Question 1

Fact Pattern 46-1​
Pharma Corporation makes and sells QualMed, the most prescribed name-brand blood pressure-lowering medication. Renew Drugs, Inc., has the potential to make a generic version of the same drug.
-Refer to Fact Pattern 46-1. A court would most likely rule that the agreement between Pharma and Renew is​

Accepted Answer

The court would likely subject the agreement between Pharma and Renew to analysis under the rule of reason. This is because it involves a potential restraint of trade and may harm competition, but it is not automatically illegal. The court would have to weigh the potential benefits and drawbacks of the agreement to determine whether or not it violates antitrust laws.

Question 2

To acquire monopoly power in its market, Sugar, Inc., sets its prices substantially below the costs of production. Under antitrust law, this is​

Accepted Answer

Setting prices below the cost of production to drive competitors out of the market and acquire monopoly power can be considered predatory pricing, which is a violation of antitrust laws if it results in the firm gaining monopoly power.

Question 3

Fact Pattern 46-1​
Pharma Corporation makes and sells QualMed, the most prescribed name-brand blood pressure-lowering medication. Renew Drugs, Inc., has the potential to make a generic version of the same drug.
-Refer to Fact Pattern 46-1. Pharma pays Renew not to sell its product. This is​

Accepted Answer

The answer of Fact Pattern 46-1​
Pharma Corporation makes and sells...

Question 4

Sunrich Company can process solar energy into an inexpensive fuel for internal combustion engines. As an innovator in its market, Sunrich currently has the power to affect the price of its product. This is​

Accepted Answer

Sunrich Company having the power to affect the price of its product indicates that it has market power, which is the ability of a firm to influence the market price of a good or service. Predatory pricing refers to setting artificially low prices to drive competitors out of the market, which is not applicable in this scenario. Price discrimination involves charging different prices to different customers for the same product or service, which is not mentioned in the scenario. Monopsony power refers to the ability of a single buyer to influence the market price, which is not applicable in this scenario as Sunrich Company is the seller.

Question 5

Smart Tablets, Inc., requires all distributors of its products to sell them at a specified minimum price. This is a violation of antitrust law​

Accepted Answer

The legality of minimum resale price maintenance is evaluated under the "rule of reason," which considers whether the anticompetitive effects outweigh the competitive benefits.

Question 6

Frozen Confections Corporation makes and sells ice cream under a variety of brand names. Frozen Fruit wants to merge with Grocers Iced Products Company, its main competitor. In weighing a challenge to the deal, a court looks at the relevant product market. This most likely includes ice cream and​

Accepted Answer

The relevant product market for the ice cream industry would likely include products that are reasonably interchangeable with ice cream, such as frozen yogurt, sorbet, and other frozen desserts. This is because consumers may perceive these products as substitutes for ice cream and may switch to them in response to changes in price or availability of ice cream. options A and D are too narrow, as they only include identical products, and option B is too broad, as it includes products that may not be closely related to ice cream.

Question 7

Speedee Snoboards, Inc., refuses to sell its products to Timber Mountain WinterSports Stores, Inc., a retail snowboard dealership. This is​

Accepted Answer

This is a unilateral refusal to deal because Speedee Snoboards, Inc., is choosing not to sell its products to a particular retailer without any agreement or contract in place.

Question 8

Gearbox, Inc., a manufacturer of vehicle parts, refuses to sell to Motor Repair & Replace, Inc., a national vehicle service firm. Gearbox convinces Cam & Cylinder Company, a competitor, to do the same. This is​

Accepted Answer

This scenario involves a group of competitors refusing to sell to a particular customer, which is known as a group boycott. This is a violation of antitrust laws, as it can harm competition and prevent access to the market. The other options given (exclusive-dealing contract, tying arrangement, market division) do not accurately reflect the actions being taken by Gearbox and Cam & Cylinder Company.

