Deck 46: Antitrust Law

Question 1

A geographical market division between rival firms is not a violation of antitrust laws.

Answer 1

False

Question 2

The possession of monopoly power constitutes the offense of monopolization.

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

Market power is a firm's power to affect the market price of its product.

Question 7

The size of a firm in relation to its market determines whether it is a mo?nopolist.

Question 8

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

Question 9

State laws regulate local restraints on competition.

Question 10

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

Question 11

Monopoly power is an extreme amount of market power.

Question 12

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

Question 13

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

Question 14

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

Question 15

Any agreement that restricts output is an unreasonable restraint of trade.

Question 16

If a joint venture does not involve price fixing or a market division, it will be ana?lyzed under the rule of reason.

Question 17

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

Question 18

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

Question 19

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

Question 20

A market division by class of customer between rival firms is a viola?tion of antitrust law.

Question 21

Exclusive-dealing contracts are per se violations of antitrust law.

Question 22

The acquisition of monopoly power through anticompetitive means constitutes a violation of antitrust law.

Question 23

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

Question 24

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

Question 25

Territorial and customer restrictions are judged under a rule of reason.

Question 26

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

Question 27

Only private individuals can enforce the antitrust laws.

Question 28

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

Question 29

Insurance companies are exempt antitrust laws whenever state regulation exists.

Question 30

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

Question 31

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

Question 32

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

Question 33

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

Question 34

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

Question 35

In determining the legality of a tying arrangement, there are two rele?vant markets to consider.

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

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

Question 41

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 42

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

A) a group boycott.
B) a market division.
C) a price-fixing agreement.
D) a tying arrangement.

Question 43

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 joint venture.
C) an exclusive-dealing contract.
D) a price-fixing agreement.

Question 44

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 45

Blue Company and Cherry Corporation are the chief competitors in their market. They agree that Blue will operate only north of the Mason-Dixon line and Cherry will operate only south of the same line. Under the Sherman Act, this is

A) a per se violation.
B) a violation only if their competitors make similar deals.
C) a violation only if they thereby acquire monopoly power.
D) not a violation.

Question 46

International Products, Inc. (ICI), has exclusive control over the market for its product. ICI's market power is subject to evaluation under

A) the Clayton Act.
B) the Federal Trade Commission Act.
C) the Sherman Act.
D) none of the choices.

Question 47

Pacific Bicycle, Inc., is the major distributor of bikes in the state of California. Pacific's closest competitor is Golden State Bike Company, another California firm. They agree that Golden State will distribute bikes in north?ern California and Pacific will distribute bikes in southern California. This is

A) a group boycott.
B) a market division.
C) a price-fixing agreement.
D) a tying arrangement.

Question 48

Omega Corporation and Precision Products, Inc., are the principal sup?pliers of their product in their market. They agree that Omega will sell exclusively to retailers and Precision will sell exclusively to wholesalers. Under the Sherman Act, this is

A) a per se violation.
B) a violation only if their competitors make similar deals.
C) a violation only if they thereby acquire monopoly power.
D) not a violation.

Question 49

USA Computer 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 50

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 51

In Case 46.1, Continental T.V., Inc. v. GTE Sylvania, Inc., the United States Supreme Court held that vertical restrictions such as the restric?tions established by Sylvania

A) promote interbrand competition.
B) promote illegal trade practices.
C) promote horizontal restrictions.
D) promote good oral hygiene.

Question 52

Engine Components, Inc., a manufacturer of vehicle parts, refuses to sell to Fix-It, Inc., a national vehicle service firm. Engine Components convinces Greasy 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 53

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

Question 54

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 55

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 56

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

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

Question 57

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 58

The United 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 group boycott 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 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

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 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 Interstate Commerce Act.
D) the Sherman Act.

Question 62

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 63

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 64

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 65

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 66

Fairway Products, Inc., and Golly 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

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 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 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 69

Press Corporation, a disk manufacturer, sells its DVDs in certain quan?ti?ties to Quik Shows, a retailer, for $275 but charges Right Stuff, 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 Interstate Commerce Act.
D) the Sherman Act.

Question 70

Studious Computers, 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 71

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

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

Question 72

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 73

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) price fixing.

Question 74

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 75

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 76

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) price fixing.

Question 77

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 78

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 79

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. Under the Clayton Act, 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.

Question 80

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

A) a group boycott.
B) a horizontal market division.
C) attempted monopolization.
D) a unilateral refusal to deal.