Deck 19: Antitrust and Regulation of Competition

Question 1

restraints are restrictions in which one company colludes with a non-competing company.

Answer 1

Vertical

Question 2

is an agreement between competitors to divide markets or geographic regions.

Answer 2

Market allocation

Question 3

Antitrust legislation was enacted in response to the accumulation of wealth and power by robber barons of the late 19th century.

Answer 3

True

Question 4

An agreement between the National Basketball Association (NBA)and its teams that requires all players to wear a single brand of shoes would not fall under the Sherman Act.

Question 5

The per se standard applies to nonprice vertical restraints.

Question 6

The standards courts use to determine violations of the Sherman Act are the per se standard and the standard.

Question 7

A is a concerted refusal to deal with a third party.

Question 8

A is an agreement between the government and a party that details conditions and compliance measures that the party will follow in exchange for the government not filing suit.

Question 9

The Sherman Act does not always prevent an entity from becoming a monopoly.

Question 10

A book publisher suggesting a retail price for the latest best seller is an example of price-fixing.

Question 11

If every buyer decides to boycott a supplier that uses child labor to produce its raw materials,they are committing a per se violation of the Sherman Act.

Question 12

Circumstantial evidence is not enough to show a meeting of the minds.

Question 13

The Act was designed to prevent companies from creating monopolies through mergers.

Question 14

In a small town,the only three gas station owners agree to sell gas for $5.00 per gallon at all three stations.This action is a violation of the Sherman Act.

Question 15

The prohibits attempts by a business to gain monopoly power.

Question 16

Under the Robinson-Patman Act,businesses considering mergers that are over a certain dollar amount are required to give advanced notice to the FTC and Department of Justice.

Question 17

restraints are restrictions on trade through an agreement with a competing company.

Question 18

In U.S.v.Colgate,the court found that boycotts do not fall under the Sherman Act.

Question 19

Vertical price-fixing occurs when a seller attempts to control the resale price at a(n) in the supply chain.

Question 20

The Sherman Act applies only to entities that have acted in an unreasonable manner.

Question 21

Adam Smith's book,The Wealth of Nations,is a source of support for some elements of antitrust law.

Question 22

The courts have adopted a soft per se analysis for cases involving tying agreements.

Question 23

The Clayton Act was amended by the Robinson-Patman Act.

Question 24

In American Needle Inc.v.National Football League,the 32 football teams were treated as a single entity because they belonged to the same sports league.

Question 25

Rockefeller's Standard Oil Trust is an example of a company that participated in antitrust behavior.

Question 26

Violators of antitrust legislation are subject to both civil and criminal penalties.

Question 27

The Clayton Act was enacted to limit the provisions of the Sherman Act.

Question 28

The test for determining a monopoly under the Sherman Act is the entity's share of the relative market.

Question 29

Price-fixing is a clear example of a per se violation.

Question 30

The district court's order for Microsoft to break apart into multiple entities in U.S.v.Microsoft was overturned on appeal.

Question 31

The Celler-Kefauver Antimerger Act specifically deals with antitrust prohibitions.

Question 32

It is not considered market allocation if two different airlines agree to split the major travel routes between them,rather than both fly to all the same cities.

Question 33

Proof of a seller's economic power in the market is necessary to prove an antitrust violation under the Clayton Act.

Question 34

In the landmark case of Texaco,Inc.v.Dagher,et al.,the U.S.Supreme Court held that per se liability applies only to agreements that are so plainly anti-competitive that no study of the industry is needed to establish their illegality.

Question 35

All monopolies are illegal.

Question 36

The Sherman Act prohibits only contracts,combinations,and conspiracies in restraint of trade,but does not govern monopolies.

Question 37

The Court has laid down a bright-line test for determining the amount of market share necessary to be considered a monopoly.

Question 38

U.S.v.Microsoft held that the appropriate standard for analyzing Microsoft's actions in the browser market was the rule of reason.

Question 39

It is not illegal for a grocery store to require a customer to buy milk in order to buy cookies.

Question 40

The Federal Trade Commission Act (FTCA)of 1914 was the first antitrust act.

Question 41

The law firm of Smith,Brown,and Jones has just held a meeting in which the three partners decided that all fees charged by each of them will be $500 per hour with no exceptions.They also set nonnegotiable fees for such things as preparation of wills,real estate settlements,and other types of standard cases.In this scenario,Smith,Brown,and Jones

A) are guilty of horizontal price-fixing under the Sherman Act.
B) are guilty of vertical price-fixing under the Sherman Act.
C) are guilty of price discrimination under the Robinson-Patman Act.
D) have broken no laws.

Question 42

The U.S.Supreme Court held that the Sherman Act applies to commercial agreements in which the parties acted in manner.

A) an unreasonable
B) a deceptive
C) a controlling
D) an illegal

Question 43

Modern antitrust law's focus is on

A) protecting individual companies.
B) protecting the competitive process.
C) protecting individual companies and the competitive process.
D) protecting neither individual companies nor the competitive process.

