Deck 26: Antitrust Law

Question 1

A horizontal restraint of trade differs from a vertical restraint of trade in that the horizontal restraint of trade:

A)follows the rules listed in the Robinson-Patman Act of 1936.
B)follows the rules listed in the Clayton Antitrust Act of 1914.
C)limits the competition between rival firms in the same industry.
D)limits the competition between a government producer and a private retailer.
E)follows the rules stated in the Sherman Antitrust Act of 1980.

Answer 1

C

Question 2

A horizontal merger occurs when a Baby store operating in California acquires a movie ticket distributor in Los Angeles.

Answer 2

False

Question 3

Price-fixing agreements are per se violations of Section 1 of the Sherman Act.

Answer 3

True

Question 4

T&U Ltd.drives its competitors out of business by charging low prices for its mopeds,thus becoming the only moped provider in the market.This resultant market is known as an)_____.

A)monopoly
B)monopsony
C)oligopsony
D)perfect competitive market
E)oligopoly

Question 5

Like the Sherman Act,the Federal Trade Commission Act is a civil statute,involving no criminal penalties.

Question 6

The Noerr doctrine does not apply to horizontal boycotts even if the object is to force the government to take action.

Question 7

The Sherman Antitrust Act of 1890 was formed to:

A)forbid combinations in restraint of trade and monopolizing.
B)forbid employers from interacting with workers in the private sector who create labor unions.
C)limit the formation of yellow-dog contracts.
D)set enhanced standards for all U.S.public company boards,management and public accounting firms.
E)limit the formation of runaway shop agreements.

Question 8

The per se violation against price-fixing is limited to agreements that directly fix prices.

Question 9

The owner of B&K Inc.,a cookie manufacturing company,entered into an agreement with Edwin,a retailer.According to the agreement,Edwin was not allowed to sell the cookies of B&K at a price lesser than $2 per pack.This is an example of an)_____.

A)closed shop agreement
B)open shop agreement
C)vertical restraint of trade
D)horizontal restraint of trade
E)runaway shop agreement

Question 10

Drafters of the Sherman Act based the act on a common-law policy against monopolies and other infringements on competition.

Question 11

A vertical allocation of customers or territory is only illegal if competition to the markets as a whole is adversely affected.

Question 12

The Robinson - Patman Act applies only to sale of commodities.

Question 13

Agreements by competitors to boycott those who engage in undesirable practices are unlawful.

Question 14

A horizontal merger occurs between competitors.

Question 15

A consent decree is a judicial order entered into by defendants in lieu of litigating,in which they admit their guilt but agree to not carry on certain activities complained of.

Question 16

Unlike the Clayton Act,the Sherman Act is not a criminal statute.

Question 17

The Clayton Act was enacted in 1914 to plug the loopholes in the Sherman Act.

Question 18

_____ is a remedy used to break up a firm into smaller,independent units,where the firm has exercised its monopoly power.

A)Amalgamation
B)Divestiture
C)Arson
D)Money laundering
E)Abatement

Question 19

Possessing a monopoly is not per se unlawful.

Question 20

It is not unlawful for a union to bargain with an employer to sell its products above a certain price floor.

Question 21

Differentiate the Clayton Act from the Sherman Act.

Question 22

B&T Inc.sells exclusively to Humdingers in North Dakota,and T&Y Inc.sells both to Humdingers and several other wholesalers.If T&Y Inc.cuts its prices to Humdingers while charging higher prices to the other wholesalers,B&T Inc.experiences an adverse effect.This adverse effect is an example of an)_____.

A)product diversification injury
B)primary-line injury
C)product differentiation injury
D)product disparagement injury
E)good-faith injury

Question 23

The _____ dictates that the question of regulatory propriety must first be submitted to the regulating agency before the courts will rule on an antitrust question.

A)bird abatement doctrine
B)Wheeler-Lea doctrine
C)primary jurisdiction doctrine
D)Hallstein doctrine
E)Monroe doctrine

Question 24

Which of the following should be the Supreme Court's preferred course of action,if it wants to determine the degree with which margarine can act as a substitute product for butter due to the latter's increase in prices?

A)The Supreme Court should encourage monopolistic competition between two primary margarine producers.
B)The Supreme Court should determine the degree of the second-line injury between two margarine distributors.
C)The Supreme Court should look at the cross-elasticity of demand between margarine and butter.
D)The Supreme Court should look into alcohol and all its related beverage consumption patterns.
E)The Supreme Court should determine the degree of the first-line injury between two butter producers.

Question 25

When is the failing company doctrine under Clayton Act applicable?

Question 26

Under the _____ a seller who deals with two or more retail customers but passes their orders on to a single wholesaler and sells the total quantity to the wholesaler in one transaction,can be held to have violated Section 2 of the Clayton Act.

A)parens patriae doctrine
B)Parker immunity doctrine
C)jus relictae doctrine
D)indirect purchaser doctrine
E)ultra vires doctrine

Question 27

Cake-a-licious,a large bakery business,purchased a wheat farm in order to reduce the risk associated with its dependency on flour.This is an example of _____.

A)right horizontal integration
B)left horizontal integration
C)backward vertical integration
D)forward vertical integration
E)an abatement violation

Question 28

Section 2 of the Sherman Act states that:

A)"The Supreme Court looks at "cross-elasticity of demand" to determine the relevant market."
B)"Employees of public organizations should not engage in collective bargaining,and take part in strikes and other forms of concerted activity."
C)"Employers and employees should not enter into yellow-dog contracts."
D)"Employers and employees should not enter into closed shop type of agreements."
E)"Every person who shall monopolize,or attempt to monopolize shall be deemed guilty of a felony."

Question 29

Which of the following is known as the "Typhoid Mary of Antitrust?"

A)The Norris-La Guardia Act
B)The Wheeler-Lea Amendments
C)The Wagner Act
D)The Robinson-Patman Act
E)The Taft-Hartley Act

Question 30

Grain Train Inc.sells wheat to both Pack Inc.and Snack Inc.,both manufacturers of wheat breads in New York.However,Grain Train Inc.helps Pack Inc.cut its costs by supplying wheat at low prices which in turn distorts the competition between Pack Inc.and Snack Inc.This is an example of an)_____ at the buyer's level.

A)bird abatement violation
B)resale price maintenance agreement
C)non-price horizontal restraint
D)secondary-line injury
E)non-price vertical restraint

Question 31

The demand for Crunchy chips in the junk food market segment was about to reach saturation point.Majority of the retailers wanted to stock Crunchy chips.Great Foods Inc.,the manufacturer of Crunchy chips,also manufactured rose flavored milk that was not doing well in the market.In order to maximize the sales of the rose flavored milk,Great Foods Inc.entered into an agreement with a group retailers stating that for every two packets of Crunchy chips,they would have to stock one bottle of the rose flavored milk.It can be said that,Great Foods Inc.entered into an)_____ with the retailers.

A)agency shop agreement
B)resale price maintenance agreement
C)runaway shop contract
D)tying contract
E)divestiture contract

Question 32

In the Clayton Act,Congress explicitly exempted _____.from the antitrust laws.

A)labor unions
B)traders
C)wholesalers and retailers
D)manufacturers
E)marketers