Deck 18: Antitrust Law and Promoting Compeittion

Question 1

Acquiring monopoly power through anticompetitive means violates antitrust law.

Answer 1

True

Question 2

A price-fixing agreement does not violate the Sherman Act if there is a compelling economic reason for the agreement.

Answer 2

False

Question 3

To violate antitrust law, an activity must involve two or more persons.

Answer 3

False

Question 4

Minimum resale price maintenance agreements are subject to analysis under the rule of reason.

Question 5

In a concentrated industry, a single firm or a small number of firms control a large percentage of market sales.

Question 6

An agreement between firms operating at different levels in the manu?fac?turing and distribution process does not affect competition.

Question 7

A market in which there is more than one seller, even if only a limited number, cannot be a monopoly.

Question 8

Any agreement that enhances market power is an unreasonable restraint of trade.

Question 9

Under the rule of reason, a court will consider the purpose of an agree?ment between competitors.

Question 10

Agreements among members of trade or professional organizations are ex?empt from an?titrust laws.

Question 11

An act must have a substantial impact on interstate commerce to violate antitrust law.

Question 12

Maximum resale price maintenance agreements are subject to analysis under the rule of reason.

Question 13

A geographical market division between rival firms does not violate antitrust laws.

Question 14

A relevant product market consists of two elements: a product market and its relevance.

Question 15

A firm that can ignore its competitors in setting a price for its product has no market power.

Question 16

Using market power to drive competitors out of business is illegal.

Question 17

If an agreement is a per se violation of antitrust laws, there must be further inquiry into its reason?ableness.

Question 18

A group boycott against a supplier for political reasons may not be illegal.

Question 19

A firm can have monopoly power without violat?ing antitrust law.

Question 20

Monopoly power is an extreme amount of market power.

Question 21

Helio Company can process hydrogen into an inexpensive fuel for internal combustion engines. As an innovator in its market, Helio currently has the power to affect the price of its product. This is

A) market power.
B) predatory pricing.
C) price discrimination.
D) price-fixing.

Question 22

Predatory pricing is above-cost pricing.

Question 23

To violate antitrust law, an attempt to monopolize a market must be intended to exclude competition and garner monopoly power.

Question 24

North Mining Company and South Excavation Company-rival firms-agree to abide by the decisions of East Coast Financial Corporation as to their respective levels of production, markets, and prices, effectively reducing competition and increasing profits. This is most likely

A) a common, legal, time-honored type of business arrangement.
B) an illegal restraint on trade.
C) an innovative, legally efficient approach to doing business.
D) an outdated, but legal business trust.

Question 25

Health Resources Corporation makes and sells Intake, the most prescribed name-brand cholesterol-lowering medication. Jerichol Company has the potential to make a generic version of the same drug. Health Resources pays Jerichol not to sell its product. This is

A) a customer restriction.
B) a group boycott.
C) an exclusive-dealing contract.
D) a price-fixing agreement.

Question 26

Predatory bidding is analyzed under the same standards as predatory pricing.

Question 27

U.S. firms may be subject to other nations' antitrust laws.

Question 28

A private party who has been injured as a result of a violation of antitrust law may recover treble damages.

Question 29

Under an exclusive-dealing contract, a seller promises a buyer a certain territory in which the buyer will have no direct competition.

Question 30

Perfecto Appliance Company, Qualité Kitchens Corporation, and Royale Products, Inc., control 90 percent of the market for appliances in a cer?tain geo?graphic area. Perfecto, Qualité, and Royale agree to sell their appli?ances for the same prices, and to ex?clude Superia Appliances, Inc., which controls the other 10 percent of the market. This is

A) an anticompetitive practice in violation of the Clayton Act.
B) a per se violation of the Sherman Act.
C) a violation of the Sherman Act under the rule of reason.
D) not a violation of antitrust law.

Question 31

Conditioning the sale of one product on the purchase of another is a tying arrangement.

