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TYING, BANKING, AND ANTITRUST: IT'S TIME FOR A CHANGE
Author(s) -
White Lawrence J.
Publication year - 1995
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.1995.tb00729.x
Subject(s) - tying , repeal , legislature , market power , enforcement , business , product (mathematics) , flexibility (engineering) , economics , service (business) , law and economics , law , microeconomics , monopoly , marketing , geometry , mathematics , management , political science
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.