Deck 47: Antitrust Law

Question 1

Chicago School theorists argue that the central, and perhaps only, purpose of antitrust law is to encourage economic ____.

A) Control
B) Regulation
C) Efficiency
D) Competition
E) Success

Answer 1

Efficiency

Question 2

Section 2 of the Sherman Act prohibits all monopolies.

Answer 2

False

Question 3

Which of the following is false regarding enforcement of the Sherman Act?

A) The Antitrust Division of the Department of Justice can bring criminal or civil actions against violators.
B) If a corporation commits a crime under the Sherman Act, the corporation could face a $10 million fine for each offense.
C) Officers and employees who are convicted under the Sherman Act face a maximum fine of $350,000 and/or jail time of up to three years.
D) If a party is harmed by a company's anticompetitive behavior, the party can bring a private suit under the Sherman Act.
E) Treble damages are not available under the Sherman Act.

Answer 3

Treble damages are not available under the Sherman Act.

Question 4

The Federal Trade Commission has been eliminated.

Question 5

The Sherman Act may not be constitutionally applied to foreign companies that conduct business in the U.S.

Question 6

Farmers are prohibited by antitrust laws from belonging to cooperatives that set prices.

Question 7

Which of the following was the result of the claim of the U.S. Department of Justice that Microsoft Corporation violated Sections 1 and 2 of the Sherman Act?

A) The court ruled that Microsoft violated both Sections 1 and 2 of the Sherman Act.
B) The court ruled that Microsoft violated neither Section 1 nor Section 2 of the Sherman Act.
C) The court ruled that Microsoft violated Section 1 but not Section 2 of the Sherman Act.
D) The court ruled that Microsoft violated Section 2 but not Section 1 of the Sherman Act.
E) The court ruled that Microsoft violated both Sections 1 and 2 of the Sherman Act but that because the U.S. Department of Justice "sat on its rights" and delayed prosecution, the suit was subject to dismissal.

Question 8

The Sherman Act attempts to stop trusts from unfairly restricting market competition.

Question 9

Section 2 of the Sherman Act applies to states, and they may be used as defendants.

Question 10

Bid rigging is legal because it has recently been removed from the category of price-fixing.

Question 11

When was the Sherman Act enacted?

A) 1890
B) 1925
C) 1935
D) 1943
E) 1958

Question 12

Group boycotts by which two or more competing sellers refuse to sell their products to a certain customer are generally per se violations of the Sherman Act.

Question 13

Which of the following is false regarding groups and activities that are exempt from antitrust law?

A) Individuals in the fishing industry can cooperate for purposes of catching and preparing fish for market.
B) Labor unions can organize and bargain.
C) When insurance businesses are subject to state antitrust regulation, they are exempt from federal antitrust law.
D) States can set their own quotas regarding the amount of oil to be sold in interstate commerce.
E) Regulatory bodies of the airline and banking industry have authority to approve behaviors that would otherwise violate antitrust law, but the same is not true for the utility industry.

Question 14

A business arrangement in which stock owners appoint beneficiaries and place their securities with trustees who manage the company and pay a share of their earnings to the stockholders is referred to as a trust.

Question 15

Which of the following was the result on appeal in Spirit Airlines Inc., v. Northwest Airlines Inc., the case in the text in which Spirit Airlines claimed that Northwest Airlines lowered its prices on certain flights once Spirit Airlines began to compete?

A) The court ruled that there was sufficient evidence from which a jury could determine that the defendant was guilty of predatory pricing thereby entitling the plaintiff to prevail.
B) The court ruled that although there was sufficient evidence from which a jury could determine that the defendant was guilty of predatory pricing, the defendant was entitled to a summary judgment ruling in its favor because the plaintiff failed to establish that it could have succeeded in the market absent the defendant's predatory pricing.
C) That there was insufficient evidence from which to determine that the defendant was guilty of predatory pricing and that summary judgment was therefore properly granted to it.
D) That although there was insufficient evidence from which to determine that the defendant was guilty of predatory pricing, a jury trial was mandated because the defendant was guilty of attempted monopolization.
E) That although there was insufficient evidence from which to determine that the defendant was guilty of predatory pricing, a jury trial was mandated because the defendant was guilty of inequitable conduct.

