Deck 20: Antitrust Law

Question 1

An attempt to monopolize trade, even if unsuccessful, may be a violation of the Sherman Act.

Answer 1

True

Question 2

The Sherman Act states that all contracts in restraint of trade are illegal.

Answer 2

True

Question 3

State governments may restrict competition in industries such as cable television and not violate antitrust laws.

Answer 3

True

Question 4

The Noerr-Pennington doctrine holds that lobbying members of the legislature to seek special favors for a competitor does not violate the antitrust laws.

Question 5

When competitor firms agree to fix prices, the agreement is most likely a violation of the Clayton Act.

Question 6

Lobbying members of the legislature to seek special favors for a competitor does not violate the antitrust laws.

Question 7

Unfair methods of competition are illegal under the FTC Act.

Question 8

Most labor union activities to work to fix wages are exempt from the antitrust laws.

Question 9

The Sherman Antitrust Act attacks the practice of exclusive dealing contracts.

Question 10

The Sherman Act was passed in response to the general unpopularity of government agencies.

Question 11

The banking industry is exempt from antitrust law so long as the states regulate it.

Question 12

Certain "exclusive deals" are prohibited by the Clayton Act.

Question 13

The Sherman Act applies to trusts, not to corporations and other business forms.

Question 14

Tying sales are prohibited by the Clayton Act.

Question 15

The Parker doctrine allows state governments to restrict competition in industries, such as cable television, and not violate antitrust laws.

Question 16

Although many industries have lobbied Congress to be made exempt from the antitrust laws, none have been exempted.

Question 17

Mergers of competitors that would injure competition are attacked under the Clayton Act.

Question 18

One of the reasons for passing the Sherman Act was to respond to the political unpopularity of big business.

Question 19

The FTC Act restricted the enforcement of certain sections of the Sherman Act.

Question 20

The insurance industry is exempt from antitrust law so long as the states regulate it.

Question 21

Because the antitrust statutes are unclear about exactly what is illegal monopolization, it is up to the courts to decide the primary factors.

Question 22

A per se rule in antitrust means the practice is exempt from prosecution.

Question 23

The Sherman and Clayton Act provide strict guidelines for what illegal monopolization is.

Question 24

Antitrust suits may be brought by the federal government or by private parties.

Question 25

Treble damages may only be collected by direct purchasers of goods in state antitrust suits.

Question 26

A firm that violates the antitrust laws could be required to break up into several independent companies.

Question 27

A per se rule in antitrust means the practice in question is automatically held to be illegal by the courts.

Question 28

Violations of the Clayton Act are the responsibility of the Justice Department and the Federal Trade Commission.

Question 29

A rule of reason analysis means that courts look at the facts surrounding an antitrust claim before determining whether competition has been helped or hurt.

Question 30

Violators of the Sherman Act face the possibility of being sent to prison for violating that law.

Question 31

Some activities of nonprofit groups and agricultural cooperatives are exempt from the antitrust laws.

Question 32

A firm that violates the antitrust laws could be required to break up and thereby set up another firm to compete with it.

Question 33

A vertical merger is when two competitor firms come together to form a new firm.

Question 34

All antitrust suits are brought by the federal government.

Question 35

The Supreme Court has rarely used the rule of reason analysis in antitrust cases.

Question 36

Government agencies may sue for a court order to block a merger of two firms.

Question 37

Violators of the Sherman Act face fines as high as $100 million per violation.

Question 38

A private party who sues another party for violating the Sherman Act, and who wins, gets three times the actual damages plus court costs and attorneys' fees.

Question 39

The Parker doctrine holds that lobbying members of the legislature to seek special favors for a competitor does not violate the antitrust laws.

Question 40

A horizontal merger is when two competitor firms come together to form a new firm.

Question 41

The Standard Oil Trust was found liable of a per se violation of Section 1 of the Sherman Antitrust Act for monopolizing trade.

Question 42

Before two firms of significant size merge, they are required to notify the government at least a month in advance.

Question 43

Under the Hart-Scott-Rodino Antitrust Improvement Act, the FTC or the Justice Department may block a planned merger until the firms agree to certain conditions.

Question 44

When evaluating the relevant market in an antitrust case, both the product market and the geographic market may be considered.

Question 45

The Justice Department's merger guidelines place particular importance on the notion of market power.

