Deck 32: Promoting Competition

Question 1

Acquiring monopoly power through anticompetitive means violates antitrust law.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

An agreement between firms operating at different levels in the manu?facturing and distribution process cannot violate antitrust law.

Answer 3

False

Question 4

Monopoly power is an extreme amount of market power.

Question 5

A price-fixing agreement has the potential to lessen competition.

Question 6

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

Question 7

A group boycott against a supplier for political reasons can be legal.

Question 8

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

Question 9

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

Question 10

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

Question 11

A price-fixing agreement that is reasonable does not violate antitrust law.

Question 12

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

Question 13

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

Question 14

A unilateral refusal to deal with a specific party is never a vio?lation of antitrust law.

Question 15

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

Question 16

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

Question 17

Monopoly power may be proved by evidence that a firm used its power to control prices.

Question 18

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

Question 19

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

Question 20

The possession of monopoly power constitutes the offense of monopolization.

Question 21

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

Question 22

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

Question 23

Insurance companies are exempt antitrust laws whenever state regulation exists.

Question 24

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

Question 25

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

Question 26

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

Question 27

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 28

A firm that is attempting to meet the competition's price may have a defense to liability for price discrimination.

Question 29

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

Question 30

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

Question 31

Enterprising Business Corporation may be engaging in conduct that vio?lates the Sherman Act.To bring an action against the firm under this statute requires that its conduct have a sig?nificant impact on

A) international commerce.
B) Internet commerce.
C) interstate commerce.
D) intrastate commerce.

Question 32

A joint refusal to deal with a particular person or firm is always a vio?lation of antitrust law.

Question 33

Fact Pattern 32-1 (Questions 5-6 apply)
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.
Refer to Fact Pattern 32-1.Cardio pays Emitate not to sell its product.This is

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

Question 34

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

Question 35

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 commission act.
B) an antitrust law.
C) an interstate commerce act.
D) a suppressive restraint on trade.

Question 36

Only private individuals can enforce the antitrust laws.

Question 37

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 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 38

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

Question 39

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

Question 40

Persons in foreign nations cannot be subject to U.S.antitrust law.

Question 41

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 42

Lightning Cycles,Inc.,makes Lightning-brand motorcycles 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 restraint.
B) a lateral restraint.
C) a vertical restraint.
D) not a restraint.

Question 43

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 44

Studious Review Guides,Inc.,has the power to control the market for its prod?uct.Antitrust law regulates

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

Question 45

Fact Pattern 32-1 (Questions 5-6 apply)
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.
Refer to Fact Pattern 32-1.A court would most likely rule that the agree?ment between Cardio and Emitate is

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 46

HVAC Parts Company charges different buyers different prices for identi?cal goods.HVAC's prices are subject to evaluation under

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

Question 47

Gourmet Foods,Inc.,requires all distribu?tors of its products to sell them at a specified minimum price.Under the Sherman Act,this is a violation

A) if the anticompetitive effects outweigh the competitive benefits.
B) if the competitive benefits outweigh the anticompetitive effects.
C) under any circumstances.
D) under no circumstances.

Question 48

Precision Press Corporation,a disk manufacturer,sells its DVDs in certain quan?ti?ties to Quik Shows,a retailer,for $275 but charges Rite Views,a com?peti?tive re?tailer,$350.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 49

The Association of Software Makers,which does not include all software producers,refuses to deal with any parties who do not carry the products of its members.Under the Sherman Act,this is

A) a per se violation if it eliminates competition or prevents entry into a given market.
B) a per se violation under all circumstances.
C) subject to the rule of reason.
D) not a violation.

Question 50

Gulf Air,Inc.,is the major wholesale distributor of software in the state of Florida.Its closest competitor is Fluid Systems Company,an?other Florida firm.The two firms agree that Gulf Air will operate in south Florida and Fluid Systems will operate in north Florida.This is

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

Question 51

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 52

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 is

A) a horizontal restraint.
B) a lateral restraint.
C) a vertical restraint.
D) not a restraint.

Question 53

To acquire monopoly power in its market,Perfect Plastics,Inc.,sets its prices lower than its competitors.Under the Sherman Act,this is

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

Question 54

Fresh Vegetables,Inc.,a wholesaler,refuses to sell its produce to Good Mart Stores,Inc.,a re?tailer.Under the Sherman Act,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 55

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 56

Seaside Cannery,Inc.,is one of many producers of canned seafood.Seaside refuses to sell its products to Port 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 57

Master Manufacturing 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 58

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

A) only Maxi's size.
B) only the relevant geographical market.
C) only the relevant product market.
D) the relevant geographical market and the relevant product market.

Question 59

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 60

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 61

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 62

Midwest Agri-Products Corporation offers to sell its sugar substitute to Nice Candies,Inc.,only if Nice Candies agrees to buy all the corn it needs from Midwest Agri-Products,even though there are other corn sellers from whom Nice Candies could buy.This is

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

Question 63

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 64

International Software,Inc.,conditions the sale of one of its products on Nationwide Office System's agreeing to buy another of International's products.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 65

Excel Corporation conditions shipments of its products to Federated Stores,Inc.,on Federated's agreement not to buy products from Great Goods Company,Excel's competitor.This is

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

Question 66

Fairway Products,Inc.,and Golly Golf Clubs Corporation lobby Congress to pass a law banning a competitor's product.This joint effort is probably

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

Question 67

Tasty Eatin' Corporation merges with Hasty Burgers,Inc.This merger between firms that compete with each other in the same market is

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

Question 68

By contract,Quality Metals Corporation forbids Resource Refining,Inc.,a wholesale buyer of Quality's products,from purchasing the products of Quality's competitors. This 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 69

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 70

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 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

Luminescent 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) a violation only if the result more clearly concentrates the market.
B) a violation only if the result makes it more difficult for potential competitors to enter the market.
C) a violation if the result more clearly concentrates the market and makes it more difficult for potential competitors to enter the market.
D) not a violation.