Deck 49: Antitrust: the Sherman Act

Question 1

Sherman Act violations may give rise to civil litigation only.

Answer 1

False
Explanation: Sherman Act violations may give rise to criminal prosecutions and civil litigation instituted by the federal government (through the Department of Justice),as well as to civil suits filed by private parties.

Question 2

United States-based firms that engage in international business activities must remember that they could be subject to antitrust complaints in other nations.

Answer 2

True
Explanation: United States-based firms that engage in international business activities must remember that they could be subject to antitrust complaints in other nations.

Question 3

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.

Answer 3

True
Explanation: 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.

Question 4

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

Question 5

Intent to monopolize is necessary to prove a violation under the Sherman Act.

Question 6

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

Question 7

The proof of joint action required for violations of Section 1 of the Sherman Act is applicable when a single firm is guilty of monopolizing or attempting to monopolize a part of trade or commerce.

Question 8

Some courts have recognized that tying agreements sometimes may be necessary to protect the reputation of the seller's product line.

Question 9

Firms that acquire monopoly power in a given market comply with the antitrust laws' objective of promoting competitive market structures.

Question 10

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

Question 11

Horizontal price-fixing is not covered under antitrust legislation and is lawful.

Question 12

The activities of a corporation and its wholly owned subsidiary will not constitute the concerted action necessary for a violation of Section 1 of the Sherman Act.

Question 13

Once firms have attained monopoly power,only then can they be held for violation of Section 2 of the Sherman Act.

Question 14

It is per se illegal for competitors to make an agreement to split up a geographical area and not to directly compete against each other.

Question 15

The relevant product market is composed of those products meeting the functional interchangeability test.

Question 16

Section 2 of the Sherman Act outlaws monopolies because monopolists have the power to fix prices unilaterally.

Question 17

As per the Colgate doctrine,a manufacturer cannot unilaterally refuse to deal with those who fail to follow the manufacturer's suggested resale prices.

Question 18

A domestic corporation attempting to monopolize outside the United States with foreign nations is guilty of a crime under the Sherman Act.

Question 19

SuperMart Inc.operates a franchise operation.Mr.Jones purchased a right to open a SuperMart but the agreement has a vertical restraint,Mr.Jones is not allowed to market or seek customers beyond 25 miles of his franchise store.This agreement is per se illegal.

Question 20

Parties that are successful in an antitrust suit are entitled to recover treble damages.

Question 21

Under Section 1 of the Sherman Act,a corporation's employees can be guilty of a conspiracy provided that they conspire with:

A)either the board of directors or the senior management of the corporation.
B)the employees of a wholly owned subsidiary firm.
C)the employees of an independent,competitor firm.
D)the employees of a subsidiary in which the parent has a controlling interest.

Question 22

Which of the following situations will justify the inference that a price-fixing conspiracy exists?

A)The defendant's parallel pricing behavior stemmed from an implied agreement.
B)Independent business decisions by the defendant led to price parallelism.
C)The defendant was unwilling to relinquish market share by engaging in price competition.
D)The evidence only indicates pure conscious price parallelism by the defendant.

Question 23

Ojay Corp. ,A-C,Inc. ,and Kato Co.are competitors in the production and sale of knives.A year ago,the three firms agreed to share pricing information with each other on a periodic basis.As a result of this agreed sharing of information,the three companies regularly charge the same prices,including a minimum price that none of the three goes below and a maximum price that none of the three goes above.A fourth producer of knives,Bronco Co. ,is the plaintiff in a Sherman Act Section 1 lawsuit against Ojay,A-C,and Kato.Bronco claims that the foregoing facts constituted price-fixing and that Bronco suffered direct antitrust injury as a result.Assuming that Bronco is a proper plaintiff,which of the following is an accurate analysis under current antitrust law?

A)Even if the defendants were involved only in conscious parallelism concerning pricing policies,they will be held liable under Section 1 because their behavior caused harm to the plaintiff.
B)If the court believes that the evidence demonstrates an agreement to fix prices,it will hold the defendants liable under Section 1 regardless of the business justifications for their agreement.
C)The defendants cannot be held liable under Section 1,because the facts indicate that they agreed to share pricing information without agreeing to fix prices or making any agreement to that effect.
D)The defendants should succeed with an argument that they are not liable for any fixing of maximum prices,because any such price-fixing would have finally benefited consumers.

