Question 1

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

Accepted Answer

To determine whether Maxi has monopoly power, it is necessary to look at both the relevant product market and the relevant geographical market. The relevant product market is the group of products or services that are considered to be substitutes for each other by consumers. The relevant geographical market is the area where Maxi operates and where consumers can purchase its products or services. By analyzing the interplay between Maxi's market power and the relevant market(s), it can be determined whether Maxi has an unfair advantage over its competitors.

Question 2

Master Manufacturing Corporation has exclusive control over the market for its product.Under the Sherman Act,this is

Accepted Answer

Under the Sherman Act, having exclusive control over the market is not necessarily a violation, but it becomes a violation if this power was acquired through anticompetitive means, such as predatory pricing, exclusive dealing contracts, or collusion with competitors to exclude others from the market. Therefore, in order to determine whether Master Manufacturing Corporation's exclusive control over the market is a violation of the Sherman Act, it would need to be investigated whether the company engaged in any anticompetitive behavior to obtain this position.

Question 3

The Association of Software Makers,which does not include all software producers,refuses to deal with any parties who do not carry the products of its members.Under the Sherman Act,this is

Accepted Answer

The Association of Software Makers' refusal to deal with parties who do not carry the products of its members is a form of exclusive dealing. Under the Sherman Act, exclusive dealing arrangements are evaluated under the rule of reason, which considers the potential anticompetitive effects of the arrangement. However, certain types of exclusive dealing agreements, including those that foreclose a substantial share of the market to competitors, are considered per se violations. In this case, if the Association's refusal to deal with non-members eliminates competition or prevents entry into the market, it would be considered a per se violation of the Sherman Act.

Question 4

To acquire monopoly power in its market,Perfect Plastics,Inc.,sets its prices lower than its competitors.Under the Sherman Act,this is

Accepted Answer

Setting prices lower than competitors with the intent of acquiring monopoly power is considered predatory pricing, which is a violation of the Sherman Act if it results in the acquisition of monopoly power. This is because it harms competition and can lead to higher prices and reduced choices for consumers.

Question 5

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

Accepted Answer

Charging different prices to different buyers for identical goods is known as price discrimination, and it can be evaluated under the Clayton Act. The Clayton Act prohibits price discrimination if it substantially lessens competition or tends to create a monopoly.

Question 6

Edgy Engine Components,Inc.,a maker of vehicle parts,refuses to sell to Fidgety Fix-It,Inc.,a national vehicle service firm.Edgy Engine convinces Greasy Motor Parts Company,a competitor,to do the same.This is

Accepted Answer

Edgy Engine Components and Greasy Motor Parts Company are engaging in a group boycott by refusing to sell to Fidgety Fix-It, Inc. This is an anticompetitive behavior and violates antitrust laws. Market division is when companies divide up a market and agree to not compete with each other in certain geographic areas or customer segments. Joint venture is when two or more companies come together to create a new entity to pursue a specific project or business opportunity. An exclusive-dealing contract is when a buyer is required to purchase all or most of their supplies or services from one seller. None of these options accurately describe the situation presented in the scenario.

Question 7

Rally Speedboat Corporation refuses to sell its products to Super Weekends,Inc.,a recreational water products dealership.This is

Accepted Answer

This is a unilateral refusal to deal because Rally Speedboat Corporation is choosing not to do business with Super Weekends, Inc., without any explicit agreement or contract between the two companies.

Question 8

Studious Review Guides,Inc.,has the power to control the market for its product.Antitrust law regulates

Accepted Answer

Antitrust law is concerned with preventing and regulating anticompetitive behavior in the market, including the acquisition and exercise of market power. Therefore, it would regulate both how Studious acquired its power and what it does with it.

Question 9

Listen Up! Corporation books and promotes concerts and other entertainment events,for which Listen Up! also sells tickets.In weighing a challenge to Listen Up!'s "monopolistic" ticket prices,a court looks at the relevant geographic market.This encompasses

Accepted Answer

The relevant geographic market would encompass the area in which Listen Up! and its competitors sell, and their customers buy, the tickets. This is because the court would be determining if Listen Up! has monopoly power in this specific market, and if they do, it could result in harm to competition and consumers. Therefore, the court would need to consider the competitive landscape in this market.

