Belgian ban on product tying rejected

24th April 2009, Comments 0 comments

The European Court of Justice in Luxembourg ruled that a Belgian ban on product-tying violates European law.

The court was ruling on a dispute between VAB (the emergency road service company) and oil company Total.

VAB had taken Total to court on grounds that Total was violating the Belgian ban on product-tying. Total offered its clients free emergency road service for a determined length of time so long as they bought a certain amount of petrol.

The European Court of Justice took up the issue and has ruled that the practice of banning product tying is in conflict with the rules of the free market.

The European Court of Justice is against any sort of national regulation which prohibits the sale of one good conditional on buying another good, regardless of the circumstances.

In a first reaction, Belgian Minister of Enterprises Vincent Van Quickenborne said he was happy with what he called a “clear ruling” from the European Court of Justice. Van Quickenborne wants to remove the law banning product-tying as soon as possible.

Product tying

Tying is the practice of making the sale of one product (the tying product) to the customer conditional on the purchase of a second distinctive product (the tied product).

It is often illegal when the products are not naturally related. Some kinds of tying, especially bound by contract, have historically been regarded as anti-competitive practices.

The basic idea is that consumers are harmed by being forced to buy an undesired product (the tied good) in order to purchase a good they actually want (the tying good), and so would prefer that the goods be sold separately.

The company doing this bundling may have a significantly large market share so that it may impose the tie on consumers, despite the forces of market competition. The tie may also harm other companies in the market for the tied good, or who sell only single components.

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