Question 44

Joe and Arthur each own a chain of restaurants.In order to ensure successful restaurants,Joe and Arthur enter into an agreement that Joe will open his new locations in Kansas City but not St.Louis and Arthur vice versa.This is an example of
A) price-fixing.

A) tying agreements.
B) market allocation.
D) boycotts.

Question 45

Which economist/philosopher is cited in support of frequent meetings being circumstantial evidence of anticompetitive collusion?

A) Plato
B) Socrates
C) John Locke
D) Adam Smith

Question 46

Vertical restraints are agreements between
A) business and government.

A) competitors.
B) noncompetitors.
D) consumers and government.

Question 47

The Robinson-Patman Act makes it illegal for a business entity to discriminate in price "between different purchasers of commodities of like quality or grade." In order to violate this act,the business must

A) make sales at different prices to at least three different purchasers.
B) make one sale of a different price to a purchaser.
C) make two or more sales to different purchasers at different prices.
D) give different price quotes to different purchasers.

Question 48

If there is no direct evidence of an agreement to manipulate the competitive market between two CEOs,a prosecutor may use their calendars and subsequent actions that were not in the usual course of business as circumstantial evidence to prove the requirement of an antitrust violation.
A) horizontal restraint

A) price-fixing
B) vertical restraint
D) meeting-of-the-minds

Question 49

Which of the following is not a type of horizontal restraint?
A) price-fixing

A) tying agreement
B) allocation of markets
D) boycotts

Question 50

When is a monopoly illegal under the Sherman Act?

A) A monopoly is illegal when it has horizontal restraints.
B) A monopoly is illegal when it is acquired or maintained through prohibited means.
C) All monopolies are illegal under the Sherman Act.
D) The Sherman Act does not address monopolies.

Question 51

Which act was designed to prevent monopolies from being created through mergers?
A) Clayton Act.

A) Sherman Act.
B) Celler-Kefauver Antimerger Act.
D) Federal Trade Commission Act.

Question 52

Horizontal restraints are agreements between
A) business and government.

A) competitors.
B) noncompetitors.
D) consumers and government.

Question 53

Which act does the Robinson-Patman Act amend?
A) McCarthy Act.

A) Sherman Act.
B) Hart-Scott-Rodino Act.
D) Clayton Act.

Question 54

Which of the following is an example of a tying agreement?

A) As part of purchasing a new computer, a buyer must also purchase a new monitor.
B) When purchasing a new digital music player, a buyer is given the option of buying songs.
C) When purchasing a used car, a buyer is offered a discount on new tires.
D) When purchasing a couch, the buyer is given free throw pillows.

Question 55

Which of the following agencies enforces federal antitrust laws?
A) Better Business Bureau.

A) Securities and Exchange Commission.
B) Federal Bureau of Investigation.
D) Federal Trade Commission.

Question 56

The University of Dover and Dover University are bitter cross-town rivals.They compete in everything from sports to academics.Because of shrinking enrollment,the schools make an agreement to give all incoming students free tuition for one semester before raising the existing rates the following semester.This action would be considered

A) a horizontal restraint, in violation of the Sherman Act.
B) a vertical restraint, in violation of the Sherman Act.
C) a tying agreement, in violation of the Clayton Act.
D) price fixing, in violation of the Robinson-Patman Act.

Question 57

There are two ice cream stands at the same intersection.In order to protect their businesses,the two owners agree that they will charge their customers the same prices for an ice cream cone.What type of horizontal restraint is this?
A) Boycott.

A) Market allocation.
B) Price-fixing.
D) This is not a horizontal restraint.

Question 58

Which of the following is not one of the steps in a three-step test for attempted monopolization under the Sherman Act?

A) The entity had a demonstrable and specific intent to achieve a monopoly.
B) The entity acted in an anticompetitive manner designed to injure its competitors.
C) The entity formed an agreement with others to achieve a monopoly.
D) There must exist a dangerous probability that monopoly power would in fact be achieved.

Question 59

Which of the following was the first major antitrust law?
A) Clayton Act.

A) Sherman Act.
B) Celler-Kefauver Antimerger Act.
D) Federal Trade Commission Act.

Question 60

In Texaco Inc.v.Dagher et al.,two oil refiners and gas suppliers,Texaco and Shell Oil,entered into a joint venture called Equilon to consolidate their operations in the western United States.Historically,Texaco and Shell were competitors,but for their joint venture they shared expenses and profits equally.The products produced by Equilon were sold under the brand names Texaco and Shell at a mutually agreed-upon price.Texaco and Shell retailers brought a class action lawsuit against the two companies,claiming there was a per se violation of the Sherman Antitrust Act because of the lack of price competition.The court held that

A) there was a per se violation because the joint venture was plainly anticompetitive.
B) there was a per se violation because oil companies are automatically held to this standard.
C) the rule of reason standard should apply because a market analysis was relevant.
D) the rule of reason standard should apply because it is a joint venture and not a meeting of the minds.

