Deck 47: A: Antitrust Law

Question 1

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.

Answer 1

False

Question 2

The possession of monopoly power is only one element of the offense of monopolization.

Answer 2

True

Question 3

Attempted monopolization is not a violation of antitrust law.

Answer 3

False

Question 4

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

Question 5

A firm can not be a monopolist unless it is the sole seller in a market.

Question 6

One component of the relevant market is the geographic boundaries of the market in which the firm and its competitors sell the product or service.

Question 7

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

Question 8

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

Question 9

Only the Federal Trade Commission can prosecute violations of all of the antitrust laws.

Question 10

A concentrated industry is one in which either a single firm or a small number of firms control a large percentage of market sales.

Question 11

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

Question 12

Most other nations' antitrust laws do not apply extraterritorially.

Question 13

Market power is the economic power to buy what you want in a given market.

Question 14

A joint effort by businesspersons to obtain legislative action is not exempt from the antitrust laws.

Question 15

Only serious threats of monopolization are condemned as violations of antitrust law.

Question 16

Restraints that have a significant impact on interstate commerce do not violate antitrust law.

Question 17

Resale price maintenance agreements are currently considered per se violations of antitrust law.

Question 18

Antitrust law prohibits anticompetitive practices.

Question 19

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

Question 20

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

Question 21

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

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

Question 22

Press Now Corporation,a disk manufacturer,sells its product in certain quan?ti?ties to Quik 2U,a retailer,for $275 but charges Rite Here,a com?peti?tive re?tailer,$350.This price discrimination is legal

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 23

Gourmet Foods,Inc. ,requires all distribu?tors of its products to sell them at a specified minimum price.This is a violation of antitrust law

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 24

Gorgeous 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 25

Energy Services Corporation engages in trade practices that may violate antitrust law.The Federal Trade Commission has the power to act against anticompetitive behavior under

A)Section 1 of the Sherman Act.
B)the Federal Trade Commission Act.
C)no federal law.
D)Section 2 of the Sherman Act.

Question 26

Fact Pattern 47-1B
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 47-1B.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

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 28

Repair Prepare Parts Company charges different buyers different prices for identi?cal goods.This is

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

Question 29

Spa Serena LLC makes and sells beauty salon supplies.By selling its product at prices substantially below the normal cost of production,Spa Serena hopes to drive its competitors from the market.This is

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

Question 30

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 price-fixing agreement 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 antitrust law.
D)subject to analysis under the rule of reason.

Question 31

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 32

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 33

Granite Golfballs,Inc. ,has the power to control the market for its prod?uct.Antitrust law regulates

A)how Granite acquired its power and what it does with it.
B)how Granite makes its product and who buys it.
C)the degree of trust Granite has with its customers and suppliers.
D)the size of Granite's market.

Question 34

Master Fabrication Corporation has exclusive control over the mar?ket for its product.Under antitrust law,this is

A)a per se violation.
B)a violation if it acquired this power through "business judgment."
C)a violation if it acquired this power through "anticompetitive means."
D)not a violation.

Question 35

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 the tickets.
D)the entire United States in all cases.

Question 36

Quotient Corporation and Precision Products,Inc. ,are the principal sup?pliers 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 37

Fact Pattern 47-1B
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 47-1B.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 38

Fresh Veggies,Inc. ,a wholesaler,refuses to sell its produce to Grocery Mart Stores,Inc. ,a re?tailer.Under antitrust law,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 39

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 40

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 41

Under what circumstances would Mom's Tools & Hardware,a small store in the middle of Nowhere,a small,isolated town,be considered a mo?nopoly? If Mom's is a monopoly,is it in violation of antitrust law?

Question 42

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.