Holley Carburetor, Inc. sells carburetors. Its cost accounting information is: Sales price $400; variable cost $150; and annual fixed costs are…

Holley Carburetor, Inc. sells carburetors. Its cost accounting information is: Sales price $400; variable cost $150; and annual fixed costs are $400,000. Ford, Dodge, and Chevy are competitors of each other in the auto industry. Ford buys 800 carburetors at the normal price of $400. Dodge then buys another 800 carburetors at the normal price of $400 in the same year. Also in the same year, but after Ford and Dodge, Chevy buys 800 carburetors but at a price of $300. Ford and Dodge discover Chevy’s reduced price and file suit against Holley under Section 2 of the Clayton Act for price discrimination. (Assume that all other elements for section 2 of the Clayton Act are met.) Holley’s defense is:

a. Holley does not have a defense under these circumstances and is liable as alleged.

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