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Essential Parts, Inc. and Dennison Widgets, Inc., are competitors selling certain machine parts that are otherwise...

Essential Parts, Inc. and Dennison Widgets, Inc., are competitors selling certain machine parts that are otherwise generally unattainable in their geographic market. This market includes the states of California, Idaho, Oregon, and Washington. Essential Parts and Dennison Widgets agree that Essential Parts will no longer sell in California and Washington and that Dennison Widgets will no longer sell in Idaho and Oregon. Have Essential Parts and Dennison Widgets violated any antitrust law? If so, which one? Explain. If they had divided their market by type of customer rather than geographic are, would the result be the same? Why or why not?

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Answer #1

Yes it is clear from above agreement that both firms have agreed to form cartel and predecided on market segmentation and created contractionary supply of already least available products and tried to restrain market. Even if they divide markets as per customer the act deems this kind of activity as illegal as it is restraint of trade and looks to form collusion  

Hence as per US ANTITRUST laws and Sherman Act 1890 the above practice is illegal and felony.

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