Question

Allitron, Inc., and Donovan, Ltd., are interstate competitors selling similar appliances, principally in the state of Illinois, Indiana, Kentucky, and Ohio. They agree that Allitron will no longer sell in Indiana and Ohio and that Donovan will no longer sell in Illinois and Kentucky. Identify the law or laws they are violating and why. Also, explain what, if any, punishment could result from this violation of the antitrust laws

Answer 1

Since Allitron and Donovan engage in interstate commerce, they are regulated by the Sherman Antitrust Act. They incurred in collusion, which is illegal since they are restraining interstate commerce. Since they are competitors, they are prohibited from simply dividing sales territories, they should instead be competing for who serves them better.

Several punishments can result from this type of behavior:

• the companies can be fined with up to $1 million each
• their upper management can be sent to jail for up to 3 years
• the Department of Justice should take actions that limit this