Question 32

Congress enacts a statute to outlaw a specific type of anticompetitive business agreement. Like other laws that regulate economic competition, this law is referred to as

A) a federal trade pact.
B) an antitrust law.
C) a per se violation.
D) a rule of reason.

Question 33

Charging different prices to different buyers for identical goods is price discrimination.

Question 34

A tying arrangement is illegal per se.

Question 35

A merger between firms that compete with each other in the same market is a vertical merger.

Question 36

Cooperative research by small-business firms is exempt from antitrust law.

Question 37

Market share and market concentration are the only factors for analyzing the anticompetitive effects of a merger.

Question 38

U.S. antitrust law may protect foreign consumers and competitors from violations by U.S. firms.

Question 39

All professional sports are exempt from antitrust regula?tion.

Question 40

A unilateral refusal to deal with a particular person or firm never vio?lates antitrust law.

Question 41

GR8 Boards, Inc., charges different prices to competing buyers for the same products. This practice is subject to evaluation under

A) the Clayton Act.
B) the Federal Trade Commission Act.
C) the Interstate Commerce Act.
D) the Sherman Act.

Question 42

Energy Power, Inc., joins with other businesses in its industry to exchange information, represent members' interests before Congress, and lobby for certain regulatory standards. These joint activities are

A) not subject to antitrust law.
B) per se violations of the Sherman Act.
C) subject to evaluation under the rule of reason.
D) violations of the Clayton Act.

Question 43

USA Microbial Corporation requires all distribu?tors of its products to sell the products at specified minimum prices. This resale price mainte?nance agreement is

A) a per se violation of the Sherman Act.
B) a violation of the Clayton Act.
C) subject to evaluation under the rule of reason.
D) not subject to antitrust law.

Question 44

Wind Turbines, Inc., has the power to control the market for its prod?uct. Antitrust law regulates

A) how Alpha acquired its power and what it does with it.
B) neither how Alpha acquired its power nor what it does with it.
C) only how Alpha acquired its power.
D) only what Alpha does with its power.

Question 45

Imperio Caffeine Corporation makes and sells coffee under a variety of brand names. Imperio wants to merge with Java Company, its main competitor. In weighing a challenge to the deal, a court looks at the relevant product market. This most likely includes coffee and

A) no other products.
B) products that are not identical but are related, such as spin-offs.
C) products that are reasonably interchangeable.
D) products with identical attributes only.

Question 46

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

A) a refusal to deal.
B) business acumen.
C) predatory bidding.
D) price discrimination.

Question 47

Smooth Sailing, Inc., conditions future shipments of its prod?ucts to dis?tributors on their agreement to charge the prices set by Smooth. This is

A) a barrier to entry.
B) a horizontal restraint.
C) a merger.
D) a vertical restraint.

Question 48

Jerseys, Inc., a manufacturer of football uniforms, begins selling its products at prices substantially below its production costs. Jerseys contin?ues this practice for a number of months and incurs significant op?erating losses. It is probably attempting to implement

A) a price-fixing scheme.
B) an exclusive dealing arrangement.
C) a predatory pricing program.
D) a conspiracy to restrain trade.

Question 49

Master Metal Worx Corporation has exclusive control over the mar?ket for its product. Under the Sherman Act, this is

A) a per se violation.
B) a violation if it acquired this power through "business acumen."
C) a violation if it acquired this power through "anticompetitive means."
D) not a violation.

Question 50

Indigo Packaging, Inc., a manufacturer of packaging papers and boxes, refuses to sell to Jiffy Quik, Inc., a delivery service firm. Indigo convinces Knotty Box Company, a competitor, to do the same. This is

A) a group boycott.
B) an exclusive-dealing contract.
C) a price-fixing agreement.
D) a tying arrangement.

