Question

WEEK 6 DISCUSSION

In today's economy, there are a wide number of powerful companies who in all appearances control massive segments of different markets. Using the Internet, identify one (1) example of a large company that has (or might be) engaged in anti-competitive behavior. Next, suggest three (3) ways that this behavior could be viewed as either a horizontal or vertical restraint of trade. Provide support for your response.

In your response to another student, take a contrary view and discuss why you believe the behavior identified could be deemed as not being a restraint of trade. Justify your response.

Answer 1

One of the giant companies that have been in the news for anti-competitive behavior is Apple Inc. One of the main reason for the criticism that Apple faced is because of their vendor-lock-in behavior.

Usually when a customer purchases a computer, there are certain components that he/she may want to upgrade sometime down the line. However on Apple’s MacBook series computer it was observed that the components, which are usually replaceable, are soldered on to the device. Due to this, if a person had purchased a computer from Apple, he/she would not be able to upgrade or repair it in the future.

This behavior can be viewed as a vertical restraint of trade. This is because of the following

• It stops the suppliers (apple’s vendors) from increasing their market unless it goes through Apple
• It stops the third party PC services companies from performing repair on the computers
• It discourages the accessories manufacturers to be able to provide as quality product as Apple themselves