Both Lemon Light,Inc.and Orange Mist Corporation are soft drink distributors in Capital City.The soft drink business is highly competitive,profit margins are razor thin,and both companies are on the brink of bankruptcy.To save themselves,they agree to not sell soft drinks at a price below $3 per six-pack.This is a fair price; it allows both of them to make a fair profit; and the customers still get a relatively inexpensive drink.This action by Lemon Light and Orange Mist is:

Question

Quizplus · Accepted Answer

The agreement between Lemon Light, Inc. and Orange Mist Corporation to not sell soft drinks at a price below $3 per six-pack constitutes horizontal price fixing, which is illegal under antitrust laws. This agreement eliminates competition between the two companies and harms consumers by limiting their choices and potentially driving up prices. The fact that both companies are on the brink of bankruptcy does not justify this illegal behavior.