Question 16

Which of the following was the result in PepsiCo Inc., v. The Coca-Cola Co., the case in the text in which PepsiCo challenged Coca-Cola's loyalty policy by which independent food distributors (IFDs) agreed to not handle soft drink products of PepsiCo?

A) That the practice violated antitrust laws because it constituted an attempted monopolization.
B) That the practice violated antitrust laws because it constituted a monopolization.
C) That PepsiCo failed to provide evidentiary support for the restrictions it urged in regard to the relevant product market and that it failed to establish an antitrust claim.
D) That while PepsiCo provided sufficient evidentiary support for the restrictions it urged in regard to the relevant product market, it failed to show that a sufficient number of customers in that market preferred IFDs over other methods of distribution.
E) That because PepsiCo had itself engaged in anticompetitive conduct, it was estopped from asserting claims against Coca-Cola.

Question 17

When was the Interstate Commerce Act passed?

A) 1887
B) 1920
C) 1934
D) 1945
E) 1964

Question 18

Which of the following is false regarding antitrust law in Japan?

A) Mergers are regulated.
B) Cartels are illegal if they restrain competition substantially contrary to public interest.
C) Unfair business practices are banned.
D) Keiretsu as a group have been outlawed.
E) The law prohibits private monopolization.

Question 19

Which of the following was the result on appeal in California v. Safeway, the case in the text involving whether an agreement between grocers to share revenues during the term of a labor dispute violated antitrust laws?

A) The court ruled that the agreement was legal because it came within the non-statutory labor exemption to antitrust laws.
B) The court ruled that the agreement was legal because it came within the statutory labor exemption to antitrust laws.
C) The court ruled that the revenue-sharing agreement was not immune from antitrust scrutiny.
D) The court ruled that because the revenue-sharing agreement was not within the non-statutory exemption to antitrust laws, it was illegal as a matter of law with no further inquiry necessary.
E) The court ruled that although the agreement came within the statutory exemption to antitrust laws, additional inquiry was needed in order to determine whether the agreement constituted a per se violation which is illegal even in the face of an exemption.

Question 20

In enacting the Sherman Act, Congress did not specify which specific behaviors were prohibited.

Question 21

Which of the following prohibits price discrimination by sellers?

A) Section 2 of the Clayton Act
B) Section 3 of the Sherman Act
C) Section 2 of the Sherman Act
D) Section 1 of the Sherman Act
E) The Federal Trade Commission Act

Question 22

Which of the following is the type of violation of Section 1 of the Sherman Act that is involved when it is determined that business practices always hurt consumers?

A) Rule-of-reason
B) Per se
C) Quick-look
D) Consumer
E) Three-prong

Question 23

A merger between two or more companies producing the same or similar products is a ______ merger.

A) Horizontal
B) Vertical
C) Conglomerate
D) Joining
E) Predatory

Question 24

Which of the following is true if a seller engages in price discrimination in order to compete in good faith with another seller's low price?

A) That is not a defense, and the seller has violated the Clayton Act.
B) That is not a defense, and the seller has violated the Sherman Act.
C) That is a valid defense to price discrimination called the meeting-the-competition defense.
D) That is a valid defense to price discrimination called the legitimate-price-discrimination defense.
E) That is a valid defense to price discrimination called the meet-the-offense defense.

Question 25

By what U.S. Constitutional authority did Congress pass the Sherman Act?

A) Through its authority to regulate interstate commerce.
B) Through its authority to prevent discrimination.
C) Through its authority under the First Amendment.
D) Through its authority under the Fourth Amendment.
E) Pursuant to the due process clause contained in both the Fifth and Fourteenth Amendments.

