Deck 13: Business Competition: Antitrust Law

Question 1

Exclusionary conduct is conduct that assists related companies to gain market share.

Answer 1

False

Question 2

Cross-elasticity of demand is irrelevant in determining the product market.

Answer 2

False

Question 3

Division of markets is a per se violation.

Answer 3

True

Question 4

Generally, joint ventures among competitors in international business are per se violations of the Sherman Act.

Question 5

Joint ventures among competitors are per se violations.

Question 6

Group boycotts are per se violations.

Question 7

Covenants not to compete are illegal per se.

Question 8

Equitable remedies are not available under the Sherman Act.

Question 9

The Robinson-Patman Act deals with price discrimination.

Question 10

Most monopolization cases are aimed at firms with market shares greater than fifty percent.

Question 11

Monopoly power is the power to control prices or exclude competition.

Question 12

The Interstate Commerce jurisdictional standard for the Sherman Act requires proof of transactions across state lines.

Question 13

An agreement among competitors for elimination of bidding is a violation of federal antitrust laws.

Question 14

Predatory pricing is pricing below actual cost.

Question 15

Setting maximum prices is a per se violation of the Sherman Act.

Question 16

Only Clayton Act violations carry treble damages.

Question 17

The Sherman Act imposes fines and imprisonment for violations.

Question 18

The Clayton Act provides for treble damage recovery for all antitrust violations.

Question 19

The Clayton Act does not carry criminal penalties.

Question 20

The Sherman Act does not apply unless sales between two or more states are involved.

Question 21

Exclusive distributorships are per se antitrust violations.

Question 22

An agreement among competitors to control the supply of their products to the market violates the Sherman Act.

Question 23

There is no price discrimination when lower prices are charged for generic label cans of the same product.

Question 24

Requiring a franchisee to use trademark napkins is a per se antitrust violation.

Question 25

Sole outlets are not antitrust violations when there is interbrand competition.

Question 26

Corporations can be fined up to $100 million for violations of the Sherman Act.

Question 27

The Sherman Act prohibits all monopolies.

Question 28

Tying arrangements are per se antitrust violations.

Question 29

A covenant in the sale of a dry cleaning business that prohibits the seller from operating a dry cleaning business anywhere in that state is too restrictive to be enforced.

Question 30

A defense to tying is quality control.

Question 31

A vertical merger that prevents market entry is illegal.

Question 32

The failing company doctrine is an exception to horizontal merger restrictions.

Question 33

A covenant not to compete in a contract for the sale of a business protects the goodwill of the existing business for the buyer.

Question 34

Corporate officers are not liable for violations of the Sherman Act.

Question 35

The legality of vertical mergers is determined by the relevant geographic and product markets.

Question 36

Meeting the competition is a defense to price discrimination.

Question 37

Monopolization is a vertical restraint of trade.

Question 38

Resale price maintenance prohibitions apply only to minimum prices.

Question 39

The tying product is the desired product.

Question 40

Generic brands can carry a lesser price than brand-name products even though identical in composition without experiencing price discrimination difficulties.

Question 41

The Antitrust Modernization Commission is an international committee.

Question 42

Without significant interbrand competition, antitrust laws require more intrabrand competition.

Question 43

There is hardly any cross-elasticity in the gasoline market.

Question 44

Superior skill, foresight, and industry is a:

A)justification for a monopoly.
B)defense to a vertical restraint.
C)defense to predatory pricing.
D)All of the above

Question 45

Gig Corp. is accused of price-gouging. Gig argues that the company is only involved in intrastate business, so it is not bound by any federal laws or regulations. If Gig is correct:

A)its actions are not illegal.
B)the state where Gig is located will have laws against price-gouging.
C)it will be a change in U.S. legal history.
D)None of the above

Question 46

A boycott against subcontractors who are cheaper because of safety concerns is still an illegal group boycott.

Question 47

The Celler-Kefauver statute, part of the Clayton Act, regulates asset acquisitions.

