Deck 28: Antitrust and Restraints of Trade

Question 1

Charging different prices to different buyers for identical goods is price discrimination.

Answer 1

True

Question 2

A horizontal restraint of trade results from an agreement between firms at different levels in the manu?facturing and distribution process.

Answer 2

False

Question 3

For purposes of price discrimination,identical products sold under dif?ferent labels are deemed to be of like quality.

Answer 3

True

Question 4

Under the rule of reason,a court will consider the effect or the potential effect of a business agree?ment on competition.

Question 5

Any agreement among competitors to fix prices constitutes a per se vio?lation of antitrust law.

Question 6

A tying arrangement occurs when competitors agree to fix,or "tie," their prices at the same level.

Question 7

A merger between firms that compete with each other in the same mar?ket is a vertical merger.

Question 8

Territorial and customer restrictions are currently considered per se vio?lations of antitrust law.

Question 9

Minimum resale price maintenance agreements are subject to analysis under the rule of reason.

Question 10

Market share and market concentration are the only factors for analyz?ing the anticompetitive effects of a merger.

Question 11

Most group boycotts are legal.

Question 12

Mergers between firms that compete in the same market are vertical mergers.

Question 13

A price fixing agreement is ana?lyzed under the rule of reason.

Question 14

Agreements among members of trade or professional organizations are ex?empt from an?titrust laws.

Question 15

An agreement between firms operating at different levels in the manu?fac?turing and distribution process does not affect competition.

Question 16

Under an exclusive-dealing contract,a seller promises a buyer a certain territory in which the buyer will have no direct competition.

Question 17

A unilateral refusal to deal with a particular person or firm never vio?lates antitrust law.

Question 18

In a concentrated industry,antitrust laws do not apply.

Question 19

Maximum resale price maintenance agreements are per se violations of antitrust law.

Question 20

If an agreement is a per se violation of antitrust laws,there must be fur?ther inquiry into its reason?ableness.

Question 21

Zippy Moto-Bikes,Inc. ,wants to prevent discount dealers that carry its products with?out providing warranty services from cutting into the business of full-service dealers.Zippy's decision to restrict discount dealers to one type of customer and full-service deal?ers to another is

A)not subject to antitrust law.
B)per se violations of the Sherman Act.
C)subject to evaluation under the rule of reason.
D)violations of the Clayton Act.

Question 22

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 23

Smooth Sailing,Inc. ,conditions future shipments of its prod?ucts to dis?tributors 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 24

Lightning Cycles,Inc. ,makes Lightning-brand motorcycles and accesso?ries,which are distributed to authorized dealers,including Macho Motors,Inc.Macho operates dealerships in several locations.Lightning imposes territorial restrictions on Macho to insulate other dealers from direct competition.This 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 25

Health Resources Corporation makes and sells Intake,the most pre?scribed name-brand cholesterol-lowering medication.Jerichol Company has the potential to make a generic version of the same drug.Health Resources pays Jerichol not to sell its product.This is

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

Question 26

Seaside Cannery,Inc. ,is one of many producers of canned seafood.Seaside refuses to sell its products to Troll Harbor Restaurant Corporation.This refusal is most likely

A)an anticompetitive practice in violation of the Clayton Act.
B)a per se violation of the Sherman Act.
C)a violation of the Sherman Act under the rule of reason.
D)not a violation of antitrust law.

Question 27

Greeting Cards,Inc.(GCI),re?quires that the buyers of its line of greeting cards also agree to buy GCI t-shirts,bal?loons,and other products.This is

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

Question 28

Smoothwater Driftboat Corporation refuses to sell its products to Sportsters Weekend,Inc. ,a recreational products dealership.This is

A)price discrimination.
B)a horizontal market division.
C)an exclusive-dealing contract.
D)a unilateral refusal to deal.

Question 29

Nano Software,Inc. ,conditions the sale of its OfficeBooks product on Payroll Personnel Company's agreeing to buy QuikReVu,Nano's photo-editing product.This deal is

A)legal,depending on its purpose and the effect on competition.
B)legal,depending on production and transportation costs.
C)legal under any circumstances.
D)not legal under any circumstances.

