Business Law Chapter 45
Which of the following occurs when a seller refuses to sell a product "A" to a buyer unless the buyer also purchases product "B" from the seller?
A tie-in contract
Section 3 of the ________ makes it illegal to lease or sell ________ or to fix a price for commodities.
Clayton Act, commodities
The federal government's power to regulate business flows from the __________ of the U.S. Constitution, and antitrust laws apply only to behavior that ________ interstate commerce or international trade.
Commerce Clause, substantially effects
If certain conditions are met, the Antitrust Division's __________ the US government agrees not to charge a firm criminally for the activity being reported if certain conditions are met.
Corporate Leniency Policy
Under the ________, corporate officers and directors who assist with the investigation are considered for _________ from prosecution on the same basis as if they had come forward individually.
Corporate Leniency Policy, immunity
For what reason is any agreement among competing firms to divide up the available market by assigning each other exclusive territories illegal per se?
Each firm is given a monopoly in its assigned territory
The _______ Act of 1982 allows exporters whose goods or services will not be resold in the United States to apply to the Department of Commerce for a "certificate of review."
Export Trading Company
Under the Hart-Scott-Rodino Antitrust Improvements Act, proposed mergers or acquisitions affecting United States Commerce that exceed certain size thresholds must be reported to the ______ and the ______.
Federal Trade Commission; Department of Justice
Congress enacted the ________ Act. Specifically to clarify the confusion surrounding the extraterritorial reach of the antitrust laws.
Foreign Trade Antitrust Improvement
The _________ requires that proposed mergers or acquisitions that exceed certain size thresholds must be reported to the federal government.
Hart-Scott-Rodino Antitrust Improvements Act
________ of goods that may be artificially inflated due to energy shortages cannot sue the manufacturers directly because it is not an antitrust violation to pass the increased costs of goods and energy on to the ultimate buyer.
Indirect purchasers
Which of the following are arrangements in which two or more entities collaborate with respect to research, development, production, marketing, or distribution?
Joint ventures
What exists when a firm controls a very high percentage share of the relevant market?
Monopoly power
The ________ allows people and businesses to join together and lobby governmental officials for various ends, even though the desired action may harm their competitors or otherwise limit competition.
Noerr Doctrine
The _______ Doctrine exempts many anticompetitive acts from the antitrust laws.
Parker
The ________ embraces the actions of state officials under the authority of state law and the actions of private firms or individuals under the supervision of authorized state officials.
Parker Doctrine
To violate Section 2(a) of the __________, the discriminatory sales must occur roughly within the same time period, and involve goods of like grade and quality.
Robinson-Patman Act
_______ restraints may ultimately be found anticompetitive and illegal, but, unlike per se restraints, they are not facially so.
Rule of reason
The Foreign Trade Antitrust Improvement Act provides that the ________ Act shall not apply to non import trade unless the conduct has a direct, substantial, and reasonably foreseeable effect on trade or commerce within the United States, on US import trade, or on the activities of US exporters.
Sherman
In response to a public outcry, Congress responded by passing the ________ in 1890, and later supplemented it with the _______, and the Robinson-Patman Act.
Sherman Act, Clayton Act
Which federal legislation indicates as follows: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations is declared to be illegal?
The Sherman Act
Which of the following is based on the idea that a firm's power to fix price is limited by the availability of competing products that buyers find acceptable?
The functional interchangeability test
Which of the following costs is often a critical factor that limits geographic market size?
Transportation
True or false: In a rule of reason trial the court endeavors to balance the anticompetitive effects of the defendants' acts against any competitive justifications for their behavior.
True
True or false: Manufacturers may run afoul of Section 1 if they require their dealers to agree to refrain from selling to customers outside their assigned territories.
True
Which of the following are generally examined under rule of reason analysis.?
Vertical restraints
Suppose WINMART sells its own "WINMART-brand" products to a chain store for less than it sells its own brand-name products to the chain's competitors. Is WINMART liable under Robinson-Patman?
Yes, if the only difference between the products is their label.
A(n) ________ is a "quick look" form of rule of reason analysis because it skips the inquiry into anticompetitive effects because they are obvious from the general nature of the restraint.
abbreviated rule of reason
A(n)______ analysis is utilized for restraints that have an obvious adverse impact on competition but are not per se treatment because their overall reasonableness cannot be ascertained without a preliminary assessment.
abbreviated rule of reason
Examples of horizontal price-fixing may include: ________. (Check all that apply)
agreements among competitors about what price they will sell a product for or what price agreements among competitors on the quantities to be produced, offered for sale, or bought.
The primary focus of U.S. antitrust enforcement is to protect American consumers from: _______.
anticompetitive conduct
International businesses must be more and more alert to the reach of another nation's ________ as they expand their operations around the world.
antitrust laws
Per se activities are ________, while the legality of a rule of reason action can be determined only after examining the behavior's _________.
automatically illegal, ultimate effect on competition
Courts are cautious in accepting inferences from ________ in cases involving allegations of horizontal price-fixing among oligopolists.
circumstantial evidence
Private individuals who have been injured by antitrust violations have strong incentives to sue under the ________ of the antitrust laws.
civil provisions for treble damages
In order to prevail on a claim of _______ based on inferences from consciously parallel behavior, plaintiffs must show that certain ______ also exist.
collusion, plus factors
Under the FSIA, the _______ of foreign sovereigns are not included within this sovereign immunity doctrine.
commercial activities
A(n) _______ merger occurs when a large firm that controls numerous other firms in diverse industries acquires a firm in a new product market.
