Question
A dominant steel manufacturer imposed a requirement on its distributors to maintain minimum markup percentages and not stock competitors' products. Distributors who violated were threatened with supply suspension. Under Section 4, which statements are correct? Statement 1: Imposing markup requirements on distributors is abuse of dominance. Statement 2: The exclusive stocking requirement is justified for brand protection. Statement 3: Threatening supply suspension for non-compliance with anticompetitive conditions is abuse. Statement 4: The manufacturer must prove legitimate business reasons for these requirements. Which statements are correct?
Solution
Imposition of anticompetitive conditions is abuse—Statement 1 is correct. Exclusive stocking requires legitimate justification—Statement 2 is incorrect. Threatening enforcement of anticompetitive conditions is abuse—Statement 3 is correct. Dominant firms bear burden of justifying conduct—Statement 4 is correct. Statements 1, 3, and 4 are correct.
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