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Tying, Banking, And Antitrust: It'S Time For A Change

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  • Lawrence J. White

Abstract

The anti‐tying section (Sec. 106) of the Bank Holding Company Act of 1970 severely limits U.S. banks' or bank holding companies' ability to link one product or service to another. Though the provisions of Sec. 106 resemble the anti‐tying provisions of the U.S. antitrust laws, the latter are considerably less restrictive and more flexible. Sec. 106 represents a misguided legislative effort to deal with a perceived problem of banks' market power. Though tying can be a manifestation of market power, it is more likely—especially for banking—to represent efficient combinations of complementary components. Regulatory and judicial enforcement of Sec. 106 surely has seriously inhibited the flexibility and efficiency of bank pricing and product offerings. A simple solution to this legislative over‐regulation is to repeal Sec. 106 and instead extend the reach of the antitrust laws to cover abusive tying by banks.

Suggested Citation

  • Lawrence J. White, 1995. "Tying, Banking, And Antitrust: It'S Time For A Change," Contemporary Economic Policy, Western Economic Association International, vol. 13(4), pages 26-35, October.
    • Handle: RePEc:bla:coecpo:v:13:y:1995:i:4:p:26-35
    DOI: 10.1111/j.1465-7287.1995.tb00729.x
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    References listed on IDEAS

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    Cited by:

    1. John A. Weinberg, 1996. "Tie-in sales and banks," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 1-19.
    2. Lawrence J. White, 2002. "Trends in Aggregate Concentration in the United States," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 137-160, Fall.

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