Question

Fifty bakeries in New York formed an association. The association signed an agreement with stores throughout the city, under which the stores agreed to purchase bread only from a bakery assigned to them by the association. The association also decided to raise the retail price of bread from 75 to 85 cents. All the association's members printed the new price on their bread sleeves. Are the bakeries in violation of the antitrust laws?

Answer 1

Answer:

The correct answer is: Yes, the bakeries violate the antitrust laws.

Explanation:

The U.S. Clayton Antitrust Act of 1914 is the legislation that regulates antitrust business practices that do not allow fair competition within a market. Three are the main unfair techniques forbidden by the Clayton Act: anticompetitive mergers, tying arrangements, and exclusive agreements.

In anticompetitive mergers firms offering similar products unite to settle the prices of the goods creating a form of monopoly. Therefore the 50 bakeries of New York who gathered to raise the price of bread from $0.75 to $0.85 are breaking the Clayton Antitrust Act of 1914.