Deck 41: Antitrust Law

Question 1

A trade association practice or agreement that restrains trade is analyzed under the rule of reason. 

Answer 1

True

Question 2

A group boycott that is intended to eliminate competition is legal. 

Answer 2

False

Question 3

Monopoly power may be proved by evidence that a firm used its power to control prices. 

Answer 3

True

Question 4

A restraint of trade is an agreement between firms that has the effect of reducing competition in the marketplace. 

Question 5

The possession of monopoly power alone does NOT constitute the offense of monopolization. 

Question 6

Market power is the ability of a firm to enter a given market. 

Question 7

The Sherman Act,the Clayton Act and the Federal Trade Commission Act are all examples of legislation designed to curb anticompetitive business practices. 

Question 8

An act must substantially affect interstate commerce to violate antitrust law. 

Question 9

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

Question 10

A market division by class of customer between rival firms violates antitrust law. 

Question 11

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

Question 12

Any agreement among competitors to fix prices is subject to evaluation under the rule of reason. 

Question 13

An agreement that is deemed a per se violation will be examined by a court to determine whether the agreement's benefits outweigh its anticompetitive effects. 

Question 14

Unilateral conduct cannot result in a violation of antitrust law. 

Question 15

Section 1 of the Sherman Act condemns monopolization. 

Question 16

For products that are sold nationwide,the relevant geographic market is the entire globe. 

Question 17

Predatory pricing involves selling a product at prices substantially above the fair market value. 

Question 18

Monopoly power is a minor amount of market power. 

Question 19

Territorial and customer restrictions are judged under the rule of reason. 

Question 20

The basic purpose of antitrust law is to foster competition. 

Question 21

Any action challenged as an attempt to monopolize must have been specifically intended to exclude competitors and garner monopoly power.

Question 22

The Clayton Act prohibits certain classes of price discrimination. 

Question 23

The market-share test measures a firm's percentage share of a market. 

Question 24

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 25

The primary measure of monopoly power is a competitor's assessment of the acts of a firm under review. 

Question 26

Soft Drink Corporation is charged with violating the Sherman Act through conduct subject to the rule of reason.When applying the rule of reason in this situation,a court will not consider​ 

A) ​the purpose of the agreement. 
B) ​the parties' market ability to implement the agreement. 
C) ​the effect of the agreement on international trade. 
D) ​the potential effect of the agreement on competition.

Question 27

A contract under which a seller forbids a buyer to purchase products from the seller's competitors is a tying arrangement. 

Question 28

North Mining Company and South Excavation Company agree to abide by the decisions of East Coast Financial Corporation as to their respective levels of production,markets,and prices,effectively reducing competition and increasing profits.This is most likely​ 

A) ​a common, legal, time-honored type of business arrangement. 
B) ​an illegal restraint on trade. 
C) ​an innovative, legally efficient approach to doing business. 
D) ​an outdated, but legal business trust.

Question 29

Labor unions can organize and bargain without violating antitrust law. 

Question 30

In determining the legality of a merger,a crucial consideration is market concentration. 

Question 31

Insurance companies are exempt from antitrust laws whenever state regulation exists. 

Question 32

A divestiture is an order to a company to cease,or divest itself of,its anticompetitive conduct. 

Question 33

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

Question 34

Discount Retail Corporation may be engaging in conduct that violates the Sherman Act.To bring an action against the firm requires that its conduct have a significant impact on​ 

A) ​international commerce. 
B) ​Internet commerce. 
C) ​interstate commerce. 
D) ​intrastate commerce.

Question 35

When a small number of companies share a large part of a market,the market is concentrated. 

Question 36

Any conspiracy-even if it occurs outside the United States-that has a substantial effect on U.S.commerce is within the reach of the Sherman Act. 

Question 37

Joint refusals to deal are not subject to scrutiny under the Sherman Act. 

Question 38

Price discrimination occurs when a seller charges different prices to competing buyers for identical goods or services. 

Question 39

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.This is​ 

A) ​a deal that neither restrains trade or harms competition. 
B) ​a legal restraint of trade. 
C) ​aper se violation of the Sherman Act. 
D) ​subject to analysis under the rule of reason.

Question 40

The U.S.Department of Justice can prosecute violations of all of the antitrust laws. 

Question 41

Pads & Pods Corporation requires all distributors of its products to sell the products at specified minimum prices.This resale price maintenance agreement is​ 

A) ​aper 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 42

Sunrich Company can process solar energy into an inexpensive fuel for internal combustion engines.As an innovator in its market,Sunrich currently has the power to affect the price of its product.This is​ 

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

Question 43

The Association of Organic Food Producers,which does not include all organic farmers and ranchers,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 nor harms competition. 
B) ​a legal restraint of trade. 
C) ​aper se violation of antitrust law. 
D) ​subject to analysis under the rule of reason.