Question 24

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

A)Interstate agreements in restraint of trade.
B)Intrastate agreements in restraint of trade.
C)Interstate deceptive and unfair practices.
D)Intrastate deceptive and unfair practices.

Question 25

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

A)intraindustry competition
B)anticoncentration of economic power
C)economic efficiency
D)anticoncentration of political power

Question 26

All of the gas stations in Smalltown agree to charge the same price for gas.The owners of the various companies get together every Friday in a coffee shop to decide what the price will be next week.This is:

A)a violation of the Section 1 of the Sherman Act.
B)a violation of the McCarran-Ferguson Act.
C)a violation of the Robinson-Patman Act.
D)not a violation,as long as it benefits consumers.

Question 27

A nolo plea or a consent decree is often attractive to antitrust defendants because:

A)the government must prove criminal intent on the defendant's part.
B)it results in an imposition of a penalty without requiring a defendant to remedy his actions.
C)it is not admissible as proof of a violation of the Sherman Act in a private plaintiff's later civil suit.
D)it does not attract the same penalty as a guilty plea or a conviction at trial.

Question 28

In United States v.Colgate & Co.(1919),the Supreme Court:

A)overruled a long-standing precedent that required per se treatment for vertical maximum price-fixing.
B)reaffirmed that horizontal divisions of markets are illegal per se and plainly represent agreements not to compete.
C)held that a manufacturer could unilaterally refuse to deal with those who failed to follow the manufacturer's suggested resale prices.
D)held that vertical minimum price-fixing would be judged under the rule of reason rather than the per se approach.

Question 29

LMNOP Corp.has been convicted under the Sherman Act for two distinct and separate violations.LMNOP may be fined as much as ________ for these two violations.

A)$50 million
B)$100 million
C)$200 million
D)$150 million

Question 30

Which of the following statements is true about indirect purchasers?

A)Indirect purchasers' recovery from defendants precludes recovery by direct purchasers.
B)The Supreme Court has held that indirect purchasers lack standing to sue for antitrust violations.
C)The Supreme Court has held that indirect purchasers can recover only their actual losses.
D)Indirect purchasers do not have the standing to sue under any state antitrust statute.

Question 31

To have standing in a federal antitrust case,what must a potential plaintiff have?

A)A direct injury resulting from the antitrust violation
B)An indirect injury resulting from the antitrust violation
C)An injury that crosses international boundaries
D)An injury that has caused a plaintiff to file for bankruptcy protection

Question 32

Traditional antitrust thinkers argue that:

A)concentrated economic power may lead to antidemocratic concentrations of political power.
B)antitrust regulations should protect competition instead of competitors.
C)concentration within a particular industry does not preclude interindustry competition.
D)domestic concentration might be necessary for effective international market competition.

Question 33

If a plaintiff proves that it has suffered a direct injury by another company in violation of the Sherman Act,it is entitled to recover:

A)twice the amount of loss it suffered as a result of the violation,plus court costs and attorney's fees.
B)twice the amount of loss it suffered as a result of the violation.
C)only the amount of loss it suffered as a result of the violation,plus court costs and attorney's fees.
D)three times the amount of loss it suffered as a result of the violation,plus court costs and attorney's fees.

Question 34

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 stance that the Supreme Court will take under these circumstances?

A)Their action will be deemed unlawful according to the rule of reason analysis.
B)Their action will be deemed lawful because only sellers can be guilty of price-fixing.
C)Their action will be deemed lawful if their agreement results in savings to consumers.
D)Their action will be deemed unlawful according to the per se analysis.

Question 35

The Sherman Act provides that individuals criminally convicted of violating it may be:

A)fined up to $1 million per violation and may be imprisoned for as long as 5 years.
B)fined up to $500,000 per violation and may be imprisoned for as long as 10 years.
C)fined up to $500,000 per violation and may be imprisoned for as long as 5 years.
D)fined up to $1 million per violation and may be imprisoned for as long as 10 years.

Question 36

________ analysis of behavior challenged under Section 1 of the Sherman Act is thought to provide reliable guidance to business.

A)Quick-look
B)Rule of reason
C)Secondary
D)Per se

Question 37

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

A)pro-intra-industry competition efforts.
B)proregulation efforts.
C)anticoncentration efforts.
D)anticonspiracy efforts.