Question 26

Section _____ of the Clayton Act prohibits anticompetitive mergers or acquisitions.

A) 2
B) 4
C) 6
D) 7
E) 10

Question 27

Which of the following was the result in Continental T.V. Inc., v. GTE Sylvania Inc., the U.S. Supreme Court case in which Continental argued that Sylvania violated the Sherman Act by restricting the location of retailers that could sell its product?

A) The court upheld the continued used of the bright line per se rule of illegality for all vertical restrictions.
B) That the rule-of-reason should always be applied when vertical restrictions are involved.
C) That the rule-of-reason standard should be applied in a vertical restriction case unless departure from the rule is justified based upon a demonstrable economic effect.
D) That a per se rule of illegality is applied in a vertical restriction case unless departure from the rule is justified based upon a demonstrable economic effect.
E) That the per se rule of illegality is applied in a vertical restriction case only when a manufacturing defendant is involved; otherwise, the rule-of-reason test applies.

Question 28

When two parties at different levels in the manufacturing and distribution process make an agreement that restrains trade, they have made a ______ restraint against trade.

A) Horizontal
B) Corresponding
C) Lateral
D) Vertical
E) Regulatory

Question 29

Which of the following standards allows a defendant to offer justification for a per se violation of Section 1 of the Sherman Act, in which case the court will engage in a rule-of-reason analysis?

A) Quick-look
B) Reasonableness
C) Justifiable
D) Necessary
E) Needful

Question 30

A seller engages in _______ when it sells the same goods to competing buyers for different prices.

A) Price gouging
B) Price discrimination
C) Predatory pricing
D) Discriminatory pricing
E) Competitive pricing

Question 31

Which of the following practices does the Clayton Act identify that are not covered under the Sherman Act?

A) Attempts to monopolize
B) Mergers
C) Vertical price fixing
D) Horizontal price fixing
E) Bid rigging

Question 32

Which of the following is not an example of a horizontal restraint of trade?

A) Price fixing
B) Resale-price maintenance agreements
C) Group boycotts
D) Trade associations
E) Joint ventures

Question 33

Which of the following was left the responsibility of identifying which specific behaviors were prohibited under the Sherman Act?

A) Congress which amends the Sherman Act from time to time to set forth additional specific offenses.
B) State legislatures.
C) Local governing bodies.
D) The courts.
E) Both state legislatures and local governing bodies.

Question 34

When a company merges with another company that is not a competitor or a buyer or seller to the company, that merger is called a ______ merger.

A) Horizontal
B) Vertical
C) Conglomerate
D) Joining
E) Predatory

Question 35

Which two markets does a court consider in identifying the relevant market for monopolization purposes?

A) Product and geographic
B) Geographic and customer
C) Reasonable and product
D) Customer and product
E) Reasonable and customer

Question 36

Under the Clayton Act, the Department of Justice is most likely to challenge which of the following types of mergers?

A) Horizontal
B) Vertical
C) Conglomerate
D) Joining
E) Predatory

Question 37

Which analysis, if any, is applied to territorial and customer restrictions imposed by a manufacturer on a retailer?

A) Both territorial and customer restrictions are generally analyzed under the rule-of-reason test.
B) Both territorial and customer restrictions are generally analyzed on a per se basis.
C) Territorial restrictions are analyzed under the rule-of-reason test, while customer restrictions are analyzed on a per se basis.
D) Customer restrictions are analyzed under the rule-of-reason test, while territorial restrictions are analyzed on a per se basis.
E) Neither territorial nor customer restrictions are analyzed on any basis because both have been ruled legal in all cases.

Question 38

Which of the following is an inquiry into the competitive effects of a company's behavior to determine whether the benefits of the behavior outweigh the harm of the anticompetitive behavior?

