The Zambia Competition and Consumer Protection Commission is in receipt of a complaint lodged by Nia Jax Inc. (`informant'). The complaint is made against Varied Fixtures Ltd. ('respondent'). The informant claims that it and the respondent are the only authorized suppliers of a product called "Nippy" in Zambia. It further claims that both firms buy the "Nippy" at the same price from the US based manufacturer. However, it is alleged that the respondent charges a price within Zambia, which is below what it pays to acquire the product from the manufacturer. The informant advises the Commission that it will not be able to continue operating in the market for much longer if the respondent continues to sell the "Nippy" at that price.

Develop a theory of anti-competitive behaviour by:

(i) Naming the anti-competitive conduct which is being alleged in the complaint.

(ii) Explaining how the competitive process could be harmed by the conduct identified in (i) above; and

(iii) Providing an efficiency defense, if any, for the conduct identified in (i) above.

Answer rating: 100% (QA)

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