Tying Arrangement: Example From Northern Pacific Railway Co. v. United States

Show on page(s): 

For example, the Northern Pacific Railway Company received a large land grant from the federal government in 1864 and 1870.  Northern Pacific broke the land into many 800 square foot tracts, and then sold the individual tracts to various buyers.  The tracts of land were rich in minerals and timber.  In the sales agreement for each tract of land, Northern Pacific included a clause that compelled all buyers to use Northern Pacific's railway lines to ship all commodities produced or manufactured on the land.  The U.S. Supreme Court considered this scheme a tying arrangement, where the tract of land was the "tying" product and the use of the railway was the "tied" product.