A) The rule-of-reason analysis
B) The per se test
C) The quick-look standard
D) The consumer standard
E) The three-prong analysis

Question 39

When a company prices one product below normal cost until competitors are eliminated and then sharply increases the price, the company is practicing ______ pricing.

A) Competitive
B) Predatory
C) Secondary
D) Horizontal
E) Primary

Question 40

When one company at one level of the manufacturing-distribution system acquires a company at another level of the system, the merger is called a ______ merger.

A) Horizontal
B) Vertical
C) Conglomerate
D) Joining
E) Predatory

Question 41

"On the Town." Benny began taking people on tours of historic sites in his town. That had not been done before because no one thought there was very much in the way of historical significance there. Benny, however, did some research; and, with a very active imagination on his part, came up with some good stories. He started to make a nice profit with the tours, particularly with tourists passing through the town on the way to the mountains. Benny began to hear of some rival tour groups that were planning to start giving tours in the area. Benny sent a memo to his secretary asking, "How can we shut down other potential tour groups because we want all the business?" One rival company had started operations, but Benny still had 85 percent of the business. His plan was to run the rival out of business and prevent the start-up of any other tour operations in his town. Benny decided that he would offer to do a free advertising brochure to any business that would put up a poster advertising his tour group and agree not to advertise or mention in any way any other tour group. Benny was particularly successful in reaching that agreement with hotels and restaurants in his town because of his likeable personality. When Prudence, who ran a rival tour group heard about Benny's actions, she was furious and accused him of an antitrust violation because he was trying to keep all the tour action for himself. Benny told Prudence she was nuts and that the only reason she had no business was that she stuck to dry historical fact on her tours and did not do research on romantic relationships between individuals in the area in order to "spice-up" her tours. He also told her that he was not a monopolist because he did not have all the business as evidenced by Prudence's own tour service.

-Which of the following violations would Prudence most likely be alleging with her claim that Benny was attempting to keep all the tour business for himself?

A) A violation of Section 1 of the Sherman Act
B) A violation of Section 2 of the Sherman Act
C) A violation of the Business Regulation Act
D) A violation of the Robinson-Patman Act
E) A violation of Sections 1 and 2 of the Sherman Act, but not a violation of the Business Regulation.

Question 42

Which of the following references the type of conglomerate merger that occurs when a company merges with another company producing a related product in order to add the related product to the company's production?

A) Horizontal extension
B) Market extension
C) Diversification
D) Vertical extension
E) Product extension

Question 43

Which of the following references the type of merger that occurs when an acquiring firm desires to spread into a new market where it does not have a product, merges with a firm in that market, and continues to produce the other firm's product in the target market?

A) Horizontal extension
B) Market extension
C) Diversification
D) Vertical extension
E) Product extension

Question 44

Which of the following is true regarding whether Shirley's arrangement that if a store carries her line of scuba gear, it must carry her line of wet suits is legal?

A) It is legal.
B) It is legal unless the items at issue may not be used together.
C) It is per se illegal.
D) If the tying arrangement leads to competitive harm, the court will likely find the arrangement to be illegal.
E) The agreement is legal only if use of the wetsuit enhanced the performance of the scuba gear which is unlikely.

Question 45

"Scuba Gear." Shirley is a popular manufacturer of scuba gear. Before she allows a store to carry her line of scuba gear, she requires that the store owner agree that her line is the only line of scuba gear the store will carry. She also requires that if a store carries her line of scuba gear, it must carry her line of wet suits. Sales of other manufacturer's gear and wet suits have begun a steady decline. She is accused of violating antitrust laws. Shirley, however, replies that she is simply conducting good business practices. Trudy, the president of ABC Scuba, calls Shirley and tells her that she is prepared to bring suit against Shirley for antitrust violations. Shirley tells Trudy that although she is not in violation, that only the government could take action against her, and that the government is way too busy to get involved in a dispute over scuba gear.