Question 9

Fresh Vegetables, Inc., a wholesaler, refuses to sell its produce to Good Foods Marketplace, Inc., a retailer. This is​

Accepted Answer

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

Question 10

Trail Bikes, Inc., makes and distributes Trail-brand bicycles and accessories to authorized dealers. To prevent price-cutting by dealers in direct competition, Trail Bikes imposes limits on where each dealer can sell Trail products. This is​

Accepted Answer

The imposition of limits on where each dealer can sell Trail products is a territorial restriction. This is a common practice in distribution agreements and is intended to prevent dealers from engaging in direct competition and engaging in price-cutting tactics.

Question 11

An antitrust action is brought against Carrier Freight Company, alleging that a certain act constitutes the offense of attempted monopolization. To qualify, the act must have had​

Accepted Answer

In order for an act to constitute attempted monopolization, it must have a dangerous probability of success. This means that it must possess a high likelihood of achieving monopoly power and excluding competition from the market. The other answer choices do not accurately reflect the level of probability necessary for attempted monopolization.

Question 12

Spa Company makes and sells beauty salon supplies. By selling its products at prices substantially below the normal cost of production, Spa hopes to drive its competitors from the market. This is​

Accepted Answer

Predatory pricing refers to setting low prices to drive competitors from the market, with the intention of raising prices once competitors have been eliminated. This strategy is often illegal and can harm consumers and fair competition. Therefore, Spa Company's strategy is an example of predatory pricing.

Question 13

Fiesta Food Company, Gourmet Cheeses, Inc., and Healthy Eats, Inc. agree to exchange information and share advertising. This trade association agreement is​

Accepted Answer

This type of agreement would require analysis under the rule of reason to determine whether it harms competition or restricts trade. It is not inherently illegal, nor is it a per se violation of antitrust law.

Question 14

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

Accepted Answer

To determine whether DrillBits has monopoly power, it is necessary to define the relevant market in which it operates. The relevant market includes both the product market (goods or services that are close substitutes for each other) and the geographic market (the area in which the firms compete). Only by defining the relevant market can it be determined whether DrillBits has the power to control prices and exclude competitors within that market. The other options (A, B, and C) are not useful in determining monopoly power.

Question 15

Through smart business management, Harvest Bakery obtains monopoly power in its market. This is​

Accepted Answer

Obtaining monopoly power through smart business management alone is not illegal under antitrust laws. It is only illegal if an entity uses anticompetitive practices to maintain or abuse its monopoly power once it has been obtained.

Question 16

Pads & Pods Corporation requires all distributors of its products to sell the products at specified minimum prices. This resale price maintenance agreement is​

Accepted Answer

Resale price maintenance agreements are evaluated under the rule of reason, which requires an assessment of the agreement's pro-competitive and anti-competitive effects. While such agreements can have anti-competitive effects, they can also have pro-competitive benefits, such as promoting competition based on non-price factors or securing adequate distribution services. Therefore, the agreements are not per se illegal but must be evaluated on a case-by-case basis.

Question 17

The Association of Organic Food Growers, which does not include all organic farmers and ranchers, refuses to deal with any parties who do not carry the products of its members. This group boycott is​

Accepted Answer

A group boycott is considered a per se violation of antitrust law, which means it is inherently illegal and does not require further analysis of its effects on competition. Therefore, the Association of Organic Food Growers' refusal to deal with parties that do not carry the products of its members is a per se violation of antitrust law.

Question 18

Agreements that are deemed per se violations of Section 1 of the Sherman Act include all of the following except​

Accepted Answer

A trade association on its own is not considered a per se violation of Section 1 of the Sherman Act. However, if the trade association engages in anticompetitive behavior, such as price-fixing or market division, then it may be considered a violation. A price-fixing agreement, a group boycott, and market division are all considered per se violations of Section 1 of the Sherman Act.

