More on Comcast competition from Sept 16 2014 article
    Some thoughts regarding the recent items suggesting that Comcast and Cox are violating the Clayton Act with regard to tying.
Comcast competition
    The practice of providing a discount to a bundle of products and services is a wide spread practice in numerous types of business.  I would think that any challenge of this practice as it applies to the home security space could either meet with a quick dismissal or a very long drawn out legal process where companies like Comcast are likely to have far greater legal capabilities and funds to defend themselves.  The opinion of the courts on this topic seems to have evolved over the years as shown in the excerpts from the paper by Paul Gift PhD entitled “The Tie-In Decision” cited below.       Given that Comcast is currently in the spotlight regarding its purchase of Time Warner Cable which is under FCC review, this may be an appropriate time for a David vs. Goliath argument.  My opinion is it doesn’t stand a chance.
    The Tie-In Decision
    The current state of the law and economics of tie-in sales and the implications for the business manager.
    By Paul Gift, PhD
2008 Volume 11 Issue 2
The tides are changing with respect to legal and economic views of tying. Recent cases show the pervasiveness of efficiency- and revenue-maximizing reasons for tying and a movement away from per se illegality to that of a less stringent rule of reason.
    Today, many antitrust scholars believe the Supreme Court’s decision in Illinois Tool, along with recent lower court decisions, like those in Microsoft III and In re Visa Check, signal the beginning of the end of the per se rule and the forthcoming ushering-in of the less-stringent rule of reason. Many believe the Supreme Court will overturn the per se rule against tying at the very next opportunity. In addition, tying is not mentioned as a per se offense in recent Supreme Court cases.
    It is clear that the legal and economic considerations of tie-in decisions have evolved over the past century and, particularly, in more recent years. The evolution and development of this issue has direct financial implications for today’s business managers. Courts of late have shown a willingness to discount the per se standard on tying and, under an effective rule of reason, consider other justifications that economists have often shown to be both viable and probable.
    The historical trend indicates that tie-in arrangements that can be supported by arguments of efficiency factors that improve the company’s bottom line without harming social or consumer welfare may well stand on firm legal footing with positive support from economic considerations. However, tie-in arrangements that cannot be supported adequately by these arguments may expose the company to costly legal action, especially when the company is a dominant player in the tying good. This is accentuated by the fact that such legal action is subject to triple damages.
    All product arrangement decisions must consider the typical risk/return factors inherent in all business decisions. In this case it is particularly important for the manager to fully evaluate a potential tie-in arrangement, consider the legal and economic environment, anticipate future financial benefits and costs, and minimize the risk exposure for the company.
John M. Flanagan
Senior Vice President
U.S. Communications, Media & Entertainment Industry
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