Legal and Economic Approach to Tying and Other Potentially Unfair and Anticompetitive Commercial Practices: Focus on Financial Services

This paper analyses the economic and legal aspects related to practices such as tying, bundling and other potentially unfair commercial practices widely used in the financial services industry. Authors draw special attention to the European financial services market. Their law and economics approach aims at illustrating the rationales for applying both antitrust and consumer protection legislation to the practices subject to analysis in this paper and observed in the retail financial services market. The author explores the main findings of the legal and economic theory as regards the applicability of antitrust rules to the practices at hand, and the possibility to treat new commercial practices under antitrust law. The paper then illustrates the economics of tying, bundling and other unfair commercial practices from a consumer policy perspective, and reports some empirical data on switching costs and patterns of consumer behaviour in retail financial services and in other sectors of the economy. Cognitive biases that may cause irrational behaviours in judgement and decision-making processes of a retail consumer are widely assessed. Finally, the author proposes a new multi-stage test for the joint assessment of selling practices under competition and consumer policy.