Assume that Allied has required Cicada to not handle any of Allied's competitors' products. Which of the following most strongly suggests that this arrangement is legal?
A) The pricing demands of Cicada have forced many building suppliers out of business.
B) Companies similar to Allied have demonstrated strong financial performance in recent years.
C) Cicada often sells groups of homes to institutions that then resell them to individual consumers.
D) In the past, Cicada and Allied were part of the same company.
E) Monopolistic competition is encouraged by the government in some cases.

Question

Quizplus · Accepted Answer

B) Exclusive arrangements are most likely to be illegal when they lessen competition, create a monopoly, or are not entered voluntarily. Choice B suggests that Allied has active and successful competitors, which in turn suggests that there's no monopoly here, making it more likely that the arrangement is legal. Choice A suggests a lessening of competition, which could only make the arrangement sound illegal. Choice C doesn't matter. The number of sellers in the supply chain isn't an important factor when it comes to exclusive dealing. Choice D could only suggest some kind of secret connection between the companies, which wouldn't help in the defense of the requirement. Choice E doesn't matter, because monopolistic competition is not encouraged in this context.

Assume That Allied Has Required Cicada to Not Handle Any