Question 38

Although the Sherman Act indicates that ''every'' restraint on trade is illegal,courts have held that the Sherman Act is applied only when a competitor acts in what way?

A)Unreasonably
B)When the competitor is profiting
C)When the competitor has obtained a monopoly
D)When the corporation has 6000 or more employees

Question 39

Today's market structure in many important industries is ________,meaning that a few dominant firms account for the bulk of production.

A)monopolistic
B)stochastic
C)oligopolistic
D)anticompetitive

Question 40

The Sherman Act states that corporations convicted of violating it may be fined as much as:

A)$50 million per violation
B)$100 million per violation
C)$200 million per violation
D)$150 million per violation

Question 41

Resale price maintenance is also known as:

A)horizontal price-fixing.
B)vertical divisions of market.
C)horizontal divisions of market.
D)vertical price-fixing.

Question 42

Which of the following situations is most likely a case of Sherman Act Section 1 violation?

A)A manufacturer unilaterally assigns exclusive territories to its dealers.
B)A manufacturer unilaterally suggests a retail price to its dealers for its products.
C)A manufacturer causes its dealers to agree not to sell outside their dealership territories.
D)A manufacturer limits the dealerships it grants in a particular geographic area.

Question 43

The National Cooperative Research Act (NCRA)that applies to joint research and development ventures (JRDVs):

A)provides that treble damages may be recovered for losses flowing from a JRDV ultimately found to be in violation of Section 1 of the Sherman Act.
B)requires firms contemplating a JRDV to provide the Department of Justice and the Federal Trade Commission with advance notice of their intent to do so.
C)lacks provisions to allow the parties to a challenged JRDV to recover attorney's fees from an unsuccessful challenger.
D)requires application of a per se rule,rather than a reasonableness standard,when a JRDV's legality is determined.

Question 44

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

A)exclusive dealing
B)joint venture
C)reciprocal dealing
D)formal written

Question 45

Courts tend to treat ________ similarly because they are similar in motivation and effect.

A)exclusive dealing agreements and reciprocal dealing agreements
B)joint venture agreements and exclusive dealing agreements
C)joint venture agreements and tying agreements
D)reciprocal dealing agreements and tying agreements

Question 46

After Khan (State Oil Co.v.Khan (1997))and Leegin (Leegin Creative Leather Products v.PSKS,Inc.(2007)),all forms of vertical price-fixing now receive ________ analysis.

A)quick-look
B)rule of reason
C)secondary
D)per se

Question 47

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

A)The seller is a new business in the tied product category.
B)The tying product is not available for purchase without the agreement.
C)The tying agreement involves two separate and distinct items.
D)The seller is the market leader in the tied product category.

Question 48

When is proof of joint action required for violation of Section 1 of Sherman Act?

A)When a firm enters into an exclusive dealing agreement with a supplier.
B)When more than one firm is charged with a conspiracy to monopolize.
C)Charges of monopolization do not require any proof of joint action.
D)When a firm possesses not only monopoly power but also intent to monopolize.

Question 49

________ agreements reduce a manufacturer's sales costs and provide dealers with a secure source of supply.

A)Joint venture
B)Exclusive dealing
C)Reciprocal dealing
D)Formal written

Question 50

As demonstrated in Suture Express Inc.v.Owens & Minor Distribution,Inc. ,the case in the text,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:

A)the seller commands 10 percent of market in the tied product category.
B)the tying product is available for purchase without the agreement.
C)the tying agreement involves two integrated components of a larger product.
D)the seller is the market leader in the tying product category.

Question 51

Hem Sylvester Oil Company,owning a chain of wholly owned gas stations,refused to purchase the tires that Sans Corporation sells in some of its stations,unless the tire manufacturer agrees to purchase from the oil company,the petrochemicals used in the tire manufacturing process.This agreement is an example of a(n):

A)exclusive dealing agreement.
B)joint venture agreement.
C)reciprocal dealing agreement.
D)formal written agreement.

Question 52

Which of the following situations is most likely to trigger liability for a vertical boycott under Section 1 of the Sherman Act?

A)Evidence indicates that a conspiracy existed between a manufacturer and its nonterminated dealers to terminate a price-cutter.
B)Evidence indicates that a manufacturer unilaterally refused to deal with a price-cutter who failed to follow the manufacturer's suggested resale prices.
C)Evidence indicates that a manufacturer has terminated a discounting distributor after receiving complaints from its other distributors.
D)Evidence indicates that a manufacturer and its nonterminated dealers were engaged in an unlawful vertical price-fixing conspiracy.

