Question 1

Frictionless Lubricant Corporation and Grease Inc. are the principal suppliers of their product in their market. They agree that Frictionless will sell exclusively to retailers and Grease will sell exclusively to wholesalers. Under anti trust law,this market division is most likely

Accepted Answer

Market division agreements between competitors are considered a per se violation of antitrust laws because they restrict competition and harm consumers by limiting choices and potentially raising prices.

Question 2

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

The group boycott by the Association of Organic Food Growers constitutes a per se violation of antitrust law because it involves a group of competitors acting in concert to exclude other competitors from the market. This type of conduct is automatically illegal under antitrust laws, without any consideration of its effects on competition.

Question 3

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 is not necessarily a per se violation of Section 1 of the Sherman Act. While trade associations could potentially facilitate anticompetitive behavior, such as information sharing or coordinated lobbying efforts, they do not inherently involve agreements between competitors that restrict competition. However, price-fixing agreements, group boycotts, and market divisions are all examples of agreements that are automatically considered to be illegal under Section 1 of the Sherman Act.

Question 4

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 generally evaluated under the rule of reason, which considers both the potential pro-competitive and anti-competitive effects of the agreement. Courts will evaluate the specific circumstances of each case to determine whether the agreement unreasonably restricts competition. It is not automatically considered a per se violation of antitrust law, nor is it exempt from antitrust law.

Question 5

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

Accepted Answer

To determine whether AgriSeeds has monopoly power requires looking at the relevant market, which encompasses the specific product or service and the geographic area in which it is sold. This helps to ascertain whether AgriSeeds has a significant market share and whether there are any close substitutes available. The other options do not encompass all the necessary factors to determine monopoly power.

Question 6

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 sell its produce...

Question 7

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

Gearbox and Cam & Cylinder's refusal to sell to Motor Repair & Replace is an agreement between competitors to not do business with a particular company. This type of behavior is considered a group boycott and is illegal under antitrust laws. An exclusive-dealing contract is when a manufacturer agrees to sell its products exclusively to one buyer. A tying arrangement is when a customer is required to purchase one product in order to obtain another. Market division is when competitors agree to divide a market amongst themselves. None of these options accurately describe the situation between Gearbox, Cam & Cylinder, and Motor Repair & Replace.

Question 8

A court would most likely rule that the agreement between Bodycare and Deja Vu is

Accepted Answer

The answer of A court would most likely rule that...

Question 9

Rugged Bikes,Inc.,makes and distributes Rugged-brand bicycles and accessories to authorized dealers,including Super Sports Stores,Inc. Super Sports operates dealerships in several locations. To insulate other dealers from direct competition,Rugged Bikes imposes limits on where Super Sports can sell Rugged products. This is

Accepted Answer

The scenario describes a territorial restriction, which limits where Super Sports can sell Rugged products, in order to insulate other dealers from direct competition.

Question 10

Glass worx Corporation has exclusive control over the market for its products. Under anti trust law,this is

Accepted Answer

Exclusive control over a market can be a violation of anti-trust law only if it was acquired through anti-competitive means. If Glass worx Corporation achieved its market position through normal business practices and competition, it would not be a violation. However, if it acquired its position by using unfair or illegal methods, such as predatory pricing or monopolistic mergers, it would be in violation of anti-trust law.

Question 11

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 trade association agreement would be subject to analysis under the rule of reason. While it may have the potential to limit competition or restrict trade, it is not inherently anti-competitive, and its effects would need to be assessed on a case-by-case basis.

Question 12

An anti trust action is brought against Carrier Transport Company,alleging the offense of attempted monopolization. To be guilty of this offense,Carrier's attempt must have

Accepted Answer

In order to be guilty of attempted monopolization, the company's attempts to monopolize must have a dangerous probability of success. This means that there is a real possibility that the company could end up with a monopoly, which would harm competition and consumers in the relevant market. A distant possibility or a distinct improbability of success would not be enough to constitute attempted monopolization. Similarly, a deadly guaranty of success would be an impossible standard to meet.

Question 13

Healthcare Device,Inc.,has exclusive control over the market for its product. Healthcare Device's market power is most likely

Accepted Answer

The answer of Healthcare Device,Inc.,has exclusive control over the market...

Question 14

Body care Corporation makes and sells Chem Med,the most prescribed name-brand blood pressure-lowering medication. Deja Vu Drugs,Inc.,has the potential to make a generic version of the same drug.
-Bodycare pays Deja Vu not to sell its product. This is

Accepted Answer

The answer of Body care Corporation makes and sells Chem...

Question 15

Soft Drink Corporation is charged with violating the Sherman Act through conduct subject to the rule of reason. When applying the rule of reason in this situation,a court will not consider

Accepted Answer

The rule of reason analysis evaluates the competitive effects of a particular business practice, and therefore does not consider its effect on international trade. The purpose and potential effect of the agreement on competition will be considered in the analysis, while the parties' market ability to implement the agreement may also be relevant.

Question 16

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

Accepted Answer

Relevant product market usually includes products that are reasonably interchangeable. In this case, it would include all types of ice cream, as they could be considered substitutes for each other.

Question 17

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

Accepted Answer

This is a unilateral refusal to deal, which means that Speedee Snoboards, Inc. is not obligated to sell its products to any particular retailer.

Question 18

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

This is an example of predatory pricing, which involves selling products at lower prices than competitors in order to drive them out of the market.

Question 19

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

Accepted Answer

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

Question 20

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

Accepted Answer

This is a market division agreement between Dredgers, Inc. and Excavators Company where they agree to operate in different regions of Georgia, avoiding competition with each other.

Quiz 38: Antitrust Law and Promoting Competition