Tying Arrangements and Reciprocity: A Lawyer's Comment on Professor Ferguson's Analysis

Abstract

Perhaps in no area save the arena of mental responsibility in the criminal law does the average attorney find himself confronted with the rigors of such an explosive and often self-contradictory discipline as in the field of antitrust law. Recent litigation in the federal courts and before the Federal Trade Commission signals the opening of a fresh assault on the business community by a concerned government and public. Having survived the enthusiasm of such trustbusters as Teddy Roosevelt and Thurman Arnold, our business giants have been forced to seek more acceptable means of exerting their market power so as to maximize profits within the framework of the existing antitrust laws. If provisions written into sales contracts by firms with weighty horizontal market power provide an example of the more sophisticated approach adopted by the business world, the reaction of the modern trustbusters and ultimately of the Supreme Court demonstrates an equally ingenious application of antitrust doctrine.1 Professor Ferguson has suggested that the antitrust decisions of the courts reflect social policy weighed in equal measure with economic factors in arriving at a particular determination. It is the purpose of this comment to suggest that such a phenomenon is not new and indeed that such a result is the natural and unavoidable consequence of our system, which forces upon bench and bar the adversary roles in all fields of socio-economic decision. The Ferguson article propounds an economic analysis of two of the more modern business practices that have come under attack by the Government, the so-called tying contract and the practice of reciprocity in buying and selling.