-The requirement of Shirley that before she will sell scuba gear to a business, the business must carry her line of wet suits is a ______ arrangement.

A) Combination
B) Tying
C) Requirements
D) Complementary
E) Joinder

Question 46

Which of the following is false regarding private enforcement of antitrust laws?

A) A private party can bring suit under the Clayton Act.
B) A private party can bring suit under the Sherman Act.
C) Under the Sherman Act a private party may receive treble damages.
D) A private party who prevails may receive attorney fees under the Sherman Act and under the Clayton Act.
E) Private parties are responsible for only a minority of antitrust claims brought to court in recent years.

Question 47

"Scuba Gear." Shirley is a popular manufacturer of scuba gear. Before she allows a store to carry her line of scuba gear, she requires that the store owner agree that her line is the only line of scuba gear the store will carry. She also requires that if a store carries her line of scuba gear, it must carry her line of wet suits. Sales of other manufacturer's gear and wet suits have begun a steady decline. She is accused of violating antitrust laws. Shirley, however, replies that she is simply conducting good business practices. Trudy, the president of ABC Scuba, calls Shirley and tells her that she is prepared to bring suit against Shirley for antitrust violations. Shirley tells Trudy that although she is not in violation, that only the government could take action against her, and that the government is way too busy to get involved in a dispute over scuba gear.

-The agreements between Shirley and sellers to the effect that the stores would only carry Shirley's gear are ______ contracts.

A) Mandatory-dealing
B) Exclusionary
C) Exclusive-dealing
D) Unilateral
E) Primary

Question 48

"On the Town." Benny began taking people on tours of historic sites in his town. That had not been done before because no one thought there was very much in the way of historical significance there. Benny, however, did some research; and, with a very active imagination on his part, came up with some good stories. He started to make a nice profit with the tours, particularly with tourists passing through the town on the way to the mountains. Benny began to hear of some rival tour groups that were planning to start giving tours in the area. Benny sent a memo to his secretary asking, "How can we shut down other potential tour groups because we want all the business?" One rival company had started operations, but Benny still had 85 percent of the business. His plan was to run the rival out of business and prevent the start-up of any other tour operations in his town. Benny decided that he would offer to do a free advertising brochure to any business that would put up a poster advertising his tour group and agree not to advertise or mention in any way any other tour group. Benny was particularly successful in reaching that agreement with hotels and restaurants in his town because of his likeable personality. When Prudence, who ran a rival tour group heard about Benny's actions, she was furious and accused him of an antitrust violation because he was trying to keep all the tour action for himself. Benny told Prudence she was nuts and that the only reason she had no business was that she stuck to dry historical fact on her tours and did not do research on romantic relationships between individuals in the area in order to "spice-up" her tours. He also told her that he was not a monopolist because he did not have all the business as evidenced by Prudence's own tour service.

-The type of service Benny provides, tours, would be referred to as which of the following markets for purposes of determining the relevant market?

A) Product
B) Consumer
C) Offered
D) Utilized
E) Disputed

Question 49

Which of the following is false regarding the Federal Trade Commission Act?

A) It was passed when Congress passed the Clayton Act.
B) It prohibits unfair and deceptive methods of competition.
C) Any anticompetitive behavior not prohibited by the Sherman Act or the Clayton Act is illegal under the act.
D) The language of the act permits the Federal Trade Commission to investigate antitrust claims.
E) While the language of the act permits the Federal Trade Commission to investigate antitrust claims, it may not bring antitrust claims against violators.

