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The two largest fabric suppliers in Orange County, the Bluth Company and Sidwell Inc. decide that...

The two largest fabric suppliers in Orange County, the Bluth Company and Sidwell Inc. decide that they will no longer sell their fabrics to the Austero Design Group. The two competitors make this decision in the hopes that they can drive Austero out of business, helping them gain market share in the area of direct fabric sales to consumers. Is this action by Bluth and Sidwell legal, why or why not?

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Answer: This action by Bluth and Sidwell is illegal. If they do so they will be forming an illegal business cartel that will aim at finishing the free and fair competition at the marketplace. Reaching an agreement to not sell fabric to Austero design group in order to drive it out of business is illegal as per the federal trade laws in U.S. This is an unfair practice as per the law. The agreement between the competitors is also called as horizontal conduct and is the violation of section 5 of the federal trade commission act.

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