Bus Law Ch 22

failing company doctrine

a competitor may merge with a failing company if (a) there is no other reasonable alternative for the failing company, (b) no other purchaser is available, and (c) the assets of the failing company would completely disappear from the market otherwise

changing conditions defense

a defense that claims prices were lowered in response to changing conditions in the market for or the marketability of the goods

meeting the competition defense

a defense that says a seller may lawfully engage in price discrimination to meet a competitor's price

Federal Trade Commission

a federal government administrative agency that is empowered to enforce the Federal Trade Commission Act

indirect price discrimination

a form of price discrimination that is less readily apparent than direct forms of price discrimination

merger

a legal consolidation of two entities into one entity

horizontal merger

a merger between two or more companies that compete in the same business and geographical market

conglomerate merger

a merger that does not fit into any other category a merger between firms in totally unrelated businesses

vertical merger

a merger that integrates that operations of a supplier and a customer; can be either backward or forward

tying arrangement

a restraint of trade in which a seller refuses to sell one product to a customer unless the customer agrees to purchase a second product from the seller

division of markets

a restraint of trade in which competitors agree that each will serve only a designated portion of the market

group boycott

a restraint of trade in which two or more competitors at one level of distribution agree not to deal with others at another level of distribution

price fixing

a restraint on trade that occurs when competitors in the same line of business agree to set the price of goods or services they sell, raising, depressing, fixing, pegging, or stabilizing the price of a commodity or service

antitrust laws

a series of statutes and regulations enacted to limit anticompetitive behavior in almost all industries, businesses, and professions operating in the U.S.

natural monopoly

a small market such as with a hometown newspaper

unilateral refusal to deal

a unilateral choice by one party not to deal with another party. This does not violate Sec. 1 of the Sherman Act because there is not concerted action

innocent acquisition

acquisition due to superior business performance

implied exemptions

airlines, professional baseball

nonprice vertical restraints

are restraints of trade that are unlawful under Sec. 1 of the Sherman Act if their anticompetitive effects outweigh the pro competitive effects

section of country

as used in Sec. 7 of the Clayton Act means a division of the country that is based on the relevant geographical market; the geographical area that will feel the direct and immediate effects of a merger

Sherman Act

certain restraints of trade and monopolistic made illegal

Rule of Reason

holds that only unreasonable restraints of trade violate Sec. 1 of the Sherman Act. The court must examine pro- and anticompetitive effects of a challenged restraint

statutory exemptions

includes labor unions, railroads, utilities, etc

line of commerce

includes the products and services that will be affected by a merger, including those that consumers use as substitutes

conscious parallelism

is a doctrine that states that if two or more firms act the same but not concerted action is shown, there is no violation of Sec. 1 of the Sherman Act

government judgment

is a judgment obtained by the government against a defendant for an antitrust violation that may be used as prima facie evidence of liability in a private civil treble-damages action

Per Se Rule

is applicable to restraints of trade considered inherently anticompetitive. Once this determination is made about a restraint of trade, the court will not permit any defenses or justifications

prima facie

means at first impression, or here, assumed until proven otherwise

market exclusion merger

merger between two companies in similar fields whose sales do not overlap

resale price maintenance

occurs when a party at one level of distribution enters into an agreement with a party at another level of distribution to adhere to a price schedule that either sets or stabilizes prices

horizontal restraint of trade

occurs when two or more competitors at the same level of distribution enter into a contract, combination, or conspiracy to restrain trade

vertical restraint of trade

occurs when two or more parties on different levels of distribution enter into a contract, combination, or conspiracy to restraint trade

Sec. 16 of the Clayton Act

permits the government or private plaintiff to obtain an injection against anticompetitive behavior that violates antitrust laws

Sec. 1 of the Sherman Act

prohibits contracts, combinations, and conspiracies in restraint of trade.

Sec. 2(a) of the Robinson-Patman Act

prohibits direct and indirect price discrimination by sellers of a commodity of a like grade and quality, where the effect of such discrimination may be to substantially lessen competition or tend to create a monopoly in any line of commerce

Sec. 2 of the Sherman Act

prohibits monopolization and attempts or conspiracies to monopolize trade

Robinson-Patman Act

prohibits price discrimination

Sec. 2 of the Clayton Act

prohibits price discrimination in the sale of goods if certain requirements are met

Sec. 3 of the Clayton Act

prohibits tying arrangements involving leases of goods

FTC Act

prohibits unfair methods of competition

Sec. 5 of the Federal Trade Commission Act of 1914

prohibits unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce

cost justification defense

provides that a seller's price discrimination is not unlawful if the price differential is due to "differences in the cost of manufacture, sale, or delivery" of the product

Sec. 4 of the Clayton Act

provides that anyone injured in their business or property by the defendant's violation of any federal antitrust law (except FTC Act) may bring a private civil action and recover from the defendant treble damages plus reasonable costs and attorney's fees

Sec. 7 of the Clayton Act

provides that is unlawful for a person or business to acquire the stock or assets of another "where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be of substantially to lessen competition, or tend to create a monopoly

Clayton Act

regulates mergers and prohibits certain exclusive dealing arrangements

Hart-Scott-Roding Antitrust Improvement Act (HSR Act)

requires certain firms to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) in advance of a proposed merger

state action exemptions

states may set utility price

Nor Doctrine

states that two or more persons can petition the executive, legislative, or judicial branch of the government or administrative agencies to enact laws or take other action without violating antitrust laws

monopoly

the exclusive possession or control of the supply or trade in a commodity or service

acquisition

when one entity takes ownership of another entity's stock, equity, interests, and/or assets

small company doctrine

when two smaller companies intend to merge in order to better compete with a larger company