Bubbly Bottling Company is engaged in the soft-drink bottling and distribution i

Question

Bubbly Bottling Company is engaged in the soft-drink bottling and distribution industry in the states of New York and New Jersey. The firm currently has about 40 percent of the market for these products and related services. Carbonate Distribution Corporation competes with Bubbly in the same states. Carbonate has about 35 percent of the market. If Bubbly were to acquire the stock and assets of Carbonate, would Bubbly be in violation of any of the antitrust laws? If so, which one? Discuss fully. Who would have any claims against the bottling companies? What are the benefits and detriments of the deal for the consumer?

Explanation / Answer

Yes Bubbly bottling company will be in violation of antitrust laws if bubbly bottling company acquires the stock and assets of Carbonate distribution corporation as per clause 7 of Clayton Act. Section 7 of clayton act prohibits any company or person from acquiring assets or stock of other company which on acquiring assets or stock results into the increase in market share and which result into reduction in competition. Federal trade commission or Us department of Justice would have claims against the bottling companies.

Due to this acquisition, small competitor might be washed away and entry of new competitor would be difficulty. This would lead to monopoly of single company which might drive prices and result into increase of prices.

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