The so-called rule of reason, based on the 1920 U.S. Steel case, stipulates that a merger of two firms in an industry is
A) illegal if the firms are large.
B) illegal because it increases the monopoly power of the resulting firm.
C) legal if there is no resulting unreasonable restraint of trade.
D) legal because the firm will be subject to regulatory control.

Question

Quizplus · Accepted Answer

The rule of reason, based on the 1920 U.S. Steel case, stipulates that a merger of two firms in an industry is legal if there is no resulting unreasonable restraint of trade. This means that the merger can be approved if it does not lead to a significant reduction in competition in the market, and does not result in a monopoly or a dominant market position for the merged firm. Therefore, Option C is the correct choice.

The So-Called Rule of Reason, Based on the 1920 U