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The danger for competition is that GE might, in future, offer customers a "mixed bundle" of engine and avionics at a lower price than the items would fetch if they were sold separately.
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The solution is what the British call kiloware, mixed bundles of stamps from around the world that have been cut away from envelopes and are sold by the pound.
The commission said in its ruling it had "investigated whether the merged company would be able to foreclose competing newspaper publishers by offering mixed bundles of subscriptions to Sky and News Corp's print, online or tablet-based newspapers".
Each case must be judged on its merits.The merits are harder to assess where there is "pure bundling", involving products available only as a package, than where there is "mixed bundling", with products available both as a package and individually.Microsoft's package of Explorer and Windows is a pure bundle.
When mixed bundling is considered the new entity will set three different prices.
Only (V) mergers that undertake mixed bundling at equilibrium may attain the highest consumer and total surplus.
Without this condition, a mechanism involving mixed bundling, i.e. combination tickets at a discount, is superior.
Both mergers are qualitatively different, not only by the component combinations, but also because the vertical merger allows more pricing strategies (pure bundling and mixed bundling).
Most of the studies on bundling have focused on pure bundles; the literature has paid little attention to mixed bundles, in which the bundle item could be bought separately.
The following result identifies under which conditions mixed bundling will be chosen: The merged entity is better off implementing mixed bundling either if (nge 4), or for (2le n<4) when composite goods are rather differentiated, i.e. for (frac{gamma }{beta }<)(0.665) if (n=2), and (frac{gamma }{beta }<)(0.883) if (n=3).
However, it turns out that mixed bundling can be improved upon by the merged entity only focusing on the selling of the bundle and stop selling (A_{1}) and (B_{1}) components separately (i.e. pure bundling).
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Justyna Jupowicz-Kozak
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