In 2010, the U.S. Federal Trade Commission was involved in a case against Coca-C

Question

In 2010, the U.S. Federal Trade Commission was involved in a case against Coca-Cola acquiring one of its largest bottler/distributors, which also distributed Dr. Pepper, because the former was considered to control too large a share of the cola market. The FTC’scasehingedondefiningthemarketforCoca-Cola. DefinethemarketforCoca- Cola, that is, what other goods would you include in the market for Coca-Cola as competitors? Considering the market for Coca-Cola, how is the market power of Coca- Cola affected by what is included as a part of the market? How would you want the market to be defined if you were a lawyer for Coca-Cola in this lawsuit (broadly or narrowly)? Explain.

Explanation / Answer

Answer:

Background

In 2010, the U.S. Federal Trade Commission was involved in a case against Coca-Cola acquiring one of its largest bottler/distributors, because the former was considered to control too large a share of the cola market. The FTC’s case hinged on defining the market for Coca-Cola.

Defining the market for Coca- Cola, the other goods we would like to include in the market for Coca-Cola as competitors are as below

Considering the market for Coca-Cola, the market power of Coca- Cola will be affected such that it will be lowered, by including the above products as a part of the market. The above products will provide larger competition in the market for the Coca Cola organization. The Coca Cola organization will face higher competition and the market value of the organization will get lowered and consumers will find alternate products for the Coca Cola products.

We want the market to be defined if we were a lawyer for Coca-Cola in this lawsuit as below

Broad View: As a lawyer of the Coca Cola organization, we want the market to be open for all the players along with Coca Cola, and Coca Cola to be considered as the premium product company in the market. This will help to have equal competition in the market and will provide higher opportunities for the Coca Cola to develop and improve its capability for future growth and survival of the business.

Narrow View: As a Lawyer of the Coca Cola organization, we want to restrict the free entry of the new companies in the market. The entry of new players to be restricted and should be allowed with suitable terms and conditions which are in favor of Coca-Cola. We want to keep the interest of the Coca Cola in the market do not want to lower down the market value of Coca Cola.

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