Buyers Beware: Lower Prices Can be Harmful to Consumers

Does a bundled discount offered by a dominant firm in the market violate Section 2 of the Sherman Antitrust Act? Megan Hare (’18) addresses this question based on her experience at the 2017 Global Antitrust Institute Moot Court Competition. Antitrust doctrine strongly favors aggressive pricing and other discount schemes that encourage competition within a given market. Bundled discounts fall squarely within the procompetitive pricing schemes praised by the Supreme Court’s antitrust doctrine. These rebates compel firms to compete for consumers, thereby allowing consumers to pay lower prices for products than they otherwise would pay without such market competition. This Contribution argues, however, that bundled discounts may be anticompetitive and unlawful under the Sherman Act when unjustifiably used by a dominant firm to gain additional market share or to maintain the firm’s existing market power.