Question 51

Lightning ATVs, Inc., makes Lightning-brand all-terrain vehicles and accessories, which are distributed to authorized dealers, including Macho Motors, Inc. Macho operates dealerships in several locations. Lightning imposes territorial restrictions on Macho to insulate other dealers from direct competition. This is

A) a horizontal market division.
B) an exclusive-dealing contract.
C) an interlocking directorate.
D) a vertical restraint.

Question 52

Seaside Cannery, Inc., is one of many producers of canned seafood. Seaside refuses to sell its products to Troll Harbor Restaurant Corporation. This refusal is most likely

A) an anticompetitive practice in violation of the Clayton Act.
B) a per se violation of the Sherman Act.
C) a violation of the Sherman Act under the rule of reason.
D) not a violation of antitrust law.

Question 53

Listen Up! Corporation books and promotes concerts and other entertainment events, for which Listen Up! also sells tickets. In weighing a challenge to Listen Up!'s "monopolistic" ticket prices, a court looks at the relevant geographic market. This encompasses

A) only areas in which Listen Up! does not have monopoly power.
B) only areas in which Listen Up! has monopoly power.
C) the area in which Listen Up! and its competitors sell, and their customers buy, the tickets.
D) the entire United States in all cases.

Question 54

An antitrust action is brought against Tri-State Transport Company, al?leging the offense of attempted monopolization. To be guilty of this of?fense, Tri-State's attempt must have

A) a dangerous probability of success.
B) a deadly guaranty of success.
C) a distant possibility of success.
D) a distinct improbability of success.

Question 55

Zippy Moto-Bikes, Inc., wants to prevent discount dealers that carry its products with?out providing warranty services from cutting into the business of full-service dealers. Zippy's decision to restrict discount dealers to one type of customer and full-service deal?ers to another is

A) not subject to antitrust law.
B) per se violations of the Sherman Act.
C) subject to evaluation under the rule of reason.
D) violations of the Clayton Act.

Question 56

Seven Ivy League colleges and universities conspire to fix tuition prices and fi?nancial aid packages. Under the Sherman Act, this is

A) a per se violation.
B) a violation only if their competitors also lower prices.
C) a violation only if they thereby acquire monopoly power.
D) not a violation.

Question 57

Spa Selectiva Company makes and sells beauty salon supplies. By selling its product at prices substantially below the normal cost of production, Spa Selectiva hopes to drive its competitors from the market. This is

A) market power.
B) predatory pricing.
C) price discrimination.
D) price-fixing.

Question 58

Velvet Chassis, Inc., a manufacturer of vehicle parts, refuses to sell to We-Fix-It, Inc., a national vehicle service firm. Velvet Chassis convinces Xpert Motor Parts Company, a competitor, to do the same. This is

A) a group boycott.
B) an exclusive-dealing contract.
C) a price-fixing agreement.
D) a tying arrangement.

Question 59

Thermo Gas, Inc., and Unity Oil Corporation refine and sell gasoline and other petroleum products. To limit the supply of gas on the market and thereby raise prices, Thermo Gas and Unity Oil agree to buy "excess" supplies from dealers and "dispose" of it. This is

A) a horizontal restraint.
B) a refusal to deal.
C) a resale price maintenance agreement.
D) a vertical restraint.

Question 60

Cardio, Inc., makes and sells Drawdown, the most prescribed name-brand heart medication. Emitate Corporation has the potential to make a generic version of the same drug. Cardio pays Emitate not to sell its product. This is most likely

A) a deal that neither restrains trade or harms competition.
B) a legal restraint of trade.
C) a per se violation of the Sherman Act.
D) subject to analysis under the rule of reason.

Question 61

Nano Software, Inc., conditions the sale of its OfficeBooks product on Payroll Personnel Company's agreeing to buy QuikReVu, Nano's photo-editing product. This deal is

A) legal, depending on its purpose and the effect on competition.
B) legal, depending on production and transportation costs.
C) legal under any circumstances.
D) not legal under any circumstances.

