Final answer:
The assertion about auto dealers being merchants is false, as an auto dealer is considered a merchant for both new and pre-owned vehicles. Exclusive dealing agreements are judged based on their impact on competition, being legal when encouraging competition and potentially illegal if they limit it.
Step-by-step explanation:
The statement that an auto dealer is a merchant when selling or leasing a new car but not when selling or leasing a pre-owned vehicle is false. A merchant is someone who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction. Therefore, whether the vehicle is new or used, an auto dealer would be considered a merchant in both cases when selling or leasing.
An exclusive dealing agreement can be both legal and illegal based on its impact on competition. Such agreements are legal if they encourage competition amongst dealers, like when the Ford Motor Company sells exclusively to Ford dealers. However, these agreements can be illegal if they limit competition, as when a large retailer obtains exclusive distribution rights for a range of products, restricting other retailers from competing effectively in the market.