Exam 42: Antitrust Law

One of the most significant violations of antitrust law involves joint efforts by businesspersons to obtain government action.

Under the Clayton Act, a business firm cannot merge with another unless the effect is to substantially lessen competition.

To fall under the Sherman Act, an activity must substantially affect

How a firm uses its monopoly power and how its actions affect competition may make its practices illegal.

All agreements that result in enhanced market power are unlawful.

Any activity that substantially affects interstate commerce falls outside the Sherman Act.

Predatory pricing is the pricing of a product below cost with the intent to drive competitors out of the market.

A refusal to deal by a single seller acting unilaterally cannot violate Section 2 of the Sherman Act.

Under the Clayton Act, a seller can condition the sale of a product on the buyer's promise not to deal in the goods of the seller's competitors.

Under the market-share test, the relevant product market includes only products that have identical attributes.

Antitrust laws are direct descendants of common law actions intended to limit agreements to eliminate competition.

Precision Parts Corporation and Aligned Gears, Inc., are competitors selling certain machine parts that are otherwise generally unattainable in their geographic market. This market includes the states of Minnesota, North Dakota, and South Dakota. Precision Parts and Aligned Gears agree that Precision Parts will no longer sell in Minnesota and that Aligned Gears will no longer sell in North and South Dakota. Have Precision Parts and Aligned Gears violated any antitrust law? If so, which one? Explain. If they had divided their market by type of customer rather than geographic area, would the result be the same? Why or why not?

Ranch Supplies Company believes that its chief competitor Stock & Equipment Inc. engages in anticompetitive behavior in an attempt to drive Ranch out of the market. Under the Clayton Act, Ranch can sue Stock & Equipment for a violation of

To drive its competitors out of a certain geographic segment of its market, Drones, Inc., sets the prices of its products below cost for the buyers in that area. This is

An antitrust action is brought against Carrier Freight Company, alleging that a certain act constitutes the offense of attempted monopolization. To qualify, the act must

To reduce marketing costs and raise prices, competitors can divide up marketing territories or customers without violating antitrust law.

Price discrimination is unlawful even if it can be justified by differences in production or transportation costs.

Road Tires Inc. conditions the sale of its products to Service Stores on the buyer's agreement to buy Road's tire-repair kits. Under the Clayton Act, this deal is

Gearbox Inc., a maker of vehicle parts, refuses to sell to Motor Repair Inc., a national vehicle service firm. Gearbox convinces Cam Company, a competitor, to do the same. This is

The legality of a tying arrangement depends in part on the agreement's likely effect on competition in the relevant markets.