Business law ch 5

Market power

A cereal manufacturer has 65% of the nationwide market for its cereal (the product market) but it may have only 10% of Albany, NY market because of a local competitor. This cereal has national ------ but does not reach monopoly levels

Every contract in restraint of trade or commerce is declared to be illegal

Clause 1 of the Sherman antitrust act

Every person who shall monopolize or attempt to monopolize, or combine or conspire with any other person to monopolize any part of the trade or commerce shall be deemed guilty of a felony

Clause 2 of the Sherman antitrust act

Sole outlets, INTERbrand competition

Coca-Cola can have exclusive distributorships in cities because Pepsi will always be there providing consumers with competitive choices of soft drinks. This is an example of what type of outlet because there is enough of what type of competition

INTRAbrand

Competition among retailers selling the same brand

INTERbrand

Different brands of same product compete (allows for more variation of brands)

Divestiture order

If the Clayton act is violated through ownership or control of competing enterprises, a court may order the violating defense t to dispose of such interests by issuing this decree; when a large size enterprise plans to merge, must give written notice to FTC and the Antitrust Dovision of the Dept of Justice

Price fixing

In 2001 Christie's and southeby's action houses settled an antitrust lawsuit for charging the same commission for many years. This is an example of

Agreements, conduct, or sons piracies to restrain trade

Section 1 of the Sherman antitrust act applies to ...

Price-fixing, monopolizing

Section 2 of the Sherman antitrust act prohibits...

Monopolistic behavior

The Sherman antitrust act controls ____ behavior

Market power

The ability to control price and exclude competitions; defined by looking at GEOGRAPHIC AND PRODUCT MARKETS

Sherman act

The federal law that regulates competitive behavior among horizontal competitors

Horizontal (restraints)

The relationship between and among competitors

Sherman act,clayton act, robinson-patman act, federal trade commission act

The statutes that curb unfair competition

Antitrust laws

These laws regulate the relationships between and among competitors: horizontal restraints. Goal is that firms gain customers based on better products or quality/customer service rather than manipulating markets or prices

Price discrimination

This occurs when a seller charges different prices to buyers for commodities of the same grade and quality, with the result of being reduced competition or a tendency to create a monopoly

Market power

To determine whether a firm has engaged in monopolization, the courts determine whether the firm has...

Horizontal price fixing

Under the Sherman act, this says that any agreements to charge an agreed-upon price or to set maximum or minimum prices between or among competitors are "per se"-in, through, or by themselves-a violation of the Sherman act

Sherman act

Under what act are competitors not permitted to agree not to deal with certain buyers. Per se violations of this act

Utah pie co. v. Continental baking co.

What case involves price discrimination issues in the midst of a battle for state market prices of a certain item

Price discrimination

What is permitted when 1) there is a difference in grade, quality, or quantity 2)the cost of transport is different 3) there is a good faith effort to meet competition 4) difference in methods or quantities (marginal cost differences) 5) deterioration of goods 6)a close-out sale of a particular line of goods

Sole (there must be enough INTERbrand competition to justify no INTRAbrand competition; more competition of different brands selling the same product than competition among retailers selling the same brand)

What type of outlets are not per se violations

Clayton act

Which act makes both the giving and the receiving of any legal price discrimination a Crime

Robinson-patman act

Which act makes it illegal to charge different prices to buyers when the marginal cost of the seller for those goods is the same

Clayton and Robinson-patman acts

Which acts prohibit price discrimination