Question 61

In U.S.v.Microsoft,the appellate court found that

A) Microsoft's business practices were a per se violation of the Sherman Act.
B) Microsoft illegally attempted to monopolize the browser market.
C) Microsoft did not employ illegal anticompetitive means to maintain and further its monopoly of the operating system market.
D) Microsoft employed illegal anticompetitive means to maintain and further its monopoly of the operating system market.

Question 62

Discuss the difference between horizontal and vertical price-fixing.

Question 63

The U.S.Major League Soccer (MLS)league wants to have more similarity in its licensed goods.To that end,the league decides to contract with a single company to produce all the licensed goods for every team.Will MLS be able to do so? Explain your answer,including any case law that supports your opinion.

Question 64

Christian and Jimmy both design and manufacture popular shoes.They believe that one of the department stores that carries both of their designs is undercutting the other department stores' prices.After discussion,Christian and Jimmy decide that they should not sell their shoes to the department store again.What type of restraint is this?
A) Boycott.

A) Meeting of the minds.
B) Price-fixing.
D) Market allocation.

Question 65

Which of the following is not a vertical restraint?

A) Market allocation.
B) Tying agreements.
C) Exclusive selling, territorial, and dealing agreements.
D) Price-fixing.

Question 66

Discuss the early motivations for enacting antitrust laws.

Question 67

In American Needle Inc.v.National Football League,the NFL had entered into an agreement with Reebok for the manufacture of all of its teams' official goods,claiming that all 32 teams were a single entity.American Needle sued on the grounds that the Reebok agreement was an illegal conspiracy under the Sherman Act.The U.S.Supreme Court held that

A) the 32 teams were a collective unit and not subject to the Sherman Act.
B) the 32 teams were not a collective unit and were subject to the Sherman Act.
C) the 32 teams were not a collective unit but were exempt from the Sherman Act because of the economic environment of sports.
D) there was no Sherman Act violation.

Question 68

In ,the Supreme Court held that a unilateral boycott does not fall under the Sherman Act.

A) Greyhound v. International Business Machines Corp.
B) United States v. Colgate
C) United States v. Grinnell
D) Covad Communications Co. v. BellSouth Corp.

Question 69

Discuss the differences between the per se and rule of reason standards.

Question 70

are antitrust laws designed to combat the problem of monopolization.
A) Horizontal restraints

A) Rules of reason
B) Structural-offense laws
D) Consent orders

Question 71

In U.S.v.Microsoft,the appellate court reversed the finding of the district court that

A) Microsoft fundamentally employed illegal anticompetitive means to maintain and further its monopoly of the operating system market.
B) Microsoft should be broken apart.
C) Microsoft business practices were a per se violation of the Sherman Act.
D) Microsoft did not employ illegal anticompetitive means to maintain and further its monopoly of the operating system market.

Question 72

Two car manufacturers entered a joint venture to consolidate their efforts to create more
fuel-efficient vehicles.The manufacturers agreed to split the expenses and profits from the joint venture equally.If an antitrust violation is alleged,identify and explain the standard used to evaluate the manufacturers' actions.

Question 73

In the case of O'Bannon v.National Collegiate Athletic Association (NCAA),the trial court ruled that the NCAA's compensation rules were an unlawful restraint of trade.The NCAA appealed the decision to the U.S.Court of Appeals for the Ninth Circuit.What was the Ninth Circuit's response? To what level of scrutiny did the appellate court hold the NCAA's amateurism rules?

Question 74

Mark is the CEO of a major computer technology firm.He wants to form an organization that would allow computer firms to share data,information,and ideas.However,he is concerned that by doing so,the organization may violate antitrust laws.You are his attorney,and he asks you to advise him in this matter.What standard should be used to analyze the organization?

Question 75

Give an example of a boycott that would not be a per se horizontal restraint.Be sure to explain why it is not a per se horizontal restraint in your response.

Question 76

What evidence may a company offer in defense to allegations of an antitrust violation under the rule of reason standard?

A) The anticompetitive harm was not harmful to the government.
B) If the company violates the standard, there is no defense.
C) Its actions were justified and necessary under the economic conditions.
D) There was no economic harm to the consumer.

Question 77

Josh owns a company that makes televisions.The company makes high-quality TVs and has a large share of the market.Recently Josh's company decided to expand its business into
surround-sound systems.If the company requires its distributors to buy the surround-sound system as a condition of sale for the TVs,would there be an illegal restraint? Why or why not?

Question 78

The test is used to determine whether an entity has monopoly power.
A) share of the relevant market

A) vertical integration
B) rule of reason
D) bright-line

Question 79

Which president led the antitrust reform movement?
A) Theodore Roosevelt

A) Woodrow Wilson
B) Harry Truman
D) Franklin Roosevelt

Question 80

What constitutes a meeting of the minds for antitrust laws? Why is it important?