Question 50

"On the Town." Benny began taking people on tours of historic sites in his town. That had not been done before because no one thought there was very much in the way of historical significance there. Benny, however, did some research; and, with a very active imagination on his part, came up with some good stories. He started to make a nice profit with the tours, particularly with tourists passing through the town on the way to the mountains. Benny began to hear of some rival tour groups that were planning to start giving tours in the area. Benny sent a memo to his secretary asking, "How can we shut down other potential tour groups because we want all the business?" One rival company had started operations, but Benny still had 85 percent of the business. His plan was to run the rival out of business and prevent the start-up of any other tour operations in his town. Benny decided that he would offer to do a free advertising brochure to any business that would put up a poster advertising his tour group and agree not to advertise or mention in any way any other tour group. Benny was particularly successful in reaching that agreement with hotels and restaurants in his town because of his likeable personality. When Prudence, who ran a rival tour group heard about Benny's actions, she was furious and accused him of an antitrust violation because he was trying to keep all the tour action for himself. Benny told Prudence she was nuts and that the only reason she had no business was that she stuck to dry historical fact on her tours and did not do research on romantic relationships between individuals in the area in order to "spice-up" her tours. He also told her that he was not a monopolist because he did not have all the business as evidenced by Prudence's own tour service.

-Which of the following is true regarding Benny's claim that he could not have a monopoly because Prudence was also operating a tour service?

A) He was correct.
B) He was incorrect; and if a company enjoys 70 percent of the relevant market, the court will usually hold that the firm has monopoly power.
C) He was incorrect; and if a company enjoys 60 percent of the relevant market, the court will usually hold that the firm has monopoly power.
D) He was incorrect; and if a company enjoys 51 percent of the relevant market, the court will usually hold that the firm has monopoly power.
E) He was incorrect; and if a company enjoys 40 percent of the relevant market, the court will usually hold that the firm has monopoly power.

Question 51

"Adult Floaters." Bruce and Jimmy are both involved in businesses that manufacture bathing suits for ladies with small personal flotation devices implanted to assist with swimming. They both ship the suits to different states around the country. Bruce and Jimmy get together and decide to raise their prices. They decide that since they are the only two manufacturers of this type of suit, if they both stick together and raise prices to an agreed upon amount, then consumers will be forced to pay that amount. They want to make a lot of money before anyone else jumps into the market. A disgruntled secretary of Bruce finds out about the agreement and sends out letters to consumers revealing it.

-What would the government's best argument to the court be regarding the conduct of Bruce and Jimmy?

A) That a rule-of-reason violation occurred.
B) That an acknowledged violation occurred.
C) That a per se violation occurred.
D) That a refusal to deal occurred.
E) That an intrastate concerted action occurred.

Question 52

"Adult Floaters." Bruce and Jimmy are both involved in businesses that manufacture bathing suits for ladies with small personal flotation devices implanted to assist with swimming. They both ship the suits to different states around the country. Bruce and Jimmy get together and decide to raise their prices. They decide that since they are the only two manufacturers of this type of suit, if they both stick together and raise prices to an agreed upon amount, then consumers will be forced to pay that amount. They want to make a lot of money before anyone else jumps into the market. A disgruntled secretary of Bruce finds out about the agreement and sends out letters to consumers revealing it.

-In attempting to establish a violation of the Sherman Act, what type of trade violation would the government most likely allege?

A) A vertical restraint
B) A horizontal restraint
C) A corresponding restriction
D) An agreed restriction
E) A rule-of-reason restriction

Question 53

"Adult Floaters." Bruce and Jimmy are both involved in businesses that manufacture bathing suits for ladies with small personal flotation devices implanted to assist with swimming. They both ship the suits to different states around the country. Bruce and Jimmy get together and decide to raise their prices. They decide that since they are the only two manufacturers of this type of suit, if they both stick together and raise prices to an agreed upon amount, then consumers will be forced to pay that amount. They want to make a lot of money before anyone else jumps into the market. A disgruntled secretary of Bruce finds out about the agreement and sends out letters to consumers revealing it.

-Have Bruce and Jimmy violated the Sherman Act?

A) Yes, they violated Section 1.
B) Yes, they violated Section 2.
C) No, there is no violation because they are not engaged in intrastate commerce.
D) No, there is no violation because they have not established a monopoly.
E) No, there is no violation because at least three businesses must be involved in order to establish a violation of the Sherman Act.