Question 10

Seaside Cannery,Inc.,is one of many producers of canned seafood.Seaside refuses to sell its products to Port Harbor Restaurant Corporation.This refusal is most likely

Accepted Answer

Seaside Cannery has the right to choose its customers, and it is not obligated to sell to anyone. Therefore, this refusal does not violate any antitrust law.

Question 11

Gourmet Foods,Inc.,requires all distributors of its products to sell them at a specified minimum price.Under the Sherman Act,this is a violation

Accepted Answer

The answer of Gourmet Foods,Inc.,requires all distributors of its products...

Question 12

Lightning Cycles,Inc.,makes Lightning-brand motorcycles and accessories,which are distributed to authorized dealers,including Macho Motors,Inc.Macho operates dealerships in several locations.Lightning imposes territorial restrictions on Macho to insulate other dealers from direct competition.This is

Accepted Answer

The territorial restrictions imposed by Lightning Cycles on Macho Motors are an example of vertical restraint. This is because it is a restriction placed by the manufacturer on the distributor, as opposed to an agreement between competitors (horizontal restraint) or a restriction on the distributor's ability to sell to certain customers (lateral restraint). Vertical restraints can be considered anti-competitive if they result in higher prices, reduced output or consumer choice, or reduced innovation, but this is dependent on the specific circumstances.

Question 13

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

Accepted Answer

This is a horizontal restraint, as it involves an agreement between two companies at the same level of the supply chain (refining and selling gasoline) to limit the supply of gas on the market, which can raise prices. This behavior restricts competition, and it is considered illegal under antitrust laws.

Question 14

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

Accepted Answer

Predatory pricing is the practice of selling products at prices substantially below the normal cost of production in order to drive competitors out of the market. This is often considered an anticompetitive practice and is illegal in many countries. Therefore, Spa Selectiva's strategy is an example of predatory pricing.

Question 15

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

Accepted Answer

In order to be guilty of attempted monopolization, Tri-State's attempt must have a dangerous probability of success. This means that there is a significant likelihood that Tri-State would be able to create a monopoly in the relevant market, which would harm competition and consumers. A distant possibility or distinct improbability of success would not be enough to satisfy this requirement. Similarly, a deadly guaranty of success is not necessary for attempted monopolization.

Question 16

Fresh Vegetables,Inc.,a wholesaler,refuses to sell its produce to Good Mart Stores,Inc.,a retailer.Under the Sherman Act,this is

Accepted Answer

The answer of Fresh Vegetables,Inc.,a wholesaler,refuses to sell its produce...

Question 17

Imperio Caffeine Corporation makes and sells coffee under a variety of brand names.Imperio wants to merge with Java Company,its main competitor.In weighing a challenge to the deal,a court looks at the relevant product market.This most likely includes coffee and

Accepted Answer

The relevant product market in this case would include products that are reasonably interchangeable, meaning that consumers could easily switch between the coffee brands offered by Imperio and Java Company. This would include not only coffee sold under their respective brand names, but also any similar products (such as flavored coffees, coffee pods, etc.) that could be considered substitutes for their primary coffee offerings.

Question 18

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

Accepted Answer

The answer of Precision Press Corporation,a disk manufacturer,sells its DVDs...

Question 19

Refer to Fact Pattern 23-1.A court would most likely rule that the agreement between Cardio and Emitate is

Accepted Answer

The answer of Refer to Fact Pattern 23-1.A court would...

Question 20

Gulf Air,Inc.,is the major wholesale distributor of software in the state of Florida.Its closest competitor is Fluid Systems Company,another Florida firm.The two firms agree that Gulf Air will operate in south Florida and Fluid Systems will operate in north Florida.This is

Accepted Answer

This is a clear example of market division, where two competitors agree to divide the market based on geography or other factors. This allows both companies to operate without directly competing with each other and potentially losing profits.

Quiz 23: Antitrust Law and Promoting Competition