supreme Court in
2005. That opportunity was lost when the Government's amicus brief
focused on the market power presumption to the exclusion of weighty
policy concerns about the use of requirements ties.

[^1]: .The analysis presented here is drawn from a chapter entitled
    *Making Antitrust/Intellectual Property Policy in the United States:
    Requirements Tie-Ins and Loyalty Discounts*, in [Handbook on
    Intellectual Property and Competition Law]{.smallcaps} to be
    published by Edward Elgar Publishing.

[^2]: . For a more detailed discussion of tie-ins, see [Lawrence A.
    Sullivan & Warren S. Grimes, The Law of Antitrust: An Integrated
    Handbook]{.smallcaps} §8.3 (2d ed. 2006).

[^3]: . Richard Craswell, Tying Requirements in Competitive Markets: The
    Consumer Protection Issues, 62 B.U. L. Rev. 661 671-79 (1982).

[^4]: . Louis Kaplow, *Extension of Monopoly Power Through Leverage*, 85
    [Colum. L. Rev]{.smallcaps}. 515 (1985); Lawrence A. Sullivan &
    Warren S. Grimes, The Law of Antitrust: An Integrated Handbook §
    8.3c (2d ed. 2006).

[^5]: . 504 U.S. 451, 473 (1992).

[^6]: . There are occasional deferred purchase ties that would not be
    requirements ties \-- for example, the sale of a cemetery's grave
    yard plot with a stipulation that the grave stone or stone carving
    services later be purchased from the cemetery. Baxley-DeLamar
    Monuments, Inc. v. American Cemetery Association, 938 F.2d 846
    (8^th^ Cir. 1991).

[^7]: . *Illinois Tool Works*. Amicus Brief of Professor Barry Nalebuff,
    2005 WL 2427646, at 5

[^8]: . International Salt Co. v. United States, 332 U.S. 392 (1947);
    IBM Corp. v. United States, 298 U.S. 131 (1936); United Shoe
    Machinery Corp. v. United States, 258 U.S. 451 (1922); Motion
    Picture Patents Co. v. Universal Film Manufacturing Co., 243 U.S.
    502 (1917). Although the plaintiff in the Kodak case alleged a tie
    between replacement parts and service, the case can fairly be
    included in the category of requirements ties because a purchaser of
    Kodak's micrographic equipment is likely to require spare parts in
    proportion to usage of the equipment. Eastman Kodak Co. v. Image
    Technical Services, Inc., 504 U.S. 451 (1992).

[^9]: . 15 U.S.C. §14. Enactment of Section 3 was a response to
    congressional dissatisfaction with the outcome of Henry v. A.B. Dick
    Co., 224 U.S. 1 (1912)(holding that a requirements tie with a
    patented tying product did not violate the Sherman Act). Victor H.
    Kramer, *The Supreme Court and Tying Arrangements: Antitrust as
    History*, 69 [Minn. L. Rev]{.smallcaps}. 1013, 1023 (1985).

[^10]: . Case 19/79, Official Journal L 019 (1979)(Vaesson/Moris).

[^11]: . Sullivan & Grimes, supra note 4, §§8.3b, 8.3c.

[^12]: . U.S. , 126 S.Ct. 1281 (March 6, 2006). Reply Brief for
    Petitioner Illinois Tool Works, Inc., 2005 WL 2902587, at 12. The
    author served as a consultant for Independent Ink during the Supreme
    Court litigation.

[^13]: . Illinois Tool Works Inc. v. Independent Ink, Inc., Brief for
    Respondent Independent Ink, Inc., 2005 WL 2427645, at 5-6.

[^14]: . Standard Oil Co. of California v. United States, 337 U.S. 293,
    305-06 (1949)("specification of the type and quality of the product
    to be used in connection with the tying device is protection
    enough").

[^15]: . *Ward S. Bowman, Jr., Tying* Arrangements and the Leverage
    Problem, 67 [Yale L. J.]{.smallcaps} 19 (1957); [Herbert Hovenkamp,
    Federal, Antitrust Policy: The Law of Competition and its
    Practice]{.smallcaps}, at §7.9 (3d ed. 2005) (Criticizing
    "troublesome leverage theory").

[^16]: . See Barry Nalebuff, *Bundling as an Entry Deterrent Device*,
    119 [Q. J. Econ]{.smallcaps}. 159 (2004); Dennis Carlton & Michael
    Waldman, *The strategic Use of Tying to Preserve and Create Market
    Power in Evolving Industries*, 33 [RAND J. Econ]{.smallcaps}. 194
    (2002); Michael D. Whinston, *Tying Foreclosure, and Exclusion*, 80
    [Am. Econ. Rev]{.smallcaps}. 837 (1990).

[^17]: . It is possible, for example, that the price-guarantee tying
    arrangement in *International Salt* was an effort to lock in
    oligopolistic prices in the salt market. See the discussion of this
    case in [Sullivan & Grimes]{.smallcaps}, *supra* note 4, at § 8.3c2.

[^18]: .In Eastman Kodak, 504 U.S. at 472-73, Kodak claimed that it did
    not reduce the price charged for its parts or equipment when it
    imposed the tie involving Kodak service.

[^19]: . [Robert Bork, Antitrust Paradox: A Policy at War with
    Itself]{.smallcaps} 110-12 (1978); (1993); Charles Rule, *Merger
    Enforcement Policy: Protecting the Consumer*, 56 [Antitrust L.
    J.]{.smallcaps} 739- 740 (1987).

[^20]: ?. Robert Lande, *Wealth Transfers as the Original and Primary
    Concern of Antitrust: The Efficiency Interpretation Challenged*, 34
    [Hastings L. J]{.smallcaps}. 67 (1982), Robert Lande, *The Rise and
    (Coming) Fall of Efficiency as the Ruler of Antitrust*, 33
    [Antitrust Bull]{.smallcaps}. 429, 455-63 (1988).

[^21]: . For a similar allocation analysis, see Illinois Tool Works Inc.
    v. Independent Ink, Amicus Brief of Professor F.M. Scherer, 2005
    W.L. 2427642, 12-17.

[^22]: . Exceptions for power buyers were made in Eastman Kodak v. Image
    Technical Services, 504 U.S. at 475; IBM Corp. v. United States, 298
    U.S. at 134. In Northern Pacific Ry. v. United States, 356 U.S. 1
    (1958), the railroad did not impose the tie against 390 of its large
    customers. F. Jay Cummings & Wayne L. Ruhter, The Northern Pacific
    Case, 22 J.L. & Econ. 329, 344-45 (1979).

[^23]: . [Sullivan & Grimes]{.smallcaps}, §8.3b2, at 433-34.

[^24]: . Professor Scherer offers this example in [F. M.]{.smallcaps}
    [Scherer, Industry Structure, Strategy, and Public
    Policy]{.smallcaps} 308-11 (1996).

[^25]: . 15 U.S.C. § 14.