Q U E S T I O N S
1. Discuss the validity and effect of each of the following:
a. A, B, and C, manufacturers of stereos, orally agree that due to the disastrous, cutthroat competition in the market, they will establish a reasonable price to charge their purchasers.
b. D, E, F, and G, newspaper publishers, agree not to charge their customers more than $0.30 per newspaper.
c. H, a distiller of liquor, and I, H’s retail distributor,agree that I should charge a price of $5 per bottle.
2. Discuss the validity of the following:
a. A territorial allocation agreement between two manufacturers of the same type of products, whereby neither will sell its products in the area allocated to the other.
b. An agreement between manufacturer and distributor not to sell a dealer a particular product or parts necessary for repair of the product.
3. Universal Video sells 40 percent of the video recording equipment in the United States. One-half of Universal’s sales is to Giant Retailer, a company that possesses 50 percent of the retail market. Giant seeks (a) to obtain an exclusive dealing arrangement with Universal or (b) to acquire Universal. Advise Giant as to the validity of its alternatives.
4. Z sells cameras to A, B, C, and D for $110 per camera. Y, one of Z’s competitors, sells a comparable camera to A for $101.50. Z, in response to this competitive pressure from Y, lowers its price to A to $101.50. B, C, and D insist that Z lower its price to them to $101.50, but Z refuses. B, C, and D sue Z for unlawful price discrimination. Decision? Would your answer differ if Z reduced its price to A to $100? Explain.
5. Discount is a discount appliance chain store that continually sells goods at a price below manufacturers’ suggested retail prices. A, B, and C, the three largest manufacturers of appliances, agree that unless Discount ceases its discount pricing, they will no longer sell to Discount. Discount refuses, and A, B, and C refuse to sell to Discount. Discount contends that A, B, and C are in violation of antitrust law. Explain whether Discount is correct.
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