Question 54

Which of the following is not a factor taken into consideration under the rule-of-reason analysis?

A) The nature and purpose of the restraint on trade
B) The scope of the restraint
C) The effect of the restraint on business and competition
D) The effect of the restraint on the defending businesses
E) The intent of the restraint

Question 55

"Scuba Gear." Shirley is a popular manufacturer of scuba gear. Before she allows a store to carry her line of scuba gear, she requires that the store owner agree that her line is the only line of scuba gear the store will carry. She also requires that if a store carries her line of scuba gear, it must carry her line of wet suits. Sales of other manufacturer's gear and wet suits have begun a steady decline. She is accused of violating antitrust laws. Shirley, however, replies that she is simply conducting good business practices. Trudy, the president of ABC Scuba, calls Shirley and tells her that she is prepared to bring suit against Shirley for antitrust violations. Shirley tells Trudy that although she is not in violation, that only the government could take action against her, and that the government is way too busy to get involved in a dispute over scuba gear.

-Which of the following is true regarding the contention of Shirley that her agreements with sellers to the effect that the sellers will only carry her scuba gear are good business practices and legal?

A) She is correct.
B) She is wrong because an agreement that a seller will only carry a seller's merchandise is per se illegal under Section 1 of the Sherman Act.
C) She is wrong because an agreement that a seller will only carry a seller's merchandise is per se illegal under the Clayton Act.
D) Additional information is needed in order to determine whether she violated either the Clayton Act or the Sherman Act because her actions will be reviewed under a rule-of-reason test with the primary inquiry being whether her actions were reasonable in view of competitive practices in the industry.
E) If the agreement lessens competition or tends to create a monopoly, the agreement is in violation of Section 3 of the Clayton Act.

Question 56

"Adult Floaters." Bruce and Jimmy are both involved in businesses that manufacture bathing suits for ladies with small personal flotation devices implanted to assist with swimming. They both ship the suits to different states around the country. Bruce and Jimmy get together and decide to raise their prices. They decide that since they are the only two manufacturers of this type of suit, if they both stick together and raise prices to an agreed upon amount, then consumers will be forced to pay that amount. They want to make a lot of money before anyone else jumps into the market. A disgruntled secretary of Bruce finds out about the agreement and sends out letters to consumers revealing it.

-In attempting to establish a violation of the Sherman Act, which of the following would be the offense the government would most likely allege?

A) Price gouging
B) Price raising
C) Charge arrangement
D) Price fixing
E) Consumer misappropriation

Question 57

Which of the following references the type of conglomerate merger that occurs when a firm attempts to extend the market for one of its current products by merging with a firm already active in the target market?

A) Horizontal extension
B) Market extension
C) Diversification target
D) Vertical extension target
E) Product extension

Question 58

"On the Town." Benny began taking people on tours of historic sites in his town. That had not been done before because no one thought there was very much in the way of historical significance there. Benny, however, did some research; and, with a very active imagination on his part, came up with some good stories. He started to make a nice profit with the tours, particularly with tourists passing through the town on the way to the mountains. Benny began to hear of some rival tour groups that were planning to start giving tours in the area. Benny sent a memo to his secretary asking, "How can we shut down other potential tour groups because we want all the business?" One rival company had started operations, but Benny still had 85 percent of the business. His plan was to run the rival out of business and prevent the start-up of any other tour operations in his town. Benny decided that he would offer to do a free advertising brochure to any business that would put up a poster advertising his tour group and agree not to advertise or mention in any way any other tour group. Benny was particularly successful in reaching that agreement with hotels and restaurants in his town because of his likeable personality. When Prudence, who ran a rival tour group heard about Benny's actions, she was furious and accused him of an antitrust violation because he was trying to keep all the tour action for himself. Benny told Prudence she was nuts and that the only reason she had no business was that she stuck to dry historical fact on her tours and did not do research on romantic relationships between individuals in the area in order to "spice-up" her tours. He also told her that he was not a monopolist because he did not have all the business as evidenced by Prudence's own tour service.

