Deck 28: Antitrust and Restraints of Trade

Question 1

Agreements among members of trade or professional organizations are exempt from antitrust laws.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

Price discrimination always violates antitrust law.

Answer 3

False

Question 4

Resale price maintenance agreements are no longer considered violations of antitrust law.

Question 5

A firm may have a legitimate reason for imposing a territorial or customer restriction.

Question 6

A tying arrangement is a per se violation of the Sherman Act.

Question 7

In determining the legality of a tying arrangement,there is only one relevant market to consider.

Question 8

A group boycott is always considered a per se violation of the Sherman Act.

Question 9

A market division by class of customer between competitors is evaluated under a rule of reason.

Question 10

A seller is prohibited from making an exclusive-dealing contract if the effect is to substantially lessen competition.

Question 11

A horizontal merger occurs when a company at one stage of production acquires a company at a higher or lower stage of production.

Question 12

A concentrated industry is one in which many firms concentrate on competing with each other.

Question 13

A joint refusal to deal with a particular person or firm always violates antitrust law.

Question 14

Under the rule of reason,a court will consider the purpose of an agreement between competitors.

Question 15

A vertical restraint is any agreement that in some way restrains competition between rival firms competing in the same market.

Question 16

An exclusive-dealing agreement is a per se violation of antitrust law.

Question 17

A unilateral refusal to deal with a particular person or firm never violates antitrust law.

Question 18

A seller is not prohibited from charging a lower price to one buyer than is charged to that buyer's competitors.

Question 19

In an exclusive-dealing contract,a seller conditions the sale of a product on the buyer's agreement to buy another product produced by the same seller.

Question 20

The reasonableness of a price-fixing agreement is never a defense.

Question 21

Fact Pattern
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.
Refer to Fact Pattern 28-1B.The agreement between Thermo Gas and Uno Oil to buy "excess" supplies from dealers and "dispose" of it is

A)a horizontal restraint.
B)a refusal to deal.
C)a resale price maintenance agreement.
D)a vertical restraint.

Question 22

USA Goods Corporation requires all distributors of its products to sell them at specified minimum prices.This resale price maintenance 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 23

Greasy Spoon Corporation merges with Hot Fork,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 trade association.
D)a vertical merger.

Question 24

Gourmet Foods,Inc. ,requires all distributors 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 25

Smooth Sailing,Inc. ,conditions future shipments of its products to distributors on their agreement to charge the prices set by Smooth.This is

A)a barrier to entry.
B)a horizontal restraint.
C)a merger.
D)a vertical restraint.

Question 26

Fact Pattern
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.
Refer to Fact Pattern 28-1B.The deal between Thermo Gas and Uno Oil is

A)a deal that neither restrains trade or harms competition.
B)a legal restraint of trade.
C)a per se violation of antitrust law.
D)subject to analysis under the rule of reason.

Question 27

International Vehicle Corporation,a maker of motor vehicles,acquires all of the car and truck rental agencies in the eastern United States.This is

A)a backward vertical integration.
B)a forward vertical integration.
C)a horizontal downward integration.
D)a horizontal upward integration.

Question 28

Fastener Products,Inc. ,a maker of nuts and bolts,sells its products to retail establishments.It charges one price to small family-owned hardware stores and a lower price to national chains.Under the Clayton Act,these price differences are

A)illegal.
B)not illegal if they are based on production or transportation costs.
C)not illegal if they are intended to eliminate competition.
D)not illegal if they are intended to prevent entry into a given market.

Question 29

Good Nite Hotel Company acquires Happy Sleep Motel Corporation.This is

A)a merger.
B)an exclusive-dealing contract.
C)an interlocking directorate.
D)a tying arrangement.

Question 30

Quotient Corporation and Precision Products,Inc. ,are the principal suppliers of their product in their market.They agree that Quotient will sell exclusively to retailers and Precision will sell exclusively to wholesalers.Under antitrust law,this is most likely

A)a per se violation.
B)a violation only if their competitors make similar deals.
C)a violation only if their customers agree to honor the deal.
D)not a violation.

Question 31

Indigo Packaging,Inc. ,a manufacturer of packaging papers and boxes,refuses to sell to Jiffy Quik,Inc. ,a delivery service firm.Indigo convinces Knotty Box 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 32

Electroplate Dishware Corporation conditions shipments of its products to Flo-Thru Stores,Inc. ,on Flo-Thru's agreement not to buy products from Glassy Ware Company,Electroplate's competitor.This is

A)an exclusive-dealing contract.
B)a smart business deal.
C)a trade association.
D)a tying arrangement.

Question 33

Pacific Bicycle,Inc. ,is the major distributor of bikes in the state of California.Pacific's closest competitor is Quanto Bike Company,another California firm.They agree that Quanto will distribute bikes in northern 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 34

Red's Sport Equipment Inc.and Sienna Athletic Company are the chief competitors in their market.They agree that Red's will operate only north of the Mason-Dixon line and Sienna will operate only south of the same line.Under antitrust law,this is most likely

A)a per se violation.
B)a violation only if their competitors make similar deals.
C)a violation only if their customers agree to honor the deal.
D)not a violation.

Question 35

MetaRay,Inc. ,Nucleo Company,and OneSys Corporation control 95 percent of the market for lasers in a certain geographic area.They agree to sell their products at the same prices,and exclude a fourth firm,Perfex Company (which controls the rest of the market).This is

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

Question 36

Fresh Vegetables,Inc. ,a wholesaler,refuses to sell its produce to Grocery Mart Stores,Inc. ,a retailer.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 the rule of reason.

Question 37

The United Association of Video Game Designers,which does not include all video game makers,refuses to deal with any parties who do not carry the products of its members.This group boycott is

A)a situation that neither restrains trade or harms competition.
B)a legal restraint of trade.
C)a per se violation of antitrust law.
D)subject to analysis under the rule of reason.

Question 38

Repair Prepare Parts Company charges different buyers different prices for identical goods.This is

A)market power.
B)predatory pricing.
C)price discrimination.
D)price-fixing.

Question 39

Greeting Cards,Inc.(GCI),is a newcomer to its market.GCI requires that the buyers of its line of greeting cards also agree to buy GCI t-shirts,balloons,and other products.This is

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

Question 40

Macro Corporation conditions the sale of its operating software on the buyer's agreement to purchase another Macro product,an Internet browser.This is

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

Question 41

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 42

Mickey's Appliance Store was a new retail seller of appliances in Sunwest City.Mickey's innovative sales techniques and financing caused the appliance department of Luckluster Department Store to lose a great many sales.Luckluster was a large department store and part of a large chain with substantial buying power.Luckluster told a number of appliance manufacturers that if they continued to sell to Mickey's,Luckluster would stop purchasing from them.The manufacturers immediately stopped selling appliances to Mickey's.Mickey's filed suit against Luckluster and the manufacturers,claiming their actions constituted an antitrust violation.Luckluster and the manufacturers could prove that Mickey's was a small retailer with a small portion of the market.Because the relevant market was not substantially affected,they claimed they were not guilty of restraint of trade.Discuss fully whether there was an antitrust violation.