PharmCo, Inc.--a large manufacturer of pharmaceuticals--sells its consumer products exclusively through drug wholesalers--who sell to retail druggists. Wholesalers are allowed a "chain discount" of 35 percent and 10 percent off of the manufacturer's suggested retail list prices.

The wholesalers are then expected to pass the 35 percent discount on to retailers. Recently a large retail drug chain approached PharmCo about buying direct.

PharmCo agreed to sell direct to the chain--and offered a discount of 35 percent. However, the chain wanted the additional 10 percent usually given to wholesalers.

PharmCo felt this would be unfair to those retail druggists who must buy through wholesalers--and refused the chain's request on the grounds that such a discount would be illegal.

Do you agree with PharmCo? Why or why not? Be sure to identify what type(s) of discounts or allowances and which law(s) are involved.