Precision Parts Corporation and Aligned Gears, Inc

question 21

Essay

Precision Parts Corporation and Aligned Gears, Inc. are competitors selling certain machine parts that are otherwise generally unattainable in their geographic market. This market includes the states of Minnesota, North Dakota, and South Dakota. Precision Parts and Aligned Gears agree that Precision Parts will no longer sell in Minnesota and that Aligned Gears will no longer sell in North and South Dakota. Have Precision Parts and Aligned Gears violated any antitrust law? If so, which one? Explain. If they had divided their market by type of customer rather than geographic area, would the result be the same? Why or why not?

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Definitions:

Ledger Accounts

Reflects a record of all the financial transactions made by a company, summarized into different categories for reporting purposes.

Accounts Receivable

Amounts owed by customers to an enterprise for goods or services that have been dispatched but not yet reimbursed.

Expenses Account

An account where business expenses are recorded, showing the money spent on operations and services.

Understated

Describing financial figures that are reported to be less than the actual or accurate amounts.