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In a well-established market, ComBuilt produces the nation's best-selling bookkeeping software. The program is far superior to all other similar programs. ComBuilt requires all its distributors and retailers to sell the program at a specified price. This is:

a. known as a price maintenance agreement and is a per se violation of Section 1 of the Sherman Act.
b. exempt from antitrust laws because it does not constitute an interference with competition.
c. allowed by antitrust laws because it is a superior product.
d. known as a price maintenance agreement and may violate Section 1 of the Sherman Act under the rule of reason test.

User Bernita
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Final answer:

The correct answer is d. known as a price maintenance agreement and may violate Section 1 of the Sherman Act under the rule of reason test. U.S. antitrust laws, specifically the Sherman Act, prohibit restrictive practices, like minimum resale price maintenance that reduces competition, unless justified by a valid business rationale.

Step-by-step explanation:

The correct answer to the question is d:

For a well-established market like the one for bookkeeping software produced by ComBuilt, requiring distributors and retailers to sell at a specified price can have antitrust implications. Under U.S. antitrust laws, particularly Section 1 of the Sherman Act, a price maintenance agreement—especially a minimum resale price maintenance—might restrict competition among dealers, which can be illegal. Such an agreement is typically not exempt from antitrust laws solely on the basis that the product is superior.

Relevant cases might involve rule of reason analysis under which the courts determine whether the specific conduct has a substantial anticompetitive effect and whether the practice is justified by a valid business rationale. Since having a monopoly or producing a superior product isn't inherently illegal, the enforcement in antitrust cases with regards to restrictive practices, like price maintenance, involves careful scrutiny of the potential effects on market competition.

User Ikuko
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