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Abstract

Recent decisions-all relying on a stylized example first provided by the Ortho court-hold that a multi-product seller that uses a bundled discount in a way that excludes an equally or more efficient competitor engages in predatory bundling. According to these decisions, a bundle can be considered 'predatory" even when the price of the bundle exceeds its cost. This Article shows that the Ortho court's stylized example and its monopoly leveraging theory are erroneous. This Article further demonstrates that even when a bundle's price excludes more efficient competitors and even when a component in the bundle is priced below cost, and thus sold at a loss, it may still have welfare-enhancing effects. The result is that bundles that fail the discount allocation test, and even bundles that fail the Brooke Group test for predatory pricing, can still be desirable.

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