Exam 49: Antitrust: the Sherman Act

In order to prove a violation of monopoly under the Sherman Act,the offending person or company must have done what?

Which of the following has been recognized by the courts as a possible justification for tying agreements?

Dee Frost,president of the American Refrigerator and Freezer Producers Association (ARFPA)and CEO of Frozenaire Corp.(one of the nation's largest manufacturers of refrigerators and freezers),delivered the keynote address at the ARFPA's annual convention in Siberia,Montana.In her speech,Frost addressed the assembled members on the "credit sales" problem currently confronting the industry.According to Frost,this problem was a result of refrigerator and freezer manufacturers' increasing tendency to sell appliances on credit instead of requiring payment in full upon delivery-a tendency that,in Frost's view,had led to negative price trends in the industry.Frost asserted that if refrigerator and freezer producers would refuse to permit credit sales and would insist upon payment in full upon delivery,prices would return to "a reasonable level that serves the interests of the industry and consumers." She concluded her remarks by assuring those in attendance that Frozenaire would do its part by "unilaterally saying 'sorry,pardner' to requests for purchases on credit." A few months after the ARFPA meeting,the U.S.Justice Department filed a Sherman Act Section 1 lawsuit against Frozenaire and the other ARFPA members,citing evidence that all ARFPA members eliminated credit sales within one month after the meeting.Is the Justice Department's action proper? Explain your reasoning.

Chicago School theorists argue that antitrust policy's primary thrust should feature:

Hardware retailers Deuce Hardware Co.and Trueblue Hardware Corp.agreed to a schedule of maximum prices that they will pay to hardware wholesalers with whom they deal.What is the most likely stand that the Supreme Court will take under these circumstances?

BG Corp. ,a manufacturer of men's polyester leisure suits and other men's clothing items,held approximately a 70 percent share of the leisure suit market in the United States.(Although most males have publicly spurned this 1970s-era item,BG knows quite well that millions of men still swear by them-albeit quietly. )BG began refusing to sell wholesalers and retailers its leisure suits unless they also purchased BG's polyester capes.As a result,intermediate sellers that wished to buy BG leisure suits for resale effectively had to agree to purchase the capes as well.BG had begun selling the capes two years earlier,but the product was a commercial flop.Only one other company manufactured capes for wearing by men,and that company was about to cease doing so because,as it and BG had discovered,there was virtually no demand among men for capes.An appropriate plaintiff has now sued BG under Section 1 of the Sherman Act,on the theory that BG was a party to impermissible tying agreements.What treatment will the court give the agreements? Will BG be held liable? Why or why not?

Supreme Court decisions in recent years indicate that some group boycotts receive per se treatment,whereas other group boycotts receive rule of reason treatment.

In the famous Du Pont cellophane case,the Supreme Court ruled that even though Du Pont had a 75 percent market share in cellophane,it did not have monopoly power in cellophane,because:

When two or more business entities conspire to monopolize a relevant market,Section 2 of the Sherman Act may be violated.

Acme Corp.has captured 90 percent of the national market for commodity "X." Acme is most likely to be liable for monopolization under Section 2 of the Sherman Act,if "X" is:

Sherman Act violations may give rise to civil prosecutions only.

Tying agreements may be challenged under both:

The passage of the antitrust laws reflected a congressional assumption that competition was most likely to exist in an oligopolistic industrial structure.

Federal antitrust laws have been extensively applied to activities affecting the international commerce of the United States.

A common variation of a(n)_____ agreement is the requirements contract.

Chicago School advocates view _____ as the primary,if not sole,goal of antitrust enforcement.

One of the elements that must be demonstrated before a challenged tying agreement will be held to violate Section 1 of the Sherman Act is that:

Which of the following antitrust activities can be challenged only under the state law?

The potential anticompetitive effect of a tying agreement is that the seller's competitors in the sale of the tied product may be foreclosed from competing with the seller for sales to customers that have entered into tying agreements with the seller.

Overbearing,Inc. ,which manufactures ball bearings,has built up a network of wholesale dealers.Under agreements between Overbearing and various dealers,each dealer has an established geographical territory of operation.These agreements also call for the individual dealers not to compete in another Overbearing dealer's exclusive territory.An appropriate plaintiff has sued Overbearing on the theory that these agreements violate Section 1 of the Sherman Act.What treatment will the court give the agreements? Why? Under that treatment,is it possible for Overbearing to avoid liability even if the existence of the agreements is established by the plaintiff? If so,how?