Question 30

Crop Yield Corporation,Dextros Harvest Company,and Equip Enterprises,Inc. ,are farm-equipment distributors that control 90 per?cent of the market for their products in a certain geographic area.The firms agree to sell their products for the same prices.This is

A)a group boycott.
B)a merger.
C)a price-fixing agreement.
D)a tying arrangement.

Question 31

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 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 the Sherman Act.
D)subject to analysis under the rule of reason.

Question 32

Perfecto Appliance Company,Qualité Kitchens Corporation,and Royale Products,Inc. ,control 90 percent of the market for appliances in a cer?tain geo?graphic area.Perfecto,Qualité,and Royale agree to sell their ap?pli?ances for the same prices,and to ex?clude Superia Appliances,Inc. ,which controls the other 10 percent of the market.This is

A)an anticompetitive practice in violation of the Clayton Act.
B)a per se violation of the Sherman Act.
C)a violation of the Sherman Act under the rule of reason.
D)not a violation of antitrust law.

Question 33

Delta Services,Inc. ,is the major wholesale distributor of software in the state of Florida.Its closest competitor is Efficient Systems Company,an?other Florida firm.The two firms agree that Delta will operate in south Florida and Efficient will operate in north Florida.This is

A)a group boycott.
B)a market division.
C)a price-fixing agreement.
D)a tying arrangement.

Question 34

Engine Components,Inc. ,a manufacturer of vehicle parts,refuses to sell to Fix-It,Inc. ,a national vehicle service firm.Engine Components con?vinces Greasy Motor Parts 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 35

Energy Power,Inc. ,joins with other businesses in its industry to ex?change information,represent members' interests before Congress,and lobby for certain regulatory standards.These joint activities are

A)not subject to antitrust law.
B)per se violations of the Sherman Act.
C)subject to evaluation under the rule of reason.
D)violations of the Clayton Act.

Question 36

XtraOrdinaire Inc.competes with Yowza! Company in the same market.Their merger would be

A)a horizontal merger.
B)an interlocking directorate.
C)a tying arrangement.
D)a vertical merger.

Question 37

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 38

By contract,Quality Metals Corporation forbids Resource Refining,Inc. ,a wholesale buyer of Quality's products,from purchasing the products of Quality's competitors.This exclusive-dealing contract is allowed

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 39

USA Cellphone Corporation requires all distribu?tors of its products to sell the products at specified minimum prices.This resale price mainte?nance agreement is

A)a per se violation of antitrust law.
B)a legal restraint of trade.
C)subject to evaluation under the rule of reason.
D)not subject to antitrust law.

Question 40

Grande Zot,Inc. ,an electronics manufacturer,sells its DVD players to Hi-Lo Retail Stores for $50 but charges It's Less! Store-which is located just down the street from Hi-Lo-$75 for the same players.This may be

A)a violation of antitrust law.
B)exempt from antitrust enforcement.
C)not subject to antitrust law.
D)subject only to antitrust common law.

Question 41

Finely Engineered Parts Corporation (FEPC)and Great Gears & Gauges,Inc.(3G),are competitors selling certain machine parts that are otherwise generally unattainable in their geographic market.This mar?ket includes the states of California,Oregon,Washington,and Idaho.FEPC and 3G agree that FEPC will no longer sell in California and that 3G will no longer sell in Oregon,Washington,and Idaho.Have FEPC and 3G violated any antitrust law? If so,which one? Explain.If they had divided their market by type of customer rather than geographic are,would the result be the same? Why or why not?

Question 42

Java Bean Company imports coffee beans and sells them under two-year contracts to Mellow Roast,Inc. ,and other coffeemakers.The contracts require that during the two-year term a coffeemaker not buy beans from Java Bean's competitors.The contracts do not limit the coffeemakers' purchase of tea or other beverage ingredients from other suppliers,how?ever.In the second year of the contract,Mellow Roast protests that this arrangement violates antitrust law.Is Mellow Roast correct? If not,why not? If so,under which antitrust statute,or statutes,could these con?tracts be held illegal?