Marvin Airlines Is an Established Airline That Is Suddenly Experiencing
Marvin Airlines is an established airline that is suddenly experiencing competition from a new airline,Cheapflites,in some of its markets.Cheapflites is a "no-frills" airline with a marketing policy that all of its tickets are fully-refundable.Marvin Airlines has rescheduled many of its flights to leave fifteen minutes later than the Cheapflites flight for the same route.Before the departure of each Cheapflites flight,a Marvin employee goes to the Cheapflites waiting area with a megaphone and announces that Marvin will allow Cheapflites passengers to fly on Marvin for $10 less than the cost of their Cheapflites ticket,and get full service as a bonus.Because the Cheapflites tickets are fully-refundable,most Cheapflites passengers accept the offer.Under the antitrust and unfair competition laws,which of the following is most likely true?
A) Marvin is not in violation of any laws, unless it has monopoly power.
B) Marvin is not in violation of any laws, unless it has agreed with at least one other airline to engage in this activity.
C) This is an illegal "tying" arrangement, because Marvin makes its offer only to those people who also have a Cheapflites ticket.
D) Marvin is likely in violation of Section 5 of the Federal Trade Commission Act, even if it is not in violation of the specific provisions of the antitrust laws.
E) Marvin is not in violation of any laws, because seats on a "no-frills" airline would not be considered a substitute for seats on a "full-service" airline.