Deck 11: Antitrust Law-Monopolies and Mergers

Question 1

Private parties commonly use the antitrust laws to sue for treble damages when they believe a merger has harmed them unlawfully.

Answer 1

True
Explanation: Private parties commonly use the antitrust laws to sue for treble damages when they believe a merger has harmed them unlawfully.The threat of those private actions as well as government oversight helps maintain a marketplace where consumers are offered the benefits of vigorous competition including lower prices,improved quality,and innovation.

Question 2

High market concentration often promotes competition.

Answer 2

True
Explanation: High market concentration often promotes competition,whereas a fragmented market of many small firms may produce higher prices.Market share alone is highly unlikely to lead to antitrust action,but a high market share acquired and/or maintained via abusive conduct may be challenged.

Question 3

A situation in which a firm holds the power to control prices and/or exclude competition in a particular market is called an oligopoly.

Answer 3

False
Explanation: A monopoly is a situation in which one firm holds the power to control prices and/or exclude competition in a particular market.A few firms sharing monopoly power constitute an oligopoly.

Question 4

Mergers may produce significant economies of scale.

Question 5

The conglomerate category includes all mergers that are neither horizontal nor vertical.

Question 6

The failing company doctrine permits a merger to preserve the assets of a firm that would otherwise be lost to the market.

Question 7

United States antitrust laws cannot be applied to foreign corporations doing business in the United States.

Question 8

The primary threat to competition arising from vertical mergers is labeled market foreclosure.

Question 9

A few firms sharing monopoly power constitute an oligopoly.

Question 10

Market share,by itself,can establish monopoly power.

Question 11

In 2000,Microsoft was deemed to have violated federal antitrust laws by using _____.

A)price discrimination
B)monopoly power
C)predatory pricing
D)conglomerate mergers

Question 12

A merger involves the union of two or more enterprises wherein the property of all is transferred to the one remaining firm.

Question 13

Growth by merger is often more expensive than internal growth.

Question 14

Market share alone will lead to antitrust action.

Question 15

The Sherman Act applies to the conduct of American business abroad when that business has a direct effect on American commerce.

Question 16

A monopoly may be earned or thrust upon a monopolist.

Question 17

The smaller the Herfindahl-Hirschman Index (HHI),the more concentrated the market.

Question 18

In 2000,Microsoft was charged with violating federal antitrust laws by maintaining market dominance through anticompetitive means.

Question 19

The Sherman Act prohibits attempts to monopolize as well as monopoly itself.

Question 20

The greater the Herfindahl-Hirschman Index (HHI),the more likely the government will be concerned about the merger.

Question 21

Which of the following data is generally used by the federal government in combination with evidence of actual behavior to identify anticompetitive situations?

A)Profit margins
B)Patent information
C)Market concentration
D)Credit access

Question 22

An athletic footwear manufacturing company acquiring a mineral water manufacturing company would be an example of a _____ merger.

A)congeneric
B)vertical
C)horizontal
D)conglomerate

Question 23

Which of the following categories of mergers involves firms dealing in unrelated products?

A)Congeneric
B)Vertical
C)Horizontal
D)Conglomerate

Question 24

Which of the following is a potential virtue of mergers?

A)A single merger can trigger a merger movement among industry competitors.
B)Mergers may permit stronger competition with previously larger rivals.
C)Mergers can significantly shape political affairs.
D)Mergers concentrate too much power in too few hands.

Question 25

Feety Shoes,a footwear manufacturing company,acquires Skeez Leathers,a leather manufacturing company.This would be an example of a _____ merger.

A)congeneric
B)vertical
C)horizontal
D)conglomerate

Question 26

Which of the following acts forbids monopolies?

A)The Sherman Act
B)The Wagner Act
C)The Magnuson-Moss Act
D)The Sarbanes-Oxley Act

Question 27

Conditions where the market will support only one firm or where large economies of scale exist are termed _____.

A)oligopoly
B)oligopsony
C)monopsony
D)natural monopoly

Question 28

Which of the following statements is true of antitrust law?

A)Antitrust laws facilitate market foreclosure by raising barriers to entry.
B)Antitrust laws are designed to curb competition that poses threats to market dominant companies.
C)Antitrust law does not apply in the event of a conglomerate merger.
D)Antitrust law does not punish efficient companies who legitimately earn and maintain large market shares.

Question 29

Which of the following is an advantage of mergers?

A)Mergers may improve credit access.
B)Mergers may lead to lower market concentration.
C)Mergers tend to reduce barriers to entry.
D)Mergers help shape political affairs.

