Deck 19: Antitrust Law and Promoting Competition

Question 1

The basic purpose of antitrust law is to reduce economic competition.

Answer 1

False

Question 2

A group boycott is not a per se violation of antitrust law.

Answer 2

False

Question 3

The primary measure of monopoly power is a competitor's assessment of the acts of a firm under review.

Answer 3

False

Question 4

A trade association practice or agreement that restrains trade is analyzed under the rule of reason.

Question 5

Antitrust legislation was created because of the belief that competition leads to higher prices and less product information.

Question 6

A restraint of trade is an agreement between firms that has the effect of reducing competition in the marketplace.

Question 7

A price-fixing agreement is an agreement among competitors to fix prices.

Question 8

For products that are sold nationwide,the relevant geographic market encompasses the entire United States.

Question 9

An act must substantially affect interstate commerce to violate antitrust law.

Question 10

The Sherman Act,the Clayton Act and the Federal Trade Commission Act are all examples of legislation designed to curb anticompetitive business practices.

Question 11

A price-fixing agreement is a per se violation of antitrust law.

Question 12

Territorial and consumer restrictions are analyzed under the rule of reason.

Question 13

A firm may not be deemed a monopoly unless it is the sole seller in a market.

Question 14

An agreement that is deemed a per se violation will be examined by a court to determine whether the agreement's benefits outweigh its anticompetitive effects.

Question 15

Section 1 of the Sherman Act condemns monopolization.

Question 16

Size alone determines whether a firm is a mo-nopoly.

Question 17

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

Question 18

Monopoly involves the power to affect prices.

Question 19

A market division by class of customer between rival firms viola-tes antitrust law.

Question 20

Predatory pricing involves selling a product at prices substantially above the fair market value.

Question 21

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

Question 22

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

Question 23

Market concentration refers to the number of firms in the market.

Question 24

Thermo Gas,Inc.,and Uno 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 Uno Oil agree to buy "excess" supplies from dealers and "dispose" of it.This

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 25

The offense of monopolization requires the intent to monopolize.

Question 26

Labor unions can organize and bargain without violating antitrust law.

Question 27

Sunrich Company can process solar energy into an inexpensive fuel for internal combustion engines.As an innovator in its market,Sunrich 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 28

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

Question 29

To fall under the Sherman Act,an activity must

A)substantially affect interstate commerce.
B)involve monopolization.
C)promote competition.
D)involve international trade.

Question 30

The Clayton Act prohibits certain classes of price discrimination.

Question 31

North Mining Company and South Excavation Company 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 li

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 32

In determining the legality of a merger,a crucial consideration is market concentration.

Question 33

The Internet has no effect on the notion of the size and limits of a relevant geographic market.

Question 34

Insurance companies are exempt from antitrust laws whenever state regulation exists.

Question 35

The possession of monopoly power alone constitutes the offense of monopolization.

Question 36

No person may be a director for two competing corporations at the same time.

Question 37

When applying the rule of reason to determine whether an agreement violates Section 1 of the Sherman Act,a court will not consider​

A)the purpose of the agreement.
B)the parties' market ability to implement the agreement.
C)the effect of the agreement on international trade.
D)the potential effect of the agreement on competition.

Question 38

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

Question 39

A single seller acting unilaterally is free to deal,or not to deal,with anyone it chooses.

Question 40

A divestiture is an order to a company to cease,or divest itself of,its an-ticompetitive conduct.

Question 41

A suit is filed against Dormroom Furniture Unlimited,Inc.,alleging that the firm has committed the offense of monopolization.To determine whether Dormroom has committed this offense,the court will consider the extent of Dormroom's market power and​

A)how Dormroom acquired its power.
B)how Dormroom makes its products.
C)Dormroom's customers.
D)Dormroom's suppliers.

Question 42

Vineyard owners and wine producers join together to form Vino Veritas,a trade association.This​

A)is a per se violation of Section 1 of the Sherman Act.
B)may be legal if it is sufficiently beneficial to both the association and the public.
C)is an innovative,legally efficient approach to doing business.
D)creates illegal territorial or customer restrictions.

