Question

Fastener Products, Inc., a maker of nuts and bolts, sells its products to retail establishments. It charges one price to small family-owned hardware stores and a lower price to national chains. Under the Clayton Act, these price differences are

Answer 1

Answer:

Under Clayton Act, these price differences will not be considered an unlawful or illegal,provided that they are related to the production or transportation of the concerned goods or services.

Explanation:

• Clayton Act is an antitrust legislation passed in United States in 1914 in order to prevent unethical or immoral business or market practices by the business firms or organizations and promote economic welfare in respective commercial markets.
• It is essentially an antitrust regulation which prohibits various antitrust activities in the market such as illegal or unauthorized mergers or acquisitions, price discriminatory practices by firms or companies and other illegal corporate conducts or practices.
• However, with regards to product or service pricing,any price charged differently to various retail entities by firms or companies to sell its products or services which are directly related or proportionate to the relevant production and transportation or supply chain expenses will not be considered as any unethical price discrimination.

Answer 2

Under Clayton Act, these price differences will not be considered an unlawful or illegal, provided that they are related to the production or transportation of the concerned goods or services.

Clayton Act was enacted in the United States in 1914, to prevent unethical or sharp business practises by firms or business owners. It was also established to promote economic welfare in respective commercial markets.

The purpose of the act is to prohibit various antitrust activities in the market which includes illegal or unauthorized mergers or acquisitions, price discriminatory practices by firms or companies and other illegal corporate conducts or practices.

Therefore, a maker of nuts and bolts who sells its products to retail establishments ; charges one price to small family-owned hardware stores and a lower price to national chains will not be considered an unlawful or illegal, provided that they are related to the production or transportation of the concerned goods or services the Clayton Act.

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