Question 48

The ability of a competitor to control the prices of a supplier in a market is a monopsony.

Question 49

Manufacturers who refuse to deal with discount houses have committed a per se violation of the antitrust laws.

Question 50

Which of the following is not required for an enforceable covenant not to compete?

A)Sale of a business
B)Reasonable geographic scope
C)Reasonable time limits
D)All of the above are required.

Question 51

Gringo's Restaurant is a small restaurant located in a Mesa, Arizona, neighborhood shopping center that has a grocery store (chain)as its anchor tenant. Carl Williams owns Gringo's and has just negotiated its sale to Wilma Freestone. The covenant not to compete provides that Williams will not open a competing restaurant anywhere within a two-mile radius of Gringo's for a period of two years. The noncompete covenant is:

A)too restrictive and is a violation of the Sherman Act.
B)not subject to review so long as it is part of the sales contract.
C)probably reasonable and enforceable.
D)void.

Question 52

Which of the following is not regulated by the Clayton Act?

A)Interlocking directorates
B)Mergers
C)Tying sales
D)Monopolization
E)All of the above are regulated by the Clayton Act.

Question 53

All horizontal mergers are illegal because there is a presumption that such mergers significantly increase market concentration.

Question 54

Which of the following acts prohibits unfair methods of competition?

A)Sherman Act
B)Federal Trade Commission Act
C)Robinson-Patman Act
D)Clayton Act

Question 55

The Antitrust Modernization Commission has proposed material changes in the antitrust laws to accommodate e-commerce market changes.

Question 56

Treble damages are recoverable for actions brought under:

A)the Sherman Act.
B)the FTC Act.
C)the Antitrust Improvements Act.
D)All of the above

Question 57

Due to increased international competition, more joint ventures have occurred in recent history than would have been predicted based on U.S. antitrust laws.

Question 58

A monopsony is illegal per se .

Question 59

Quantity discounts violate the Robinson-Patman Act.

Question 60

Intrabrand competition exists when a manufacturer provides the same goods to more than one distributor or retailer in a particular market area.

Question 61

Jay Farnswood is the president of a local group of real estate agents. At their monthly luncheon meeting, Farnswood stood and told his colleagues that he simply could not survive by charging the 5 percent commission rate and noted, "I don't know what the rest of you are going to do, but I am going to charge 6 percent commission on all my listings starting today." Farnswood's statements:

A)constitute price fixing.
B)only reflect his intentions; there is no agreement to fix prices.
C)constitute an attempt to monopolize.
D)None of the above

Question 62

Vertical mergers are:

A)illegal per se .
B)mergers between manufacturers and wholesalers.
C)regulated by the Sherman Act.
D)All of the above

Question 63

Fair trade contracts:

A)are void.
B)have been consistently enforced since 1975 to the present day.
C)have been changed by the Leegin case.
D)have been changed by the Khan case.

Question 64

Which statement is correct concerning penalties under the Sherman Act?

A)Corporations can be fined up to $10 million.
B)Corporations can be fined up to $100 million.
C)Individuals can be fined up to $10 million.
D)Individuals intentionally violating the Act can be fined up to $100 million.

Question 65

Carl Wilton has just sold his Mexican restaurant to Jerry Felt. The restaurant is located in Costa Brava, a city of about 300,000 people. In their sales agreement, a clause provides that Carl will not open another restaurant in Costa Brava for a period of five years. The clause is:

A)a covenant not to compete.
B)void as against public policy.
C)prohibited under the Sherman Act.
D)None of the above

Question 66

A group of local architects has met and decided that their bidding on public works projects has created a danger for the public because the bids come in so dangerously low that building safety is sacrificed. The action of the architects:

A)does not violate the Sherman Act because of the reason for their boycott.
B)does not violate the Sherman Act because they offer services only and do not sell goods.
C)violates the Sherman Act in spite of their motivation.
D)None of the above

Question 67

Resale price maintenance occurs when:

A)the manufacturer suggests retail price.
B)minimum prices are enforced.
C)consignment arrangements control prices.
D)All of the above

Question 68

Snow-Man manufactures a cotton candy machine. It will not sell its machine unless the buyer purchases at least five-dozen paper cones for holding the cotton candy. The cotton candy machine is:

A)the tying product.
B)the tied product.
C)neither of the above - it is not a tying arrangement.
D)None of the above

Question 69

This exists when a buyer has the ability to control market prices.