Question 44

Gearbox,Inc.,a manufacturer of vehicle parts,refuses to sell to Motor Repair & Replace,Inc.,a national vehicle service firm.Gearbox convinces Cam & Cylinder Company,a competitor,to do the same.This is​ 

A) ​a group boycott. 
B) ​an exclusive-dealing contract. 
C) ​a tying arrangement. 
D) ​a market division.

Question 45

Dredgers,Inc.,is the major wholesale distributor of heavy equipment in the state of Georgia.Its closest competitor is Excavators Company,another Georgia firm.The two firms agree that Excavators will operate in southern Georgia and Dredgers will operate in northern Georgia.This is​ 

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

Question 46

Some agreements are so blatantly and substantially anticompetitive that they are deemed illegal per se under Section 1 of the Sherman Act.These include all of the following except​ 

A) ​a price-fixing agreement. 
B) ​a group boycott. 
C) ​a trade association. 
D) ​a market division.

Question 47

Fact Pattern 41-1Bodycare Corporation makes and sells ChemMed, the most prescribed name-brand blood pressure-lowering medication. Deja Vu Drugs, Inc., has the potential to make a generic version of the same drug.
Refer to Fact Pattern 41-1.A court would most likely rule that the agreement between Cardio and Emitate is​ 

A) ​a deal that neither restrains trade or harms competition. 
B) ​a legal restraint of trade. 
C) ​aper se violation of the Sherman Act. 
D) ​subject to analysis under the rule of reason.

Question 48

Marvin is a very good businessman.He starts Marvin's Bike Company in the small town of Wheatland.There is one other bike store in Wheatland.Through good business management,Marvin's obtains a great deal of market power in Wheatland.This acquisition of monopoly power is​ 

A) ​aper se violation of Section 1 of the Sherman Act. 
B) ​an illegal restraint on trade. 
C) ​not an antitrust violation. 
D) ​aper se violation of Section 2 of the Sherman Act.

Question 49

A court deems an agreement between Silver Saddles Saddlery and Time Tested Tack,Inc.to be a per se violation of the Sherman Act.The court is​ 

A) ​prevented from determining whether the agreement's benefits outweigh its anticompetitive effects. 
B) ​required to unanimously decide whether the agreement's benefits outweigh its anticompetitive effects. 
C) ​required to apply the rule of reason. 
D) ​required to issue a formal complaint against Silver Saddles and Time Tested Tack.

Question 50

To acquire monopoly power in its market,Global Positioning Systems,Inc.,sets its prices substantially below the normal costs of production.Under antitrust law,this is​ 

A) ​aper se violation. 
B) ​a violation if its competitors set similar prices. 
C) ​a violation if it thereby acquires monopoly power. 
D) ​not a violation.

Question 51

A suit is filed against Dormroom Furniture Unlimited,Inc.,alleging that the firm has committed the offense of monopolization.To determine the extent of Dormroom Furniture's market power,the court will use the​ 

A) ​market-share test. 
B) ​geographic-share test. 
C) ​rule of reason. 
D) ​monopoly test.

Question 52

Fine Food Company,Gourmet Cheeses,Inc.,and Healthy Eats,Inc.agree to exchange information and share advertising.This trade association is​ 

A) ​a deal that neither restrains trade nor harms competition. 
B) ​a legal restraint of trade. 
C) ​aper se violation of antitrust law. 
D) ​subject to analysis under the rule of reason.

Question 53

Frictionless Lubricant Corporation and Grease,Inc.,are the principal sup-pliers of their product in their market.They agree that Frictionless will sell exclusively to retailers and Grease will sell exclusively to wholesalers.Under antitrust law,this is most likely​ 

A) ​aper 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 54

Healthcare Device,Inc.,has exclusive control over the market for its product.Healthcare Device's market power is most likely​ 

A) ​"an unfair or deceptive act or practice." 
B) ​aper se violation. 
C) ​not a violation. 
D) ​subject to further evaluation.

Question 55

A suit is filed against AgriSeeds Corporation,alleging that the firm committed the offense of monopolization.To determine whether AgriSeeds has monopoly power requires looking at​ 

A) ​the company's size alone. 
B) ​the marketing practices of the company's competitors. 
C) ​production methods and marketing techniques. 
D) ​the relevant geographic market and the relevant product market.

Question 56

Frozen Confections Corporation makes and sells ice cream under a variety of brand names.Frozen wants to merge with Grocers Products Company,its main competitor.In weighing a challenge to the deal,a court looks at the relevant product market.This most likely includes ice cream and​ 

A) ​no other products. 
B) ​products that are not identical but are related, such as spin-offs. 
C) ​products that are reasonably interchangeable. 
D) ​products with identical attributes only.

