Against Per Se Illegality of Tying and Bundling in Digital Markets: Perspectives from the EU and India

Abstract

The rapid global diffusion of digital technologies has prompted jurisdictions to abandon traditional effects-based competition enforcement in favor of rigid ex ante regulatory regimes. The European Union’s Digital Markets Act (DMA), often viewed as a "model law," exemplifies this shift by imposing per se prohibitions on a catalogue of practices deemed inherently anti-competitive. Among these, the categorical condemnation of tying and bundling is particularly striking. Unlike other DMA-listed practices, tying has a long, contested history in industrial economics, where it is associated with both foreclosure risks and significant efficiency gains.This paper argues that the transplantation of per se prohibitions on tying into ex ante frameworks neglects economic nuance and misrepresents technological reality. Through a comparative analysis of EU jurisprudence, existing Indian competition law, and the proposed Indian Digital Competition Bill, the paper demonstrates that earlier effects-based approaches were better equipped to distinguish exclusionary tying from welfare-enhancing "technological integrations." It further contends that digital markets do not eliminate classical efficiencies; rather, they intensify them through deep product integrations. Using a brief case study of an AI product, the paper illustrates how rigid rules misclassify innovation as anti-competitive and shows how minor exemptions in draft laws often produce legal uncertainty. Ultimately, the paper contends that the per se illegality of tying reflects political choices over sound economics. It suggests that emerging economies, particularly India, should modernize their effects-based jurisprudence instead of adopting blanket bans.