Penny Stafford, owner of the Seattle-based Belvi Coffee and Tea Exchange Inc. filed the lawsuit, which contends that Starbucks exploited its monopoly power. Starbucks used predatory practices such as offering to pay leases that exceeded market value if the building owner would refuse to allow competitors into the same building; having its employees offer free coffee samples in front of her store to lure away customers; and offering to buy out competitors at below-market prices and threatening to open nearby stores if the offer is rejected.
a. Explain how Starbucks is alleged to have violated U.S. antitrust laws in Seattle.
b. Explain why it is unlikely that Starbucks might use predatory pricing to permanently drive out competition.
c. What information would you need that is not provided in the news clip to decide whether Starbucks had practiced predatory pricing?
d. Sketch the situation facing Belvi Coffee and Tea Exchange Inc. when the firm closed.