Question

Are any of the following fact-patterns Antitrust Violations under the Sherman Act, Clayton Act, or Robinson-Patman Act?

Jay Corporation, the largest manufacturer of bicycles in the United States with 40 percent of the market, has recently entered into an agreement with Retail Bike, the largest retailer or bicycles in the United States with 37 percent of the market, under which Jay will furnish its bicycles only to Retail, and Retail will sell only Jay's bicycles. The government is now questioning this agreement.

Retail Bikes created a new buying option that anyone who buys a bike must also buy a pair of padded Retail Bikes-brand bicycle shorts.

Retail Bikes opened a new mountain bike shop next to Mom & Pop Cycles, a small local bike shop that sells only mountain bikes. During their grand opening sale,Retail bikes slashed prices of their road bikes, but not their mountain bikes by 50%.

Also discuss who the Sherman Act, Clayton Act, and Robinson Patman Act are supposed to protect (consumers or small businesses), and why.

Please answer all parts of the question.

Answer 1

Corporation J is the largest manufacturer of a product in the
country. They also occupy 40% of the market. J enters into an
agreement with Retailer R to have exclusive dealings with each
other. Retailer R occupies 37% of the market.

*Exclusive dealing arrangements can violate Section 3 of the
Sherman if it can be proved that the arrangement restricts
competition/. This situation does not create a monopoly because of
the market share that it holds. The government will keep a watchful
eye on the relationship to see if it does in fact restrict
competition. If the arrangement can be proved to promote
competition, it will be overlooked.