Question 57

Fresh Vegetables,Inc.,a wholesaler,refuses to sell its produce to Good Mart Stores,Inc.,a retailer.This is​ 

A) ​"an unfair or deceptive act or practice." 
B) ​aper se violation. 
C) ​not a violation. 
D) ​subject to analysis under the rule of reason.

Question 58

Speedee Snoboards,Inc.,refuses to sell its products to Timber Mountain WinterSports Stores,Inc.,a retail snowboard dealership.This is​ 

A) ​an exclusive-dealing contract. 
B) ​a territorial restriction. 
C) ​attempted monopolization. 
D) ​a unilateral refusal to deal.

Question 59

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

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

Question 60

Fact Pattern 41-1Bodycare Corporation makes and sells ChemMed, the most prescribed name-brand blood pressure-lowering medication. Deja Vu Drugs, Inc., has the potential to make a generic version of the same drug.
Refer to Fact Pattern 41-1.Bodycare pays Deja Vu not to sell its product.This is​ 

A) ​a market division. 
B) ​a refusal to deal. 
C) ​an exclusive-dealing contract. 
D) ​a price-fixing agreement.

Question 61

To drive its competitors out of a certain geographic segment of its market,Superior HVAC,Inc.,sets the prices of its products below cost for the buyers in that area.This is​ 

A) ​a refusal to deal. 
B) ​business acumen. 
C) ​predatory pricing. 
D) ​price discrimination.

Question 62

Earthgrown Flora,Inc.,is one of many producers of cut flowers.Earthgrown refuses to sell its products to Florist Shops Corporation.Under antitrust law,this refusal is most likely​ 

A) ​aper se violation. 
B) ​a violation if its competitors make similar deals. 
C) ​a violation if it thereby acquires monopoly power. 
D) ​not a violation.

Question 63

Precision Parts Corporation and Quality Gears,Inc.,are competitors selling certain machine parts that are otherwise generally unattainable in their geographic market.This market includes the states of Minnesota,North Dakota,and South Dakota.Precision Parts and Quality Gears agree that Precision Parts will no longer sell in Minnesota and that Quality Gears will no longer sell in North and South Dakota.Have Precision Parts and Quality Gears 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 64

Grip-All Tires,Inc.,conditions the sale of one of its products on Helpful Vehicle Service Stores agreeing to buy another of Grip-All's products.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 65

City Manufacturing Corporation conditions shipments of its products to Exurb Stores,Inc.,on Exurb's agreement not to buy products from Fresh Works Company,City's competitor.This is​ 

A) ​an exclusive-dealing contract. 
B) ​a tying arrangement. 
C) ​price discrimination. 
D) ​a unilateral refusal to deal.

Question 66

HVAC Parts Company charges different buyers different prices for identical goods.HVAC's prices are subject to evaluation under​ 

A) ​the Clayton Act. 
B) ​the Federal Trade Commission Act. 
C) ​the Sherman Act. 
D) ​no antitrust law.

Question 67

An antitrust action is brought against Tri-State Transport Company,alleging the offense of attempted monopolization.To be guilty of this offense,Tri-State's attempt must have​ 

A) ​a dangerous probability of success. 
B) ​a deadly guaranty of success. 
C) ​a distant possibility of success. 
D) ​a distinct improbability of success.

Question 68

Farm Crops Corporation offers to sell its wheat substitute to Gluten-Free,Inc.,only if Gluten-Free agrees to buy all of the wheat substitute that it needs from Farm Crops,even though there are other sellers from whom Gluten-Free could buy.This is​ 

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

Question 69

Under what circumstances would Quality Market,a small store in Rustic,an isolated town,be considered a monopoly? If Quality Market is a monopoly,is it in violation of antitrust law?​

Question 70

Precision Press Corporation,a disk manufacturer,sells its DVDs in certain quantities to Quik Shows,a retailer,for $275 but charges Rite Views,a competitive retailer,$350.This is most likely a violation of​ 

A) ​the Clayton Act. 
B) ​the Federal Trade Commission Act. 
C) ​the Sherman Act. 
D) ​no antitrust law.

Question 71

Gaucho Ranchland Supplies Corporation believes that Vaquero Stock & Equipment Corporation engages in anticompetitive behavior in an attempt to drive Gaucho,its chief competitor,out of the market.Antitrust laws can be enforced against Vaquero by​ 

A) ​only a disinterested third party. 
B) ​Congress. 
C) ​Gaucho. 
D) ​none of the choices.

Question 72

Big U.S.Oil Company joins with a foreign cartel to control the price of oil.The cartel has a substantial effect on U.S.commerce.A suit for violation of U.S.antitrust laws can be brought against​ 

A) ​both Big U.S. Oil and the cartel. 
B) ​neither Big U.S. Oil nor the cartel. 
C) ​only Big U.S. Oil. 
D) ​only the cartel.