Question

A state owned a large natural gas field and took bids for its exploitation. The highest bid came from an interstate pipeline company that distributed natural gas to providers throughout the country. A local gas company submitted the next highest bid, which included the commitment that it would pass along to local customers any savings if it was awarded the contract. The state awarded the contract to the local company. The interstate company sued to overturn this decision.
Should the interstate company prevail?

Answer 1

Answer: b. No, because the state acted as a market participant

Explanation:

The state in this instance was a market participant because they were acting as buyers who were looking for companies that could supply the service of exploiting their gas fields.

As a result, they have total discretion to pick whichever supplier they choose, regardless of the benefits or lack thereof, much like a normal buyer would do. The interstate company would therefore lose the case.