Question 43

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 44

Edgy Engine Components,Inc.,a maker of vehicle parts,refuses to sell to Fidgety Fix-It,Inc.,a national vehicle service firm.Edgy Engine convinces Greasy Motor Parts Company,a competitor,to do the same.This is​

A)a group boycott.
B)a market division.
C)a joint venture.
D)an exclusive-dealing contract.

Question 45

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)entire United States in all cases.

Question 46

Fresh Vegetables,Inc.,a wholesaler,refuses to sell its produce to Good Mart Stores,Inc.,a re-tailer.This is​

A)"an unfair or deceptive act or practice."
B)a per se violation.
C)not a violation.
D)subject to analysis under the rule of reason.

Question 47

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 sometimes substituted for coffee.
D)products with identical attributes only.

Question 48

A court deems an agreement between Silver Saddles Saddlery and Time Tested Tack,Inc.to be a per se violation of the Sherman Act.The court is​

A)prevented from determining whether the agreement's benefits outweigh its anticompetitive effects.
B)required to unanimously decide whether the agreement's benefits outweigh its anticompetitive effects.
C)required to apply the rule of reason.
D)required to issue a formal complaint against Silver Saddles and Time Tested Tack.

Question 49

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 50

Organic Cheeses,Inc.,Fine & Fresh Foods Company,and Healthy Whole Foods,Inc.organize together to exchange information and share advertising.This is an example of a​

A)trade association.
B)resale price maintenance agreement.
C)monopoly.
D)territorial restriction.

Question 51

Pads & Pods 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 antitrust law.
B)a legal restraint of trade.
C)subject to evaluation under the rule of reason.
D)not subject to antitrust law.

Question 52

Bodycare Pharma Corporation makes and sells ChemMed,the most prescribed name-brand blood pressure-lowering medication.Deja Vu Drugs,Inc.,has the potential to make a generic version of the same drug.Bodycare pays Deja Vu not to sell its product.This is

A)a market division.
B)a joint venture.
C)an exclusive-dealing contract.
D)a price-fixing agreement.

Question 53

A suit is filed against AgriSeeds Corporation,alleging that the firm commit-ted the offense of monopolization.To determine whether AgriSeeds has mo-nopoly power requires looking at

A)the company's size alone.
B)the marketing practices of the company's competitors.
C)production methods and marketing techniques.
D)the relevant geographic market and the relevant product market.

Question 54

Which of the following is not a per se violation of Section 1 of the Sherman Act?​

A)A price-fixing agreement
B)A group boycott
C)A trade association
D)A market division

Question 55

Excavators & Haulers,Inc.,is the major wholesale distributor of heavy equipment in the state of Georgia.Its closest competitor is Forklifts & Tractors Company,an-other Georgia firm.The two firms agree that Excavators will operate in southern Georgia and Forklifts will operate in northern Georgia.This is​

A)an exclusive-dealing contract.
B)a market division.
C)a price-fixing agreement.
D)a joint venture.

Question 56

Rugged Bikes,Inc.,makes Rugged-brand bicycles and accessories,which are distributed to authorized dealers,including Super Sports Equipment,Inc.Super Sports operates dealerships in several locations.Rugged Bikes imposes restrictions on Super Sports to limit the area in which it sells bikes and thereby insulate other dealers from direct competition.This is​

A)a territorial restriction.
B)a resale price maintenance agreement.
C)a unilateral refusal to deal.
D)a price-fixing agreement.

Question 57

Rally Speedboat Corporation refuses to sell its products to Super Weekends,Inc.,a recreational water products dealership.This is​

A)an exclusive-dealing contract.
B)a horizontal market division.
C)attempted monopolization.
D)a unilateral refusal to deal.

Question 58

Healthcare Device,Inc.,has exclusive control over the market for its product.Healthcare Device's market power is most likely​

A)"an unfair or deceptive act or practice."
B)a per se violation.
C)not a violation.
D)subject to further evaluation.

Question 59

To acquire monopoly power in its market,Global Positioning Systems,Inc.,sets its prices substantially below the normal costs of production.Under antitrust law,this is​

A)a per se violation.
B)a violation if its competitors set similar prices.
C)a violation if it thereby acquires monopoly power.
D)not a violation.

