Firm A and Firm B are rivals who produce fancy and expensive…
Firm A and Firm B are rivals who produce fancy and expensive big screen televisions. Firm A and Firm B compete vigorously on many dimensions: price, quality, and service. Firm A and Firm B enter into an agreement to jointly produce and distribute a co-branded television set. Firm A argues that its horizontal agreement with Firm B is lawful because the agreement created efficiencies by decreasing costs that both Firms were contractually required to pass through to consumers. Specifically, Firms A and B argue that the horizontal agreement reduces its distribution costs. The fact finder found that the exact same efficiencies could have been obtained without the horizontal agreement, or through a less restrictive agreement. Which case best stands for the proposition that Firm A’s efficiency justification is pretextual and thus is not credited in a Section 1 analysis?
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