Question 62

The Car Parts Company (TCP) and UltraDrive Components, Inc., sell motor vehicle parts to Vroom! Stores, Inc., and Willys Trucking Corporation. Price discrimination oc?curs if

A) TCP charges Vroom! and Willys different prices for identical goods.
B) UltraDrive agrees to charge Willys stable prices even if market prices change.
C) Vroom! refuses to buy parts from TCP if its prices are higher than UltraDrive's.
D) the sellers' prices are influenced by the race or gender of the buy?ers' owners.

Question 63

Bubbly Bottling Company is engaged in the soft-drink bottling and distribution industry in the states of New York and New Jersey. The firm currently has about 40 percent of the market for these products and related services. Carbonate Distribution Corporation competes with Bubbly in the same states. Carbonate has about 35 percent of the market. If Bubbly were to acquire the stock and assets of Carbonate, would Bubbly be in violation of any of the antitrust laws If so, which one Discuss fully.

Question 64

Global Sales, Inc., engages in trade practices that may violate antitrust law. The Federal Trade Commission has the power to act against unfair trade practices under

A) the Clayton Act.
B) the Federal Trade Commission Act.
C) the Interstate Commerce Act.
D) the Sherman Act.

Question 65

ProSports, Inc., makes and sells professional sports equipment. The U.S. Department of Justice files a suit against ProSports, alleging that it has committed the offense of monopolization under the Sherman Act. ProSports responds that its share of the relevant market is less than 50 percent, its activities do not constitute an unreasonable restraint of trade, and it has no intention of monopolizing the professional sports equipment industry. What are the elements of the offense of monopolization Which, if any of ProSports's defenses would be successful against the charges filed by the U.S. Department of Justice

Question 66

XtraOrdinaire Inc. competes with Yowza! Company in the same market. Their merger would be

A) a horizontal merger.
B) an interlocking directorate.
C) a tying arrangement.
D) a vertical merger.

Question 67

By contract, Quintessent Metals Corporation forbids Rad Refining, Inc., a wholesale buyer of Quintessent's products, from purchasing the products of Quintessent's competitors. This exclusive-dealing contract is allowed

A) under any circumstances.
B) unless its effect is to cause a competitor a loss of any business.
C) unless its effect is to substantially lessen competition.
D) unless there is no effect on a competitor.

Question 68

Grande Zot, Inc., an electronics manufacturer, sells its DVD players to Hi-Lo Retail Stores for $50 but charges It's Less! Store-which is located just down the street from Hi-Lo-$75 for the same players. This may be

A) a violation of antitrust law.
B) exempt from antitrust enforcement.
C) not subject to antitrust law.
D) subject only to antitrust common law.

Question 69

Greeting Cards, Inc. (GCI), re?quires that the buyers of its line of greeting cards also agree to buy GCI t-shirts, bal?loons, and other products. This is

A) a group boycott.
B) an exclusive-dealing contract.
C) a price-fixing agreement.
D) a tying arrangement.

Question 70

To prevent its competitors from obtaining sufficient supplies to make their products, Molded Plastics, Inc., uses its market power to increase the prices of those supplies (inputs which Molded Plastics also uses). This is

A) a refusal to deal.
B) business acumen.
C) predatory bidding.
D) predatory pricing.

Question 71

Electroplate Dishware Corporation conditions shipments of its products to Flo-Thru Stores, Inc., on Flo-Thru's agreement not to buy products from Glassy Ware Company, Electroplate's competitor. This is

A) an exclusive-dealing contract.
B) a smart business deal.
C) a trade association.
D) a tying arrangement.

Question 72

Natural Spices, Inc., and Oriental Import Company, two small condiment com?panies, form a joint venture to fund research into producing spices more cost effec?tively. This is

A) a violation of antitrust statutes.
B) exempt from antitrust enforcement.
C) not subject to antitrust law.
D) subject only to antitrust common law.