Sherman Anti-Trust Act
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William Inglis & Sons is a family-owned whole-sale bakery with production facilities in Stockton, California, that manufactured and distributed bread and rolls in northern California. ITT Continental is one of the nation's largest wholesale bakeries and was a competitor of Inglis in the northern California market. Both Inglis and Continental sold their bread under a private label and an advertised label. Continental's advertised bread was Wonder bread, whereas Inlis's advertised bread was Sunbeam. The private label is sold at a lower price than the advertised brand, but the principal difference between the two is the profit. Inglis filed a complaint stating that Continental was selling its private label bread at below-cost prices in a predatory price scheme designed to drive Inglis out of the market. Inglis also says the lower price on private bread earned Continental more grocery-shelf space for its Wonder bread. Is such conduct illegal under the Sherman Act? Is predatory pricing a per se violation?
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Solution Summary
The purpose of the Sherman Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself, such as monopolies.
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The purpose of the Sherman Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself, such as monopolies.
Predatory pricing is a strategy that entails a temporary price below the cost of production in order to injure competition ...
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