In 2002, Roxanna Leland, who lived in Curio Valley, an isolated town n rural Michigan, began selling fresh pies under the business name Momma Roxie's Heavenly Pies. Leland's business grew as a result of the superior quality of the pies and her willingness to carry fresh pies daily into every Curio Valley shop. Such a local desire for the pies grew that Momma Roxie's eventually garnered 80 percent of the pie sales in Curio Valley. In 2004, Leland sold the business and its name to Arnold Sachmeister under an agreement that Leland would not sell pies in Curio Valley for twenty years. Under Sachmeister, Momma Roxie's began requiring that every pie purchaser buy an "Arnie's Poem of the Day" for $1 along with each pie. In 2001, a new local pie dealer, Crusty Joe, began successfully competing with Momma Roxie's. Momma Roxie's soon began selling all pies at half the price of Crusty Joe. Using the information presented in the chapter, answer the following questions.
- What is the term for a firm that holds such market power that it can limit rivals from competing in the market?
- Did the agreement between Leland and Sachmeister constitute a restraint of trade? If so, would this be considered a reasonable or unreasonable restraint? Explain.
- What is the term applicable to the requirement that each buyer purchase a poem along with a pie? Is such a requirement legal? Discuss.
- To succeed in an action predatory pricing against Momma Roxie's, what must Crusty Joe demonstrate?
This question comes from the text, "Legal Environment of Business: Text & Cases 8th Edition
SyllabusISBN- 13: 978-0-538-45399-8SyllabusISBN- 13: 978-0-538-45399-8SyllabusISBN- 13: 978-0-538-45399-8