Deck 45: The Antitrust Laws

Question 1

The federal government's right to regulate business is derived from the _____ of the U.S.Constitution.

A) Commerce Clause
B) Separation Clause
C) Due Process Clause
D) Renegade Clause

Answer 1

A
Explanation: The federal government's right to regulate business is derived from the Commerce Clause of the U.S. Constitution. The federal antitrust laws apply only to behavior that substantially affects interstate commerce or international trade. Behavior that affects only intrastate (purely local) commerce is outside the scope of the federal antitrust laws and must be challenged under state antitrust statutes, some of which are not vigorously enforced.

Question 2

The _____ provides that the Sherman Act shall not apply to nonimport trade unless the conduct has a direct,substantial,and reasonably foreseeable effect on trade or commerce within the United States,on the U.S.import trade,or on the activities of U.S.exporters.

A) Robinson-Patman Act
B) Clayton Act
C) Noerr Doctrine
D) Foreign Trade Antitrust Improvement Act

Answer 2

D
Explanation: Seeking to clarify the confusion surrounding the extraterritorial reach of the antitrust laws, Congress enacted the Foreign Trade Antitrust Improvement Act. Specifically, this statute provides that the Sherman Act shall not apply to nonimport trade unless the conduct has a direct, substantial, and reasonably foreseeable effect on trade or commerce within the United States, on U.S. import trade, or on the activities of U.S. exporters.

Question 3

Unilateral actions,even if they have an anticompetitive effect,do not violate Section 1 of the Sherman Act.

Answer 3

True

Question 4

The Sherman Act denies the federal courts injunctive powers to remedy antitrust violations.

Question 5

Acts classified as per se illegal are presumed to be illegal.

Question 6

The Clayton Act was passed to supplement the Sherman Act by attacking specific practices that monopolists had historically followed to gain monopoly power.

Question 7

When a manufacturer gets a retailer to agree to follow his suggested price,the agreement does not involve joint action.

Question 8

Tie-in contracts occur when a seller refuses to sell a product to a buyer unless the buyer also purchases another product from the seller.

Question 9

The Sherman Act:

A) makes contracts in restraint of trade and monopolization illegal.
B) does not provide criminal penalties for violations of its provisions.
C) does not give the federal courts any injunctive powers.
D) was specifically designed to attack tie-in, exclusive dealing, and requirements contracts.

Question 10

As the Clayton Act deals with probable harms to competition,there is criminal liability for Clayton Act violations.

Question 11

Federal antitrust laws apply to:

A) intrastate commerce exclusively.
B) behavior that substantially affects interstate commerce or international trade.
C) behavior that affects external economies other than the U.S.
D) any type of nonimport trade.

Question 12

The Parker Doctrine is often referred to as the state action exemption.

Question 13

An agreement among competing firms to divide up the available market by assigning each other exclusive territories is determined as a legal agreement.

Question 14

Behavior that affects only intrastate commerce is within the scope of the federal antitrust laws.

Question 15

Under no circumstances can a single firm lawfully refuse to deal with firms or agree to deal only on certain terms.

Question 16

Horizontal price-fixing is always illegal.

Question 17

The Noerr Doctrine prohibits people and businesses from joining together and lobbying governmental officials.

Question 18

The purpose of U.S.antitrust law is to encourage and protect competition.

Question 19

The Foreign Trade Antitrust Improvement Act provides that the Sherman Act shall never apply to nonimport trade.

Question 20

The _____ gives the federal courts broad injunctive powers to remedy antitrust violations.

A) Noerr Doctrine
B) Sherman Act
C) Parker Doctrine
D) Robinson-Patman Act

Question 21

Tie-in contracts:

A) do not violate Section 3 of the Clayton Act regardless of the seller having monopoly power in the tie-in product.
B) do not violate Section 1 of the Sherman Act under any circumstance.
C) violate Section 3 of the Clayton Act if the seller has foreclosed competitors from a substantial volume of commerce in the tied product.
D) violate Section 7 of the Clayton Act if they violate Section 1 of the Sherman Act.

Question 22

Section 1 of the Sherman Act applies to _____.

A) unilateral actions
B) joint actions
C) nonimport trade
D) mergers

Question 23

Full rule of reason analysis:

A) cannot be determined until after a court conducts a thorough market analysis.
B) is a "quick look" form of rule of reason analysis.
C) applies to restraints that are facially illegal like per se restraints.
D) is utilized for restraints that have an obvious adverse impact on competition.

Question 24

In a typical predatory-pricing scheme,the predator:

A) reflects changing conditions in the marketplace affecting the marketability of competitor's goods.
B) reduces the sale price of its product to below cost, hoping to drive competitors out of business.
C) does not aim to create monopoly.
D) furnishes customers with certain services that were not provided by the competitors.

Question 25

Which of the following is true of joint ventures?

A) They are arrangements in which two or more entities collaborate with respect to research, development, production, marketing, or distribution.
B) They directly violate Section 2 of the Sherman Act.
C) They do not violate Section 1 of the Sherman Act as they involve cooperation between actual or potential competitors.
D) They refer to the acquisition of one company by the other.

Question 26

Section 3 of the Clayton Act was designed to attack:

A) licensing arrangements.
B) exclusive dealing contracts.
C) aleatory contracts.
D) adhesion contracts.

Question 27

Horizontal price-fixing:

A) is also called resale price maintenance.
B) occurs when the manufacturer gets the retailer to agree to follow the suggested retail price.
C) can be legally justified if there was a direct agreement between competitors.
D) is an attempt by competitors to interfere with the market and control prices.