Question 30

Which of the following is a disadvantage of mergers?

A)Mergers hinder economies of scale.
B)Mergers may contribute to management inefficiencies.
C)Mergers may lead to higher prices.
D)Growth by merger is often more expensive than internal growth.

Question 31

A(n) _____ is a situation in which one firm holds the power to control prices and/or exclude competition in a particular market.

A)oligopsony
B)oligopoly
C)monopoly
D)perfect competition

Question 32

A _____ merger involves two or more firms at different levels of the same channel of distribution.

A)horizontal
B)vertical
C)conglomerate
D)congeneric

Question 33

A car manufacturer acquiring a tire manufacturing company would be an example of a _____ merger.

A)congeneric
B)vertical
C)horizontal
D)conglomerate

Question 34

A merger of two wine producers in the same geographic market would be an example of a _____ merger.

A)congeneric
B)vertical
C)conglomerate
D)horizontal

Question 35

Which of the following is a hazard of mergers?

A)Mergers do not offer tax advantages.
B)Mergers lead to too much power being concentrated in too few hands.
C)Mergers increase competition in the market.
D)Growth by merger is always more expensive than internal growth.

Question 36

Which act forbids attempts to monopolize as well as monopoly itself?

A)The Sherman Act
B)The Sarbanes-Oxley Act
C)The Robinson-Patman Act
D)The Wagner Act

Question 37

Which of the following is a part of the general legal test for monopolization?

A)Monopoly as a consequence of a superior product
B)Growth or development as a consequence of historic accident
C)The existence of a natural monopoly in that industry
D)The willful acquisition or maintenance of monopoly power

Question 38

Which of the following acts offers the primary legislative oversight: "That no person engaged in commerce shall acquire the whole or any part of the stock or the assets of another person engaged also in commerce where the effect of such acquisition may be substantially to lessen competition,or to tend to create a monopoly"?

A)The Wagner Act
B)The Sarbanes-Oxley Act
C)The Clayton Act
D)The Robinson-Patman Act

Question 39

Which of the following is a defense to monopolization?

A)Price fixing
B)Price discrimination
C)Natural Monopoly
D)Coercive conduct

Question 40

A few firms sharing monopoly power constitute a(n) _____.

A)monopsony
B)monopolistic market
C)oligopoly
D)perfectly competitive market

Question 41

What are the remedies for mergers determined to be anticompetitive?

Question 42

A _____ merger typically involves an alliance between a supplier and a purchaser. A) congeneric
B) conglomerate
C) horizontal
D) vertical

Question 43

Which of the following statements about the Herfindahl-Hirschman Index (HHI) is true?

A)The smaller the HHI,the more likely the government will be concerned about the merger.
B)The larger the increase in the HHI,the less concentrated the market.
C)The greater the increase in the HHI,the less likely the government will be concerned about the merger.
D)The larger the HHI,the more concentrated the market.

Question 44

The _____ doctrine permits a merger to preserve the assets of a firm that would otherwise be lost to the market.

A)indoor management
B)reciprocity
C)failing company
D)price squeeze

Question 45

What is a monopoly? How is an unlawful monopoly determined?

Question 46

Explain the application of U.S.antitrust policies overseas.

Question 47

What is premerger notification?

Question 48

Which of the following is employed to measure market concentration?

A)The Herfindahl-Hirschman Index
B)The Atkinson Index
C)The Gini Index
D)The Ogive Index

Question 49

Describe the five steps used by a court in monopolization analysis.

Question 50

Describe the methodology for analyzing horizontal mergers.

Question 51

Which of the following is true of the Sherman Act?

A)It applies to the conduct of American business abroad when that business has a direct effect on American commerce.
B)It applies only to the conduct of all businesses based in the United States.
C)If a business was conducted entirely abroad,it is outside the purview of the Sherman Act.
D)If an American firm enters into an agreement with another nation,it cannot be sued for violations under the Sherman Act.

Question 52

The ability of a seller to profitably maintain prices above competitive levels for a significant period of time is called _____.

A)price fixing
B)market foreclosure
C)market power
D)predatory pricing

Question 53

List the potential benefits and hazards of mergers.

Question 54

Explain the differences among horizontal,vertical,and conglomerate mergers.

Question 55

Which of the following acts is applicable to acquisitions combining domestic and foreign firms and is potentially applicable to acquisitions not involving American firms if the effect would harm competition in the American market?

A)The Sherman Act
B)The Clayton Act
C)The Sarbanes-Oxley Act
D)The Robinson-Patman Act