-What must be proven against Benny in order to establish that he violated antitrust laws through conduct involving monopolization?

A) Only that he had market power.
B) That he (1) possessed market power and (2) unfairly achieved the market power.
C) The he (1) possessed market power and (2) used the market power unfairly.
D) That he (1) possessed market power, (2) that he unfairly achieved the market power, and (3) that he used the market power for abuse.
E) That he (1) possessed market power, and (2) unfairly achieved the market power or used the market power for abuse.

Question 59

"Scuba Gear." Shirley is a popular manufacturer of scuba gear. Before she allows a store to carry her line of scuba gear, she requires that the store owner agree that her line is the only line of scuba gear the store will carry. She also requires that if a store carries her line of scuba gear, it must carry her line of wet suits. Sales of other manufacturer's gear and wet suits have begun a steady decline. She is accused of violating antitrust laws. Shirley, however, replies that she is simply conducting good business practices. Trudy, the president of ABC Scuba, calls Shirley and tells her that she is prepared to bring suit against Shirley for antitrust violations. Shirley tells Trudy that although she is not in violation, that only the government could take action against her, and that the government is way too busy to get involved in a dispute over scuba gear.

-Which of the following is true regarding Shirley's statement that only the government could take action against her?

A) She is correct.
B) She is correct only if she has had no other antitrust charges brought against her; otherwise, private parties are allowed to bring suit.
C) She is incorrect although private parties are limited to injunctive relief only.
D) She is incorrect although private parties are limited to damages only and may not recover attorney fees.
E) She is incorrect, and a prevailing plaintiff is entitled to attorney fees and damages.

Question 60

"On the Town." Benny began taking people on tours of historic sites in his town. That had not been done before because no one thought there was very much in the way of historical significance there. Benny, however, did some research; and, with a very active imagination on his part, came up with some good stories. He started to make a nice profit with the tours, particularly with tourists passing through the town on the way to the mountains. Benny began to hear of some rival tour groups that were planning to start giving tours in the area. Benny sent a memo to his secretary asking, "How can we shut down other potential tour groups because we want all the business?" One rival company had started operations, but Benny still had 85 percent of the business. His plan was to run the rival out of business and prevent the start-up of any other tour operations in his town. Benny decided that he would offer to do a free advertising brochure to any business that would put up a poster advertising his tour group and agree not to advertise or mention in any way any other tour group. Benny was particularly successful in reaching that agreement with hotels and restaurants in his town because of his likeable personality. When Prudence, who ran a rival tour group heard about Benny's actions, she was furious and accused him of an antitrust violation because he was trying to keep all the tour action for himself. Benny told Prudence she was nuts and that the only reason she had no business was that she stuck to dry historical fact on her tours and did not do research on romantic relationships between individuals in the area in order to "spice-up" her tours. He also told her that he was not a monopolist because he did not have all the business as evidenced by Prudence's own tour service.

-The relevant market would be considered in determining the company's ________ share.

A) Allocated
B) Consumer
C) Market
D) Presumed
E) Allowable

Question 61

What must be shown in order to establish a violation of Section 1 of the Sherman Act?

Question 62

Sheila has a flower shop as does her friend Bob. Their shops are in adjoining towns located approximately 10 miles apart. Sheila agrees that she will not sell flowers for delivery in Bob's town in return for Bob agreeing that he will not sell flowers for delivery in Sheila's town. Have Sheila and Bob committed any antitrust violation, if so what and under what standard would it be reviewed?

Question 63

What does a judge consider when conducting a rule-of-reason analysis?

Question 64

Set forth and describe the three specific types of injuries under the Robinson-Patman Act.

Question 65

Contrast traditional antitrust theories with the Chicago School theories.