Question 53

Assume that the Oklahoma Wholesale Lumber Suppliers' Association,a trade association formed by all lumber wholesalers in the state,adopts a "fair competition" plan that divides the state into exclusive territories for member wholesalers.Each member wholesaler is forbidden by the plan to sell to retailers in another wholesaler's territory.Under these circumstances,which of the following is true?

A)Since this is a case of ancillary vertical restraint,the courts would apply the rule of reason to determine whether it is lawful.
B)Since this is a case of "naked" horizontal restraint,the courts would apply the per se rule to determine whether it is lawful.
C)Since this is a case of ancillary horizontal restraint,the courts would apply the per se rule to determine whether it is lawful.
D)Since this is a case of "naked" vertical restraint,the courts would apply the rule of reason to determine whether it is lawful.

Question 54

Market shares in excess of ________ have historically justified an inference of monopoly power.

A)70 percent
B)60 percent
C)90 percent
D)80 percent

Question 55

In analyzing vertical restraints on distribution,courts today will apply what analysis?

A)The rule of reason
B)Finding that any evidence of vertical restraint is per se illegal
C)Federal courts will not consider issue,deferring it to international courts
D)Applying the strict scrutiny test

Question 56

The following statements pertain to alleged violations of Section 1 of the Sherman Act.Which statement is accurate?

A)Although tying agreements are classified as per se violations of Section 1,the judicial treatment given to them differs from pure per se treatment.
B)Because vertical restraints on distribution necessarily harm intrabrand competition,they are considered per se violations of Section 1.
C)Because group boycotts amount to reprehensible conduct that cannot have competitive justification,all such agreements are considered per se violations of Section 1.
D)Although concerted action ordinarily has been required in order for there to have been a violation of Section 1,the Supreme Court recently dispensed with the requirement in price-fixing cases.

Question 57

Bony Corp.requires retailers and wholesalers that purchase Bony's $200 videocassette recorders (VCR)to purchase $20 of blank Bony videotapes with each VCR.Under these circumstances,which of the following statements is accurate?

A)Bony's tying requirement will be deemed legal by the courts because it provides a great value proposition for its end users.
B)The competitive harm in this case would be to Bony's competitors in the sale of VCRs.
C)The fact that Bony is the market leader in the VCR market is a relevant factor insofar as the legality of Bony's tying requirement is concerned.
D)Evidence that almost all of Bony's VCRs sold last year were part of the tying agreement would be helpful to Bony if it were sued under Section 1 of the Sherman Act.

Question 58

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

A)The tying product functions properly only if used with the tied product.
B)The tying product is not available for purchase without the agreement.
C)The tying agreement involves two separate and distinct items.
D)The seller is the market leader in both the tying and tied product categories.

Question 59

To be liable for monopolization,a defendant must:

A)possess superior-quality products and services.
B)have a market share in excess of 70 percent.
C)possess best-in-class business acumen.
D)have exclusive dealing agreements with suppliers.

Question 60

Tying agreements may be challenged under both:

A)Section 1 of the Robinson-Patman Act and Section 3 of the Sherman Act.
B)Section 1 of the Sherman Act and Section 3 of the Clayton Act.
C)Section 1 of the Robinson-Patman Act and Section 3 of the Clayton Act.
D)Section 1 of the Clayton Act and Section 3 of the Sherman Act.

Question 61

Methods of antitrust analysis are commonly called Chicago School theories because many of their major premises were advanced by scholars affiliated with:

A)Loyola University.
B)Chicago State University.
C)the University of Chicago.
D)the University of Illinois at Chicago.

Question 62

When two or more persons or business entities join for the purpose of restraining trade,a(n)________ occurs.

A)conspiracy
B)monopoly
C)acquisition
D)oligopoly

Question 63

Chicago School advocates point out that concentration in a particular industry does not necessarily preclude:

A)interindustry competition.
B)intraindustry competition.
C)anticoncentration of economic power.
D)anticoncentration of political power.

Question 64

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:

A)other functionally equivalent products were available in the market.
B)Du Pont had not acquired its market power through improper means.
C)cellophane was not a significant product in interstate commerce.
D)inference of monopoly power requires market share in excess of 80 percent.

