Question

Venus LLC is a large monopolistic electronic firm. The firm has been putting a lot of pressure on some of the complementor companies, asking them to bundle their products along with the products made by Venus LLC, which will make it mandatory for customers to buy Venus LLC products along with the complementary products, even if they are unrelated. In this scenario, Which of the following does Venus LLC's actions demonstrate
A) Agency strategy
B) Dumping strategy
C) Price limiting
D) Anticompetitive behavior
E) On-the-job consumption

Answer 1

Answer:

D) Anticompetitive behavior

Explanation:

Venus LLC is using or abusing of its market power to try to force its customers to buy its products in bundles. When a customer is forced to buy a product he/she doesn't want in order to purchase the product they are interested in is called horizontal tying. E.g. you want to buy a TV and you must  also buy a subscription to a cable operator.

In this case, even the companies that manufacture the complementary products are being pressured to carry on this unethical practice. Sometimes horizontal tying can be considered illegal, but not always. It depends on the specific details of each case.