Question

Coca-Cola, Inc. and PepsiCo, Inc. have only one distributor each in the Phoenix area. The Phoenix market is an intensely competitive soft drink market with prices being among the lowest in the nation. A local restaurateur has requested a dealership from PepsiCo and has been denied. He claims an antitrust violation. Which of the following statements is true? a. The denial of the distributorship to someone who can afford it is anticompetitive and is a per se violation. b. The denial is justifiable given the level of interbrand competition. c. The denial is an example of resale price maintenance. d. none of the above

Answer 1

Answer:

B. The denial is justifiable given the level of interbrand competition.

Explanation:

Anti trust law only applicable if you can proof that two or more producers in the same industry work together in order to assert their control over the market. They can do this through price fixing, controlling the amount of supply, etc.

This condition can't be found in the scenario above.

The denial that done by PepsiCo is justifiable because in a really competitive market, a company need to impose a strict requirement on which entities they should form a dealership relation with. If PepsiCo choose the wrong dealers, Its competitors could easily taken over the market and resulted in a huge amount of loss for the company.