Question 60

Marvin starts Marvin's Bike Company in Wheatland,South Dakota.There is one other bike store in Wheatland.Through good business management,Marvin's Bike Company obtains a great deal of market power in Wheatland.This is​

A)a per se violation of Section 1 of the Sherman Act.
B)an illegal restraint on trade.
C)not an antitrust violation.
D)a per se violation of Section 2 of the Sherman Act.

Question 61

City Manufacturing Corporation conditions shipments of its products to Exurb Stores,Inc.,on Exurb's agreement not to buy products from Regional Works Company,City's competitor.This is​

A)an exclusive-dealing contract.
B)a tying arrangement.
C)price discrimination.
D)a unilateral refusal to deal.

Question 62

Big U.S.Oil Company joins with a foreign cartel to control the price of oil.If the cartel has a substantial effect on U.S.commerce​

A)both Big U.S.Oil and the foreign cartel can be sued for violation of U.S.antitrust laws.
B)neither Big U.S.Oil nor the foreign cartel can be sued for violation of U.S.antitrust laws.
C)only Big U.S.Oil can be sued for violation of U.S.antitrust laws.
D)only the foreign cartel can be sued for violation of U.S.antitrust laws

Question 63

Holiday Baskets,Inc.,refuses to buy products from GMO Farms.This can violate antitrust laws if the refusal​

A)is likely to have an anticompetitive effect on a particular market.
B)results in lower prices for consumers.
C)provides no economic benefits for consumers.
D)is likely to increase competition.

Question 64

Farmed Crops Corporation offers to sell its wheat substitute to Gluten-Free,Inc.,only if Gluten-Free agrees to buy all of the wheat substitute that it needs from Farmed Crops,even though there are other sellers from whom Gluten-Free could buy.This is​

A)an exclusive-dealing contract.
B)a tying arrangement.
C)price discrimination.
D)business acumen.

Question 65

Mango Corporation believes that Melon Corporation engages in anticom-peti-tive behavior in an attempt to drive Mango and its other competitors out of the market.Antitrust laws can be enforced against Melon by​

A)Mango and its competitors only.
B)Mango,its competitors,and the Federal Trade Commission only.
C)Mango,its competitors,the Federal Trade Commission,and the U.S.Department of Justice.
D)the Federal Trade Commission and U.S.Department of Justice only.

Question 66

To prevent its competitors from obtaining sufficient supplies to make their products,Continental Steel,Inc.,uses its market power to increase the prices of those supplies.This is​

A)price discrimination.
B)business judgment.
C)predatory bidding.
D)predatory pricing.

Question 67

Silicon Corporation,which controls 40 percent of the com-puter-chip mar-ket in the United States,merges with Micro Processors,Inc.,which controls 15 per-cent of the same market.This merger is a violation​

A)only if the result more clearly concentrates the market.
B)only if the result makes it more difficult for potential competitors to enter the market.
C)if the result more clearly concentrates the market and makes it more difficult for potential competitors to enter the market.
D)under no circumstances.

Question 68

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

A)predatory pricing.
B)business judgment.
C)predatory bidding.
D)price discrimination.

Question 69

Global Services Corporation 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 Sherman Act.
D)no law.

Question 70

Precious Metals Corporation,a raw materials vendor,sells its commodities in certain quan-ti-ties to Quarry Refining Company for a certain price but charges Rich Assets,Inc.,a Quarry com-peti-tor,a higher price.This is most likely a violation of​

A)the Clayton Act.
B)the Federal Trade Commission Act.
C)the Sherman Act.
D)no antitrust law.

Question 71

Java Bean Company imports coffee beans and sells them under two-year contracts to Mellow Roast,Inc.,and other coffeemakers.The contracts require that during the two-year term a coffeemaker not buy beans from Java Bean's competitors.The contracts do not limit the coffeemakers' purchase of tea or other beverage ingredients from other suppliers,how-ever.In the second year of the contract,Mellow Roast protests that this arrangement violates antitrust law.Is Mellow Roast correct? If not,why not? If so,under which antitrust statute,or statutes,could these con-tracts be held illegal?

Question 72

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.