McDonald's Corporation grants to Bob a franchise in which he will be the only one who has the right to sell McDonald's products in his small hometown. Under the Sherman Act:
A) this is per se illegal.
B) there is no violation.
C) this will be tested under the rule of reason.
D) there is a tying arrangement.

Question

Quizplus · Accepted Answer

This will be tested under the rule of reason because the Sherman Act applies a rule of reason analysis to most business arrangements to determine their effect on competition. Exclusive territories, like the one granted to Bob, are not automatically illegal (per se) but are evaluated based on their impact on competition within the relevant market.

McDonald's Corporation Grants to Bob a Franchise in Which He