A)Monopoly
B)Oligopoly
C)Monopsony
D)Maintenance control

Question 70

Which of the following is not a per se violation of the antitrust laws?

A)Price fixing
B)Group boycotts
C)Predatory pricing
D)Division of markets
E)All of the above are per se violations.

Question 71

Several law firms in the Detroit area have met and agreed not to charge more than $200 for a simple will so that they can more effectively compete with the increasing number of legal clinics. The agreement for a price maximum is:

A)not an antitrust violation because the public benefits from maximum prices.
B)not an antitrust violation because it is a service and not a sale of goods.
C)price fixing and an antitrust violation.
D)None of the above

Question 72

Cross-elasticity of demand is:

A)the willingness to substitute other products.
B)a factor in determining resale price maintenance.
C)a factor in determining the geographic market.
D)justification for a monopoly.

Question 73

Pool Line is the manufacturer of a pool cleaning system that has been called by the pool construction industry, "the miracle we have waited a lifetime for." The cleaning system is very effective and recommended by all consumer magazines. The result is that 93 percent of all new pools have the system, and 94 percent of all pool owners buying replacement systems choose Pool Line. The relevant product market is:

A)pool cleaning systems.
B)pool supplies and equipment.
C)cleaning equipment.
D)outdoor recreation supplies.

Question 74

Resale price maintenance is:

A)a rule of reason violation.
B)an attempt by a retailer to control prices.
C)regulated by the Clayton Act.
D)All of the above

Question 75

Pool Line is the manufacturer of a pool cleaning system that has been called by the pool construction industry, "the miracle we have waited a lifetime for." The cleaning system is very effective and recommended by all consumer magazines. The result is that 93 percent of all new pools have the system, and 94 percent of all pool owners buying replacement systems choose Pool Line. Pool Line's competitors have brought suit charging Pool Line with monopolization of the pool cleaning market. Pool Line:

A)probably has a monopoly per se because of the 90 percent+ market share figures.
B)probably has a valid defense of superior skill, foresight, and industry.
C)will owe treble damages to the competitors.
D)has probably obtained a monopoly illegally.

Question 76

Horizontal mergers:

A)include mergers between manufacturers and jobbers.
B)can be approved if a failing company is acquired.
C)are always antitrust violations.
D)have a detrimental effect on competition.

Question 77

The manufacturers of several designer purses have met and agreed not to sell their purses to Jolie's Department Store because of Jolie's practice of discounting all items 20 percent below the retail costs at other stores. The manufacturers are concerned about maintaining their images of exclusivity and quality. The agreement among the manufacturers:

A)is valid because of their need to protect their product.
B)violates the Sherman Act because it is a boycott.
C)is valid because the rule of reason applies and they have a valid reason.
D)None of the above

Question 78

Predatory pricing is:

A)pricing below cost.
B)per se illegal.
C)price discrimination.
D)None of the above

Question 79

Which of the following would not be price fixing?

A)Agreements to limit production
B)Agreements to limit competitive bidding
C)Agreements to charge the same interest on credit contracts
D)All of the above are price fixing.

Question 80

Snow-Man manufactures a cotton candy machine. It will not sell its machine unless the buyer purchases at least five dozen paper cones for holding the cotton candy. Snow-Man's requirement is:

A)an example of an exclusive dealing contract.
B)a tying arrangement.
C)a requirements contract.
D)a convenience for the buyer.