TigA and USC Beverages are each national sports drink distributors and are direct competitors. There are many competitors in the market, but TigA, the market leader, has about a 50% market share and USC Beverages, its closest competitor, has about a 25% market share. Shug Jordan, the TigA C.E.O., and Patrick Dye, the USC C.E.O., were classmates in the UofSC University Executive MBA Program, and are close friends who live in the same neighborhood and belong to the UofSC University Golf Club. During a Saturday morning round of golf, Mr. Jordan and Mr. Dye start discussing their respective businesses.

1 First, Mr. Jordan and Mr. Dye discuss TideAde, an upstart sports drink company that is aggressively marketing and starting to dilute the market share of both TigA and USC Beverages. Mr. Jordan and Mr. Dye believe that they can each produce sports drinks at a lower cost than TideAde, so Mr. Jordan suggests to Mr. Dye that perhaps TigA and USC should reduce their prices to their direct costs for the next three months to try to squeeze TideAde out of the market.

2 Second, Mr. Jordan and Mr. Dye discuss a possible merger between TigA and USC Beverages. Mr. Jordan suggest that, if TigA and USC Beverages combine, they can achieve economies of scale, reduce production costs, decrease prices, and increase their combined market share to 90%.

3 Last, Mr. Jordan and Mr. Dye know that all sports drink companies purchase a patented potassium supplement from a sole source key supplier. Since TigA and USC Beverages are very important customers of the key supplier, they decide that they will ask the key supplier not to do business with TideAde.

7.3.1 Explain how antitrust laws apply to these discussions and whether they expose the parties to any sanctions.

4 Assume that you work for Mr. Jordan at TigA and that Mr. Jordan advises you that he intends to discuss potential market strategies with Mr. Dye. How would you advise Mr. Jordan on how to mitigate antitrust law compliance risk?