Question 1

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

Accepted Answer

The legality of the deal depends on its purpose and effect on competition. If it is found to be anti-competitive and harms the market, it may be deemed illegal.

Question 2

The Car Parts Company (TCP) and UltraDrive Components, Inc., sell motor vehicle parts to Vroom! Stores, Inc., and Willys Trucking Corporation. Price discrimination occurs if

Accepted Answer

Price discrimination occurs when the seller charges different prices for the same product or service to different buyers. In this scenario, TCP and UltraDrive sell motor vehicle parts to Vroom! and Willys Trucking Corporation. If TCP charges Vroom! and Willys different prices for identical goods, then it is practicing price discrimination. Therefore, option A is the correct answer. Options B, C, and D do not correctly define price discrimination.

Question 3

Bubbly Bottling Company is engaged in the soft-drink bottling and distribution industry in the states of New York and New Jersey. The firm currently has about 40 percent of the market for these products and related services. Carbonate Distribution Corporation competes with Bubbly in the same states. Carbonate has about 35 percent of the market. If Bubbly were to acquire the stock and assets of Carbonate, would Bubbly be in violation of any of the antitrust laws If so, which one Discuss fully.

Accepted Answer

The answer of Bubbly Bottling Company is engaged in the...

Question 4

Global Sales, Inc., engages in trade practices that may violate antitrust law. The Federal Trade Commission has the power to act against unfair trade practices under

Accepted Answer

The Federal Trade Commission (FTC) is empowered by the Federal Trade Commission Act to act against unfair trade practices, including those that violate antitrust law. The Clayton Act and the Sherman Act are also antitrust laws, but they do not specifically grant authority to the FTC. The Interstate Commerce Act regulates interstate commerce, but does not grant authority to the FTC to act against antitrust violations.

Question 5

ProSports, Inc., makes and sells professional sports equipment. The U.S. Department of Justice files a suit against ProSports, alleging that it has committed the offense of monopolization under the Sherman Act. ProSports responds that its share of the relevant market is less than 50 percent, its activities do not constitute an unreasonable restraint of trade, and it has no intention of monopolizing the professional sports equipment industry. What are the elements of the offense of monopolization Which, if any of ProSports's defenses would be successful against the charges filed by the U.S. Department of Justice

Accepted Answer

The answer of ProSports, Inc., makes and sells professional sports...

Question 6

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

Accepted Answer

A merger between XtraOrdinaire Inc. and Yowza! Company would be a horizontal merger, as both companies compete in the same market and would be combining their operations. An interlocking directorate involves the same individuals serving on the boards of two different companies, which is not the case here. A tying arrangement involves a seller offering a product or service on the condition that the buyer also purchases a separate product or service, which is not relevant to this scenario. A vertical merger involves two companies in different stages of the production process merging, which is also not applicable here.

Question 7

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

Accepted Answer

Exclusive dealing contracts are allowed unless their effect is to substantially lessen competition. In this case, the contract forbidding Rad Refining, Inc. from purchasing the products of Quintessent's competitors may indeed lead to a substantial lessening of competition in the relevant market, as it could limit the ability of competitors to gain market share and compete on price or other terms. Therefore, this type of contract would be closely scrutinized under antitrust rules.

Question 8

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

Accepted Answer

This pricing strategy may be considered price discrimination, which can be a violation of antitrust law if it harms competition or consumers. The fact that It's Less! Store is located just down the street from Hi-Lo Retail Stores suggests that Grande Zot may be unfairly favoring one customer over another, potentially leading to anti-competitive behavior.

Question 9

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

Accepted Answer

This is a tying arrangement because GCI is requiring buyers to also purchase other products in order to purchase their line of greeting cards.

Question 10

To prevent its competitors from obtaining sufficient supplies to make their products, Molded Plastics, Inc., uses its market power to increase the prices of those supplies (inputs which Molded Plastics also uses). This is

Accepted Answer

Predatory bidding involves using market power to bid up the prices of inputs to prevent competitors from obtaining them at a reasonable cost, which is what Molded Plastics, Inc. is doing.

Question 11

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

Accepted Answer

This is an exclusive-dealing contract, where Electroplate Dishware Corporation conditions shipments of its products to Flo-Thru Stores on the agreement not to buy products from Glassy Ware Company, thereby excluding Electroplate's competitor from the market.

Question 12

Natural Spices, Inc., and Oriental Import Company, two small condiment companies, form a joint venture to fund research into producing spices more cost effectively. This is

Accepted Answer

The joint venture to fund research into producing spices more cost effectively is exempt from antitrust enforcement under the National Cooperative Research and Production Act of 1993. This act provides antitrust immunity for certain types of collaboration among competitors in research and development.

Quiz 18: Antitrust Law and Promoting Compeittion