Question 46

In Standard Oil v. U.S., the Supreme Court determined that the combination of companies in the Standard Oil Trust reflected an efficient arrangement that benefitted consumers and found no Sherman Act violations.

Question 47

In FTC v. Procter and Gamble, the Supreme Court held that Procter and Gamble could not merge with Clorox because even though the firms did not compete currently, they could compete in the future.

Question 48

Under the Hart-Scott-Rodino Antitrust Improvement Act, the government may not block proposed mergers of firms; the mergers must be contested in court later.

Question 49

When one firm has more than 25 percent of the share of a market, it is in violation of the merger guidelines if it attempts to merge with another firm.

Question 50

The Standard Oil Trust was found in violation of Section 1 of the Sherman Antitrust Act. That meant under a rule of reason, the Trust was guilty of monopolizing trade.

Question 51

Under the failing firm defense, a strong firm in an industry will be allowed to merge with another firm in the same industry if that firm was about to go bankrupt.

Question 52

In U.S. v. El Paso Natural Gas, two gas pipeline companies in physically distinct markets, and not in competition, were not allowed to merge because it was possible that in the future they could compete with one another.

Question 53

The Department of the Commerce has published a series of merger guidelines that discuss factors considered in determining whether a merger is likely to be challenged.

Question 54

In an antitrust case, the geographic market affected by a merger must be regional or national, not local, for the law to apply.

Question 55

The Justice Department's merger guidelines states that the ability to maintain prices above the competitive level is evidence of market power.

Question 56

A company's market share refers to the percent of a relevant market controlled by the company.

Question 57

In some cases, courts might prevent a merger to keep potential, not current, competition alive in an industry.

Question 58

In FTC v. Procter and Gamble, the Supreme Court held that Procter and Gamble could not merge with Clorox because Procter and Gamble had too much of a share of the bleach market already.

Question 59

The Supreme Court has held that if two firms are potential competitors then there is a per se rule against a merger.

Question 60

The rule of reason approach to mergers was established in the landmark case Standard Oil Company v. U.S.

Question 61

The antitrust standards of the European Union and the U.S. are growing closer together.

Question 62

The Supreme Court has held horizontal price fixing to be per se illegal in every antitrust case.

Question 63

OPEC, the oil cartel, has been held not to violate the antitrust laws because of the power-buyer defense.

Question 64

EU antitrust law applies to U.S. businesses that do business in Europe.

Question 65

A horizontal restraint of trade occurs when the businesses involved are on the same level of operation and work together to limit competition.

Question 66

The Supreme Court held it to be legal, under a rule of reason in the Broadcast Music case, for the rights to play copyrighted music to be sold under a blanket licensing agreement that prevented negotiation over fees.

Question 67

The Supreme Court has held the sharing of price information to be a per se violation of the Sherman Act.

Question 68

In U.S. v. Trenton Potteries, a group of sanitary potters successfully argued that reasonable price-fixing agreements were legal.

Question 69

The power-buyer defense to antitrust allegations says that a merger that increases the concentration of market power is not anticompetitive so long as purchasers are large, sophisticated, and have bargaining power.

Question 70

Price fixing is generally considered to be the worst violation of antitrust law.

Question 71

In general, price fixing among competitors is per se illegal.

Question 72

In U.S. v. Trenton Potteries, the Supreme Court held that the defendants' price-fixing agreements were legal under a rule of reason analysis because they resulted in lower prices for consumers.

Question 73

In U.S. v. Baker Hughes, the power-buyer defense was used to show that the defendant illegally monopolized its market, and was subject to treble damages under the Sherman Act.

Question 74

Since 1942, the Supreme Court has held exchanges of information are per se legal because they promote the efficient operation of the market.

Question 75

When a company uses the failing firm defense, it must show that alternatives have been tried and have not succeeded in saving the firm.

Question 76

An example of a horizontal restraint of trade is a cartel, such as OPEC.

Question 77

The antitrust standards of the European Union and the U.S. have been growing further apart in such things as exclusive dealing and territorial restrictions.

Question 78

In Todd v. Exxon Corp. the court held that a group of oil companies could share salary information because it was public information that was available to all parties.

Question 79

In U.S. v. United States Gypsum Co., involving the sharing of price information by members of an industry with each other, the Supreme Court held that exchanges of information are per se illegal.

Question 80

Generally, it is legal to share price information, so long as it is done openly.