C seems to be the answer.

A not because nothing has been said about price maintainence policy
B is not because nothing has been discussed about the internal corporate matters
D is not as it has not clearly said whether the extension would lead to appropraite rule
E is not as elimination of rule is not discussed

To me D seems to be the answer as - C talks both about Horizontal and vertical price management. But the author focuses on vertical prize management and has been describing that with unilateral action not being covered the manaufcator can not expect any response from retailor for price management and this leaves the manafactur/sales person with stating a policy for which they can not expect a "OK" - response. Thus authro would agree to cover unilateral action

The law
does not extend to unilateral action. So long
as the manufacturer’s policies and behaviors
40 do not go beyond these accepted unilateral
actions, there is no illegal activity.
However, this result has left the field in
virtually total disarray. The focus on
unilateral action versus combined action
45 puts otherwise sane sales people in the
peculiar position of trying to state a policy to

Explanation- the law is not extended to unilateral action, which has caused disarray....

This emphasis on unilateral action stems
35 from the fact that the antitrust laws prohibit
only contracts, combinations and
conspiracies in restraint of trade. The law
does not extend to unilateral action. So long
as the manufacturer’s policies and behaviors
40 do not go beyond these accepted unilateral
actions, there is no illegal activity.
However, this result has left the field in
virtually total disarray. The focus on
unilateral action versus combined action .....

The author is trying to mean that law applies to contracts and conspiracies but not to unilateral action. Only unilateral action is permitted while conspiracies and contracts are deemed illegal. This situation demands revision, preferably removal of ban on contracts and conspiracies so that manufacturers can get "OK" ( written consent) from retailers. This will prevent unitended illegalitie sin the trade.

E is the winner.

Its not C because author does not talk about horizontal parts.
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The Answer should "D".
This emphasis on unilateral action stems from the fact that the antitrust laws prohibit only contracts, combinations and conspiracies in restraint of trade. The law does not extend to unilateral action

3rd paragraph is saying that rules are only applied on conspiracies, contracts, and combinations and not to unilateral action . It has never mentioned that these rules should be removed from conspiracies also. "E" is saying the same.

D) Extending the law to cover unilateral action would be a positive step in improving the current state of regulation

D clearly implies that author is not happy with the fact that there is no rule applied to unilateral facts. Hence, it will be considered as a positive move by Author

Hi abhimahna, GMATNinja, daagh
I chose C for the below mentioned reasons>

This emphasis on unilateral action stems from the fact that the antitrust laws prohibit only contracts, combinations and conspiracies in restraint of trade. The law does not extend to unilateral action. So long as the manufacturer's policies and behaviors do not go beyond these accepted unilateral actions, there is no illegal activity. However, this result has left the field in virtually total disarray. The focus on unilateral action versus combined action puts otherwise sane sales people in the peculiar position of trying to state a policy to an existing or potential retailer but being required to avoid receiving so much as an ok in response. Without substantial reform of these rules, the continuing uncertainty and counterintuitive results will inevitably lead to completely unintended illegal behavior on the part of confused corporate entities.

So, I thought answer should be D.

Can you please spare some time to explain why the answer is E?
And where my reasoning is wrong.

Thank you

VeritasKarishma GMATNinja mikemcgarry egmat
daagh
Can you please discuss this passage especially the last paragraph as to what it intends to convey ?
Also please throw some light on this question .

Both D and E have the same result, one covers the unilateral regulation while the other removes combinations and conspiracies altogether.I don't think it is clear in the passage that the author prefers which one.

I don't get it.. why is it E and not D

Hi Expert,

Could you please post OE for Q1-Q2?

Thank you.

my 2 cents on Q1

Q1-
We need to cover combinations (not just unilateral, we are already covering unilateral)
Option D - cover unilateral (we are already covering unilateral, hence incorrect)
Option E - remove ban from combination (or cover combination, hence correct)

still need help with Q2- (i got this wrong)
I think the passage is talking about recent antitrust "regulation", which is a modification of an old antitrust "law"? Experts please help.
It is as difficult to reject E as to accept A

My thoughts:

First paragraph: Agreements establishing price maintenance are considered illegal. However, there are exceptions -- some activities don't actually break the law.

Second paragraph: Colgate doctrine allows manufacturers to establish a specific price unilaterally, which means to a whole group. However, the manufacturer can't go further than establishing a pricing policy (and perhaps a termination of their agreement). This means the manufacturer can set a pricing policy but can't take further actions, such as frequently calling the retailer, etc.

Third paragraph: This situation puts manufacturers/salespeople in a difficult spot. If they can't take any further actions, manufacturers can't openly communicate with retailers, even regarding things that aren't regarding price, because the discussion may lead to unintended illegal behavior.

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1). With which of the following choices would the author be most likely to agree?

A)Price maintenance policies are a rational approach by manufacturers seeking to maximize their profitability and control over their products in the retail market.
B) The Colgate doctrine is an ill advised attempt to meddle in internal corporate matters that should be left to the competence of the corporate managers.
C) The law should be revised to allow vertical and horizontal price maintenance.
D) Extending the law to cover unilateral action would be a positive step in improving the current state of regulation.
E) Eliminating the ban on combinations and conspiracies would be a positive step in improving the current state of regulation.

The author is looking for reform of these laws. D wants to add regulation, which is not what the author is looking to achieve. E fits the bill -- the author wants to remove the ban and completely reform these rules.

2) Which of the following can be inferred about retail price maintenance?

A) Antitrust law has a long history in America.
B) If the restraints on combined actions are not modified, consumer prices will increase as beleaguered manufacturers pass on the costs of compliance to consumers.
C) Manufacturers need to form a more efficient lobby to affect policy and reverse irrational restrictions.
D) Notwithstanding differing legal treatments, there are no substantial differences between horizontal and vertical pricing arrangements.
E) Irrational regulation is a significant cause of unintended illegal behavior on the part of many corporations.

The first paragraph speaks to the long history of antitrust regulation. We can't infer answer E -- the wording is too strong. We don't know if irrational regulation is a significant cause of unintended illegal behavior on the part of many corporations. Best answer is A.
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Explanations for the questions

Good one basshead . I answered these two incorrectly and selected the same 2 wrong options with most responses. I was wondering where will I find the explanation and there your explanation was. You saved my day. Thank you Keep posting.

Posted from my mobile device

It is good. Good tough passage. Just curious to know the level of the first two questions. 750+ or like 800

I am afraid if the OA there for question 1 and 2 are given correct, haven't attempted the passage though. In my opinion the difficulty of the passage should be as follow:

Question #1: 750-800
Question #2: 750-800
Question #3: 700
Question #4: 650

Overall: 700-750
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