Problem on retail price minimum set and maintained


Question: You own COOL LOOKS, Inc., a manufacturer of sunglasses. Your sunglasses contain premium components, improve vision and reduce eye strain. None of this is immediately noticeable just by looking at the sunglasses so consumer education is important to your sales success. You require your distribution channel to enter into a contract with you that requires the retailer to: (1) have its sales people engage in a three hour online training session prior to selling COOL LOOKS, (2) the store to build a special display case for the sunglasses that highlights the features of the glasses and (3) to agree not to sell COOL LOOKS below a retail price minimum set and maintained by COOL LOOKS. Is this contract legal? Question options: 1) Yes, you are setting a retail price maximum and have a good reason for doing so. 2) Yes, you are setting a retail price minimum and have a good reason for doing so. 3) No, retail maintenance price fixing is per se illegal under the Sherman Antitrust Act. 4) No, retail maintenance price fixing is illegal under the rule of reason and there is no good reason to fix the price in this case.

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Other Management: Problem on retail price minimum set and maintained
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