Tied selling is the practice by which a supplier obliges its customers to obtain goods or services from it or its affiliates, as a condition for obtaining another good or service that is, by its nature and according to commercial usage, unrelated to the first good or service. This type of practice may be prohibited under Sections 17, 20 and 33 of the Act.
An example of tied selling can be found where a bank makes it, as a condition of getting a loan, compulsory for a customer to purchase other products such as investment services from the bank. Manufacturers of electronic goods may also require consumers to purchase peripheral equipment or services in order to keep their warranty for a certain product valid, i.e., the product must not be used along with other products apart from the manufacturer’s. This also amounts to tied selling. Note that tied selling could be achieved through direct or indirect means. Direct tied selling occurs where the supplier imposes an explicit obligation on the customer to purchase the two unrelated products, and refuses to supply the products separately.
Indirect methods of tied selling include tactics such as offering a substantial discount for the joint purchase of the two products such that the customer has no incentive to purchase the products separately.