Question 65

Which of the following terms is a legal requirement that anyone seeking to challenge a particular action in court must demonstrate that such action substantially affects his or her legitimate interests before he or she will be entitled to bring suit?

A)Mootness
B)Ripeness
C)Nolo contendre
D)Standing

Question 66

The level of criminal intent required for a Sherman Act violation is:

A)knowledge.
B)recklessness.
C)negligence.
D)specific intent.

Question 67

According to the Chicago School viewpoint,the traditional antitrust focus on the structure of industry has improperly emphasized protecting ________ instead of protecting ________.

A)consumers;competitors
B)competitors;consumers
C)competitors;competition
D)competition;consumers

Question 68

Which of the following situations is most likely to be deemed in violation of Section 2 of the Sherman Act?

A)Intent to monopolize
B)Attempted monopolization
C)Misdirected monopolization
D)Conspiracy to monopolize

Question 69

Which of the following outlaws monopolization,attempted monopolization,and agreements in restraint of trade?

A)The Clayton Act
B)The Commerce Clause of the U.S.Constitution
C)Federal Trade Commission Act
D)The Sherman Act

Question 70

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

A)Had the intent to monopolize
B)Profited by the actions in question
C)Violated criminal statutes in at least one state
D)Engaged in civil fraud during the course of business

Question 71

In American Needle,Inc.v.National Football League,the case in the text,the U.S.Supreme Court held that:

A)necessity of cooperation transforms concerted action into independent action.
B)concerted action under Section 1 turns on whether the parties involved are legally distinct entities.
C)the conduct at issue was concerted activity under the Sherman Act that was subject to Section 1 analysis.
D)the interest in maintaining a competitive balance among athletic teams was not legitimate or important.

Question 72

Foreign firms that are ________ in the U.S.domestic commerce are subject to federal antitrust jurisdiction.

A)"occasionally engaged"
B)"continuously engaged"
C)"even rarely engaged"
D)"engaged even once"

Question 73

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:

A)felt-tip pens.
B)cellophane.
C)men's socks.
D)yellow notepads.

Question 74

Which of the following is an injunctive power used by the courts to remedy civil antitrust violations in extreme cases?

A)An order requiring the convicted defendant to divest itself of the stock or assets of acquired companies
B)An order in the form of a dissolution degree that requires the defendant to liquidate its assets and cease business operations
C)An order requiring the convicted defendant to divorce itself from a function level of its operations
D)An order requiring the convicted defendant to cancel existing contracts

Question 75

________ involve a defendant's consent to remedial measures aimed at remedying the competitive harm resulting from his actions.

A)Consent decrees
B)Nolo contendres
C)Guilty pleas
D)Arbitration agreements

Question 76

Which of the following involves a plea where the defendant technically has not admitted guilt,but the sentencing court can still impose the same penalty as if the defendant pleaded guilty or was convicted at trial?

A)Consent decree
B)Nolle prosequi
C)Nolo contendere
D)Corpus delecti

Question 77

Which of the following applies federal antitrust laws to only behavior having some significant impact on interstate or foreign business?

A)The Clayton Act
B)The Sherman Act
C)Federal Trade Commission Act
D)The Commerce Clause of the U.S.Constitution

Question 78

Before a court can determine a defendant's market share,it must first define the relevant market.One of the components of a relevant market determination is the relevant:

A)resource market.
B)supply market.
C)geographic market.
D)competitive market.

Question 79

In the case in the text,United States v.Hsiung,the court held that:

A)the price-fixing scheme as alleged and proven was subject to per se analysis under the Sherman Act.
B)a per se analysis was inappropriate because the conduct in question occurred in another country.
C)the $500 million fine imposed was improper because it was based on the collective gains to all members of the conspiracy rather than the gains to AUO alone.
D)the jury instruction misled the jury as to its task.

Question 80

Which of the following statements about criminal prosecutions pursuant to the Sherman Act is false?

A)The Alternative Fine Statute allows the maximum fine amounts to be exceeded when the convicted defendant derived "pecuniary gain" from the offense.
B)The government must only prove an unlawful purpose to sustain a criminal conviction.
C)The Alternative Fine Statute allows the maximum fine amounts to be exceeded when the convicted defendant's offense caused "pecuniary loss" against someone else.
D)Corporations convicted of violating the Sherman Act may be fined as much as $100 million per violation.