Question 28

Which of the following statements is true of Section 2 of the Sherman Act?

A) Joint action is necessary in order to violate Section 2.
B) Section 2 does not outlaw monopolies.
C) In order to show a violation of Section 2, the government or a private plaintiff must not show that the defendant firm has monopoly power.
D) Section 2 outlaws contracts, combinations, and conspiracies.

Question 29

Jekyll Inc.,a camera dealer,refuses to sell its cameras to customers unless they also agree to buy memory cards and other camera accessories from Jekyll.This scenario is an example of a(n)_____.

A) requirements contract
B) tie-in contract
C) exclusive dealing contract
D) adhesion contract

Question 30

Which of the following is true of a consignment agreement?

A) If a manufacturer delivers all goods to its dealers on a consignment basis, the goods become the property of the dealer.
B) The owner of goods delivers them to another who is to act as the owner's agent in selling the goods.
C) If a manufacturer delivers all goods to its dealers on a consignment basis, the dealer cannot lawfully fix the price of those goods.
D) It is always held to be joint action.

Question 31

Licensing arrangements:

A) are per se violations of U.S. antitrust laws.
B) should undergo rule of reason analysis.
C) should be subject to strict scrutiny analysis.
D) are unlikely to raise antitrust issues.

Question 32

If a distributor persuades a manufacturer to refuse to deal with a rival distributor,the two parties:

A) have committed a per se violation of Section 1 of the Sherman Act.
B) do not violate Section 1 of the Sherman Act since this is a unilateral action.
C) are conspiring to form a monopoly, thus directly violating Section 2 of the Sherman Act.
D) are attempting vertical price-fixing.

Question 33

When a manufacturer sells goods to retail outlets and suggests a retail price,there is no violation of Section 1 of the Sherman Act because there is no:

A) merger of any type.
B) contract, combination, or conspiracy to fix the price.
C) indication of an intent to monopolize.
D) exclusive dealing contract.

Question 34

Tie-in contracts may also violate:

A) Section 1 of the Sherman Act.
B) Section 2 of the Sherman Act.
C) Section 7 of the Clayton Act.
D) Section 2(a) of the Robinson-Patman Act.

Question 35

The functional interchangeability test helps to determine if:

A) a firm controls a very high percentage share of the relevant market.
B) the defendant had an anticompetitive intent.
C) there has been joint action.
D) the plaintiff has standing to bring an antitrust suit.

Question 36

The abbreviated rule of reason analysis applies to restraints:

A) in which the overall reasonableness cannot be ascertained without a thorough examination of their pernicious and beneficial effects in the relevant markets.
B) that have an obvious adverse impact on competition, but whose overall reasonableness cannot be immediately ascertained.
C) that require thorough inquiry into the anticompetitive effects because the effects are not obvious.
D) that deserve a per se treatment because of their obvious unreasonableness.

Question 37

Silverlight Inc.,a cell phone store,agrees to sell cell phones and related accessories manufactured only by Moore Corp.This is an example of a(n)_____.

A) requirements contract
B) exclusive dealing contract
C) tie-in contract
D) adhesion contract

Question 38

Which of the following is true of vertical price-fixing?

A) It is an attempt by competitors to interfere with the market and control prices.
B) It is not within the scope of Section 1 of the Sherman Act.
C) It is illegal per se for manufacturers to state a "suggested retail price" for their products.
D) It is an attempt by manufacturers to control the resale price of their products.

Question 39

Section 3 of the Clayton Act applies to:

A) service contracts.
B) true consignments.
C) anticompetitive behavior.
D) formal agreements only.

Question 40

A restaurant called Habib's agrees to buy all the groceries it needs from Rida Supermarket.Which of the following contracts is created in this case?

A) Requirements contract
B) Tie-in contract
C) Exclusive dealing contract
D) Adhesion contract

Question 41

An oil producer's merger with an oil refiner is an example of a _____.

A) conglomerate merger
B) push down merger
C) horizontal merger
D) vertical merger

Question 42

A candy company merging with a greeting cards company is a:

A) vertical merger.
B) conglomerate merger.
C) product-extension merger.
D) market-extension merger.

Question 43

Describe defenses to direct price discrimination under the Robinson-Patman Act.

Question 44

Describe the Hart-Scott-Rodino Antitrust Improvements Act.

Question 45

Describe Section 2 of the Sherman Act.

Question 46

Auro Inc.,a manufacturer of lawn mowers,sells a lawn mower model both to retail chain Streetmart and to standalone store Lawnworks in the town of Bayside.Auro sells the model to Streetmart at $5 less per unit than it sells to Lawnworks as Streetmart buys more mowers.Streetmart's retail prices are therefore lower than those of Lawnworks.Which of the following statements is true of this case?

A) Auro is in violation of Section 2(a) of the Robinson-Patman Act.
B) Auro is in violation of the provisions of the Parker Doctrine.
C) Auro is in violation of the Noerr Doctrine.
D) Auro is in violation of Section 3 of the Clayton Act.

Question 47

If one automobile firm merges with another automobile firm,it is called a _____.

A) push down merger
B) vertical merger
C) conglomerate merger
D) horizontal merger

Question 48

What is price-fixing?

Question 49

Describe the type of behavior Section 3 of the Clayton Act is designed to attack.

Question 50

Conglomerate mergers that create a potential for reciprocal dealing have been successfully challenged under:

A) Section 3 of the Clayton Act.
B) Section 2 of the Sherman Act.
C) Section 7 of the Clayton Act.
D) Section 2(a) of the Robinson-Patman Act.