Question 19

Friction-Lube Corporation and Grease Inc. are the principal suppliers of their products in their market. They agree that Friction-Lube will sell exclusively to retailers and Grease will sell exclusively to wholesalers. Under antitrust law, this market division is most likely​

Accepted Answer

Market division is considered a per se violation of antitrust law because it eliminates competition and allows the suppliers to control prices and output. The fact that they agreed on exclusivity to different types of customers does not change the fact that it restricts competition in the market.

Question 20

Able Excavators, Inc., is the major wholesale distributor of heavy equipment in the state of Georgia. Its closest competitor is Big Machine Company, another Georgia firm. The two firms agree that Able will operate in southern Georgia and Big will operate in northern Georgia. This is​

Accepted Answer

The agreement between Able Excavators and Big Machine Company to operate in different regions of Georgia is a form of market division, where the firms divide the relevant market or customers amongst themselves. This is generally considered illegal under antitrust laws as it reduces competition, but it may be permitted under certain circumstances, such as when it allows firms to achieve greater efficiencies or when it is part of a settlement of antitrust litigation.

Quiz 46: Antitrust Law

To acquire monopoly power in its market, Sugar, Inc., sets its prices substantially below the costs of production. Under antitrust law, this is

Fact Pattern 46-1 Pharma Corporation makes and sells QualMed, the most prescribed name-brand blood pressure-lowering medication. Renew Drugs, Inc., has the potential to make a generic version of the same drug. -Refer to Fact Pattern 46-1. Pharma pays Renew not to sell its product. This is

Sunrich Company can process solar energy into an inexpensive fuel for internal combustion engines. As an innovator in its market, Sunrich currently has the power to affect the price of its product. This is

Smart Tablets, Inc., requires all distributors of its products to sell them at a specified minimum price. This is a violation of antitrust law

Frozen Confections Corporation makes and sells ice cream under a variety of brand names. Frozen Fruit wants to merge with Grocers Iced Products Company, its main competitor. In weighing a challenge to the deal, a court looks at the relevant product market. This most likely includes ice cream and

Speedee Snoboards, Inc., refuses to sell its products to Timber Mountain WinterSports Stores, Inc., a retail snowboard dealership. This is

Gearbox, Inc., a manufacturer of vehicle parts, refuses to sell to Motor Repair & Replace, Inc., a national vehicle service firm. Gearbox convinces Cam & Cylinder Company, a competitor, to do the same. This is

Fresh Vegetables, Inc., a wholesaler, refuses to sell its produce to Good Foods Marketplace, Inc., a retailer. This is

Trail Bikes, Inc., makes and distributes Trail-brand bicycles and accessories to authorized dealers. To prevent price-cutting by dealers in direct competition, Trail Bikes imposes limits on where each dealer can sell Trail products. This is

An antitrust action is brought against Carrier Freight Company, alleging that a certain act constitutes the offense of attempted monopolization. To qualify, the act must have had

Spa Company makes and sells beauty salon supplies. By selling its products at prices substantially below the normal cost of production, Spa hopes to drive its competitors from the market. This is

Fiesta Food Company, Gourmet Cheeses, Inc., and Healthy Eats, Inc. agree to exchange information and share advertising. This trade association agreement is

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

Through smart business management, Harvest Bakery obtains monopoly power in its market. This is

Pads & Pods Corporation requires all distributors of its products to sell the products at specified minimum prices. This resale price maintenance agreement is

The Association of Organic Food Growers, which does not include all organic farmers and ranchers, refuses to deal with any parties who do not carry the products of its members. This group boycott is

Agreements that are deemed per se violations of Section 1 of the Sherman Act include all of the following except

Friction-Lube Corporation and Grease Inc. are the principal suppliers of their products in their market. They agree that Friction-Lube will sell exclusively to retailers and Grease will sell exclusively to wholesalers. Under antitrust law, this market division is most likely

Able Excavators, Inc., is the major wholesale distributor of heavy equipment in the state of Georgia. Its closest competitor is Big Machine Company, another Georgia firm. The two firms agree that Able will operate in southern Georgia and Big will operate in northern Georgia. This is