Question 1

Three of the airline companies agree that they will not go any lower than $100 each way for coast-to-coast tickets. This is:

Accepted Answer

This is an example of horizontal price fixing, where competitors agree to set a minimum price for their products or services.

Question 2

The Clayton Act:

Accepted Answer

The Clayton Act was specifically enacted to prevent and stop certain trade practices before they become restraints of trade. It also gave more specific guidelines on what constituted a violation, strengthened private antitrust litigation, and prohibited certain anticompetitive conduct that the Sherman Act did not explicitly address.

Question 3

Which of the following remedies are available under the Sherman Act?

Accepted Answer

The Sherman Act allows for injunctive relief as a remedy for antitrust violations. It does not provide for damages of four times the actual loss or for consequential damages.

Question 4

If all milk producers in the area agree to set a minimum price for raw milk, this would be an example of:

Accepted Answer

Setting a minimum price for raw milk by all milk producers in the area is an example of horizontal price fixing, which is an agreement among competitors at the same level of the supply chain to set prices, allocate markets, or limit production. It is illegal under antitrust laws because it reduces competition and harms consumers by preventing them from enjoying the benefits of market forces.

Question 5

The 1936 Act prohibiting price discrimination in interstate commerce involving commodities of like grade and quality is the:

Accepted Answer

The 1936 Act prohibiting price discrimination in interstate commerce involving commodities of like grade and quality is the Robinson-Patman Act. The Sherman Act, Clayton Act, and Federal Trade Commission Act are all different antitrust laws, but they do not specifically address price discrimination in the same way that the Robinson-Patman Act does.

Question 6

Harry Jones at Jones Brothers Furniture Co.does not like the Bryte Lamp Co.representative, so he decided that Jones Brothers would boycott Bryte.Under the Sherman Act, this is:

Accepted Answer

Boycotting a company based on personal dislike by a business does not violate the Sherman Act as it does not inherently involve anticompetitive practices or agreements that restrict trade. The Sherman Act primarily targets anticompetitive agreements, monopolization, or attempts to monopolize.

Question 7

Under Section 1 of the Sherman Act, which of the following is illegal per se?

Accepted Answer

Horizontal market allocations are illegal per se under Section 1 of the Sherman Act. Vertical market allocations and vertical territorial and customer restrictions may be considered illegal under the rule of reason analysis, which takes into account the specific circumstances and potential anti-competitive effects of the practices. Therefore, choices A and C are not correct. Choice D is not a specific answer and does not provide a clear explanation.

Question 8

A merger involving firms that are not competitors, customers, or suppliers is termed a:

Accepted Answer

A conglomerate merger involves the combination of two firms that operate in different industries and are not competitors, customers, or suppliers to one another. This type of merger is also sometimes referred to as a diversification merger.

Question 9

Barb sets her prices to undercut her competitors by 20%.This is:

Accepted Answer

Undercutting competitors by setting lower prices is a competitive business strategy and does not violate the Sherman Act, which addresses anti-competitive practices like price fixing and monopolies.

Question 10

A manufacturer agrees to sell the distributor 1,000 boxes of 2-quart bowls only if he agrees to resell to the retailer at cost plus $1.10 per bowl and the retailer must agree to sell at no less than his cost plus .50 per bowl.This is:

Accepted Answer

This scenario describes vertical price fixing, where the manufacturer sets the minimum resale price for the distributor and retailer, controlling the pricing structure down the supply chain.

Question 11

Enforcement proceedings under the Sherman Act may not be brought by the:

Accepted Answer

The U.S. Commerce Department does not have the authority to bring enforcement proceedings under the Sherman Act. The authority rests with the U.S. Justice Department, the Federal Trade Commission, and state Attorneys General.

Question 12

If a seller of a product conditions its sale upon the buyer's purchasing a second product from the seller, this is known as a:

Accepted Answer

This is known as a tying arrangement, which occurs when a seller conditions the sale of a product or service on the buyer's agreement to purchase a separate product or service from the seller.

Question 13

Boycotts that are in violation of the Sherman Act include:

Accepted Answer

The Sherman Act prohibits agreements and practices that restrain trade or limit competition. When two or more firms with market power agree not to deal with a third party, it can be seen as a violation of the Sherman Act as it eliminates competition. Choices A and B may not necessarily be anticompetitive, and choice D describes a cooperative agreement that would not violate the Sherman Act.

Question 14

Margaret tells the members of the Raleigh Association of Restaurant Owners that they will be able to get a better price on linen supplies (tablecloths, napkins) if they will deal with one supplier rather than split their business between two.They all know Margaret deals with Niagara Linen rather than Cayuga.Under the Sherman Act, if they all sign contracts with Niagara:

Accepted Answer

Illegality may be inferred from this conduct because if the restaurant owners collectively decide to deal exclusively with Niagara Linen, it could be seen as an implicit agreement to boycott Cayuga, potentially violating antitrust laws under the Sherman Act.

Question 15

If a type of restraint is characterized as per se illegal:

Accepted Answer

If a type of restraint is characterized as per se illegal, the plaintiff need only show that the type of restraint occurred, without the need to prove that it limited competition or conduct extensive economic analysis. This is because per se illegal restraints are considered to be inherently anti-competitive, and therefore do not require a showing of harm to competition.

Question 16

In order for there to be a violation of Section 2 of the Sherman Act, in addition to monopoly power, the courts must find:

Accepted Answer

Section 2 of the Sherman Act prohibits monopolization, which includes both the possession of monopoly power and the willful acquisition or maintenance of that power through improper conduct. Therefore, to establish a violation of Section 2, it is necessary to prove unfair conduct such as predatory pricing, exclusionary practices, or other anticompetitive behavior. Concerted action, competitive behavior, and economic advantage are not the only requirements for a Section 2 violation.

Question 17

If X Co.agrees with S Co.that X will not sell beer in Wisconsin if S will not sell beer in Colorado, under the Sherman Act, this is:

Accepted Answer

This agreement is a per se illegal horizontal market allocation because it involves two competitors agreeing to divide markets geographically, which is considered a violation of antitrust laws under the Sherman Act.

Question 18

The definition of price-fixing includes agreements that:

Accepted Answer

Price-fixing is an agreement between two or more parties to set prices at a certain level. This can be done to raise prices, stabilize prices, or depress prices.

Question 19

The Justice Department's policy toward conduct by foreign companies is to:

Accepted Answer

The Justice Department's policy includes focusing on boycotts and cartels, examining conduct for legal violations, and expanding Sherman Act enforcement to foreign companies harming U.S. exports.

Question 20

To determine "market share," one would require knowledge of which of the following?

Accepted Answer

Market share is calculated by comparing the sales of a product to the total sales of all competing products in the market, which requires knowledge of competing products, sales locations, and sales volume.

Quiz 40: Antitrust