Asked by Antonio DjToniko on Apr 30, 2024
Verified
Bony Corp.requires retailers and wholesalers that purchase Bony's $200 videocassette recorders (VCR) to purchase $20 of blank Bony videotapes with each VCR.Under these circumstances,which of the following statements is accurate?
A) Bony's tying requirement will be deemed legal by the courts because it provides a great value proposition for its end users.
B) The competitive harm in this case would be to Bony's competitors in the sale of VCRs.
C) The fact that Bony is the market leader in the VCR market is a relevant factor insofar as the legality of Bony's tying requirement is concerned.
D) Evidence that almost all of Bony's VCRs sold last year were part of the tying agreement would be helpful to Bony if it were sued under Section 1 of the Sherman Act.
Tying Agreement
A contractual agreement requiring a buyer to purchase an unwanted product or service to obtain a desired one, often seen as anti-competitive.
Videocassette Recorders
Devices used to record television programs and play them back through a television, using magnetic tape cassettes.
Market Leader
A company or brand that has the highest sales or market share in a particular market or industry.
- Ascertain the features and legal implications of tying agreements and vertical pricing practices.
- Understand the importance of market dominance and monopoly influence within the context of antitrust legislation.
Verified Answer
AC
Alicia CliftonMay 02, 2024
Final Answer :
C
Explanation :
One of the elements that must be demonstrated before a challenged tying agreement is held to violate Section 1 of the Sherman Act is that the seller has sufficient economic power in the market for the tying product (such as a large market share)to appreciably restrain competition in the tied product market.Since Bony is the leader in the VCR market (the tying product),it follows that it will be able to restrain competition in the tied market product (blank videotapes).As such,this factor will be relevant insofar as the legality of Bony's tying requirement is concerned.
Learning Objectives
- Ascertain the features and legal implications of tying agreements and vertical pricing practices.
- Understand the importance of market dominance and monopoly influence within the context of antitrust legislation.