Final answer:
The assertion is false; the scenario described is vertical price fixing, not horizontal price fixing which involves competitors at the same level setting prices. Manufacturers can suggest minimum prices but cannot demand them, and antitrust authorities closely monitor practices that reduce competition.
Step-by-step explanation:
The statement is false. When a manufacturer conspires with wholesalers or retailers to ensure certain retail prices are maintained, it is known as vertical price fixing, not horizontal price fixing. Horizontal price fixing occurs when competitors within the same industry, at the same level of distribution, agree to set prices or limit production. In contrast, vertical price fixing involves different levels of the supply chain, such as when manufacturers agree with retailers on minimum resale prices. Although outright minimum resale price maintenance agreements are illegal, a manufacturer is allowed to suggest minimum prices and cease doing business with dealers who consistently sell below those suggested prices.
Antitrust authorities try to prevent firms from colluding to form a cartel because such actions can lead to reduced output and increased prices, hurting consumers and competition. Practices like tie-in sales, bundling, and predatory pricing are often scrutinized in antitrust cases because they can also reduce competition under certain circumstances.