Final answer:
Tying sales are a business practice where customers must buy an unrelated product in order to purchase the desired item, thus reducing competition and choice. This practice is often illegal as it is considered a restrictive practice. The subtleties of the law allow for suggested minimum prices, but not mandatory ones.
Step-by-step explanation:
Tying sales refer to a controversial practice in which a customer is allowed to purchase one product only on the condition that they also buy a second, separate product. This forces consumers to acquire a product they may not want or need and restricts their choice in the market. Restrictive practices like this aim to reduce competition but do not involve direct collusion between firms to manipulate prices or production levels.
For example, it might be considered a tying sale if a store sells a popular DVD but requires the purchaser to also buy a specific model of a portable TV. These products are generally not directly related, which exemplifies why such restrictive practices are problematic. The law often prohibits these practices because they undermine fair competition and can negatively impact the consumer.
However, there are subtleties in the law, such as a manufacturer suggesting a minimum price to dealers and discontinuing business with those who do not adhere to it, which is legal as opposed to setting a mandatory minimum resale price, which isn't.