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Since the dawning of antitrust regulation in America at the beginning

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Since the dawning of antitrust regulation in America at the beginning  [#permalink]

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Since the dawning of antitrust regulation in America at the beginning of the twentieth century, agreements establishing resale price maintenance have been considered expressly illegal. Unlike horizontal price fixing between competitors, however, where there are no exceptions to a blanket ban on such activity, certain types of vertically integrated price maintenance schemes have been held not to violate the law.

The current rule, the so-called Colgate doctrine named after one of the first major corporate litigants, provides that a manufacturer may state a pricing policy and refuse to deal with those who do not abide by it so long as no actual agreement is made. For example, a manufacturer is allowed to unilaterally establish a specific price at which it would like the retailers to resell its product. It may also state that it will terminate any retailer who fails to abide by its pricing policy. The manufacturer is even allowed to follow through by terminating any noncomplying retailers. The manufacturer is not, however, allowed to do anything beyond the flat statement of its pricing policy and a possible, but undiscussed, termination of the retailer. Any attempt by the manufacturer to obtain the retailer's agreement or its promise of acquiescence to the pricing policy goes beyond the approved unilateral action and will therefore be considered illegal.

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.


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.


Originally posted by RohitKalla on 17 Aug 2011, 00:10.
Last edited by SajjadAhmad on 09 Oct 2019, 22:00, edited 2 times in total.
Updated - Complete topic (890).
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Re: Since the dawning of antitrust regulation in America at the beginning  [#permalink]

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New post 18 Aug 2011, 04:40
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
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Re: Since the dawning of antitrust regulation in America at the beginning  [#permalink]

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New post 21 Aug 2011, 20:37
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
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Re: Since the dawning of antitrust regulation in America at the beginning  [#permalink]

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New post 28 Aug 2011, 06:55
1
Quote:
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
Quote:


Explanation- the law is not extended to unilateral action, which has caused disarray....
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Re: Since the dawning of antitrust regulation in America at the beginning  [#permalink]

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New post 22 Apr 2012, 02:54
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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Re: Since the dawning of antitrust regulation in America at the beginning  [#permalink]

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New post 24 Apr 2016, 01:07
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
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Re: Since the dawning of antitrust regulation in America at the beginning  [#permalink]

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New post 21 Jun 2018, 03:19
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
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Since the dawning of antitrust regulation in America at the beginning  [#permalink]

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New post 09 Oct 2019, 14:27
RohitKalla wrote:
Since the dawning of antitrust regulation in America at the beginning of the twentieth century, agreements establishing resale price maintenance have been considered expressly illegal. Unlike horizontal price fixing between competitors, however, where there are no exceptions to a blanket ban on such activity, certain types of vertically integrated price maintenance schemes have been held not to violate the law.

The current rule, the so-called Colgate doctrine named after one of the first major corporate litigants, provides that a manufacturer may state a pricing policy and refuse to deal with those who do not abide by it so long as no actual agreement is made. For example, a manufacturer is allowed to unilaterally establish a specific price at which it would like the retailers to resell its product. It may also state that it will terminate any retailer who fails to abide by its pricing policy. The manufacturer is even allowed to follow through by terminating any noncomplying retailers. The manufacturer is not, however, allowed to do anything beyond the flat statement of its pricing policy and a possible, but undiscussed, termination of the retailer. Any attempt by the manufacturer to obtain the retailer's agreement or its promise of acquiescence to the pricing policy goes beyond the approved unilateral action and will therefore be considered illegal.

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.
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.






Please Explain why the answer is what it is.


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 .
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New post 16 Nov 2019, 00:39
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.
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New post 03 Dec 2019, 21:26
I don't get it.. why is it E and not D
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Re: Since the dawning of antitrust regulation in America at the beginning   [#permalink] 03 Dec 2019, 21:26
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