Legal Environment of Business

Orange produces smartphones in the U.S. and sells them nationwide. Orange contracted with Big LA Box (BLAB)to make it the exclusive distributor of Orange smartphones in California. BLAB received a promise that Orange would not sell its smartphones to any other retailer within 20 miles of BLAB. In its stores, BLAB has a unique in-house pricing policy: staff are instructed to add a twenty-percent (20%) premium to business customers purchases of Orange smartphones versus the regular non-business prices. BLAB gives non-business customers a twenty-percent (20%) discount off of the list price, but does not give the same discount to business customers. Circle, a bitter rival of BLAB, asked Orange to allow it to sell its products in California. Orange refused, pointing to its contract with BLAB. Orange's distribution policy differs in New York from what it is in California. In New York, Orange allows every distributor who asks to sell Orange smartphones. However, Orange requires that New York retailers sign contracts stating that they agree not to sell Orange products below prices in a monthly "price list" sent by Orange. In contracts with its distributors nationwide, Orange insists that sales of its smartphones be tied to sales of a data plan. No consumer is allowed to purchase an Orange smartphone without also buying an Orange data plan. Based on the Leegin Creative Leather Products case, the agreement between Orange and its New York retailers would be: O a. a horizontal restraint agreement which is no longer per se illegal. O b. a vertical restraint agreement which is illegal under the rule of reason c. a vertical minimum price fixing agreement which is no longer per se illegal. d. a horizontal restraint agreement which is illegal under the rule of reason. a Check M Work