conglomerate
Section 1 of the Sherman Act provides that a ________ occurs when two or more persons join together for the purpose of restraining trade."
conspiracy
line of commerce, section of the country
criminal; treble
Section 2(d) of the Robinson-Patman Act prohibits sellers from making __________ to competing customers for the same services
discriminatory payments
Sellers will not be liable under Section 2(b) of the Robinson-Patman Act if the seller in good faith agrees to "beat the competition" by granting a(n) _________ to a customer who has been offered a lawful, lower price by one of the seller's competitors.
discriminatory price
Federal courts can order defendants convicted of antitrust violations to: ________. (Check the three correct answers).
divorce themselves from a functional level of their operations liquidate its assets and go out of business divest themselves of the stock or assets of other companies
If a defendant acquires a(n) _______ through superior products and service or other demonstrations of business acumen, the intent to monopolize will not be found.
dominant market position
Plus factors include all of the following: ________. (Check the correct answers)
evidence that the defendant acted contrary to its interests evidence implying a traditional conspiracy evidence that the defendant had a motive to enter into a price-fixing conspiracy
A(n) _______ contract is created when a buyer agrees to sell only the product lines of her seller.
exclusive dealing
Unlike tie-in contracts, ________ and requirements contracts are not illegal because they can benefit both buyer and the seller by reducing selling costs and assuring buyers of a supply of needed items.
exclusive dealing contracts
Section 3 of the Clayton Act was basically designed to attack three kinds of anticompetitive behavior: _______. (Check the three correct answers)
exclusive dealing contracts requirements contracts tie-in (tying) contracts
The sovereign compulsion defense is not available unless the ______ has actually compelled, rather than merely permitted or encouraged, the anticompetitive activity.
foreign government
The _______ defense excuses private parties from complying with our antitrust laws when their anticompetitive conduct has been directed by a foreign government.
foreign sovereign compulsion
Unlike per se restraints, _________ restraints may ultimately be found anticompetitive and illegal, but not until after a court conducts a full market analysis.
full rule of reason
An example of a conglomerate merger would be the acquisition by a large firm of a smaller company that has the same product market but in a different _______ market.
geographic
If a wholesaler "suggests" that a retail outlet sell an item at a certain price but the retail outlet sells the product at a discount price, the Sherman Act: _______.
has not been violated because there was no joint action
The Sherman Act has been interpreted to reach foreign entities whose actions: _________. (Check the two correct answers)
have an anticompetitive effect in the United States limit American access to markets abroad
Under a Section 7 analysis, a court seeking to determine the legality of a(n) _______ merger (between competitors) considers the market share of the resulting firm.
horizontal
The United States Supreme Court requires a higher level of proof of anticompetitive effects result whenever a(n) _______ produces a firm with a large market share.
horizontal merger
Courts are cautious in accepting inferences from circumstantial evidence in cases involving allegations of __________ among oligopolists
horizontal price-fixing
Whether done directly or indirectly, ________ is always illegal and can never be legally justified.
horizontal price-fixing
attempts by competitors to interfere with the market and control prices are called ________ and are illegal per se under Section 1.
horizontal price-fixing
Any agreement among competing firms to divide up the available market by assigning each other exclusive territories is a _______ division of markets and is ________.
horizontal, illegal per se
A court will not infer an agreement (or joint action) from the actions of the defendants in the following areas: _______. (Check all the correct answers)
if a corporation conspires with itself or its employees if a corporation conspires with a wholly owned subsidiary.
The Sherman Act makes contracts _________ of trade and monopolization illegal.
in restraint
Violations of antitrust laws provide penalties, including fines and jail time, as well as giving federal courts broad ________ to remedy antitrust violations.
injunctive powers
If the defendant intentionally acquired monopoly power or attempted to maintain it after having acquired it, the _________ has been shown.
intent to monopolize
Although the first two plus factors are important to a court's analysis, they must be supplemented by other evidence because they often merely restate _______.
interdependence
proof that defendants adopted a common plan, proof defendants got together and exchanged assurances of common action
interdependence
According to the Sherman Act, _______ is not an "agreement" within the term's meaning under the Sherman Act.
interdependent behavior
Even commercial transactions that take place solely within the borders of one state can have an impact on ________ commerce in today's economy.
interstate
From the language of the Sherman Act, it is apparent that the purpose of Section 1 is to attack ________ in restraint of trade while _______ actions do not violate Section 1.
joint action, unilateral
Antitrust violations that occur within the territory of the United States fall squarely within the ________ of the US antitrust laws
jurisdictional reach
An export trade certificate imparts a presumption of ______ on the conduct of the export trading company, and if an injured party can prove that a violation has occurred, it can receive ______ damages.
legality; actual
A company will frequently attempt to exploit the market by __________ its intellectual property to licensees who may be manufacturers or distributors.
licensing
A(n) ________ can raise antitrust issues if its involves restraints on the competitive activities of the licensor and/or licensee.
licensing arrangement
Under Section 7 the "________" analysis is similar to relevant product, and the "_______" is similar to geographic market.
line of commerce, section of the country
Plus factors that may show circumstantial evidence for collusion include all of the following except: _______.
manufacturer and agent agreeing on a sales price for a product
Under a Section 7 analysis, a court seeking to determine the legality of a horizontal merger (between competitors) would consider the _________ of the resulting firm
market share
Under a Section 7 analysis, a court seeking to determine the legality of a horizontal merger (between competitors) would consider the _________ of the resulting firm.
market share
Section 7 of the Clayton Act was designed to provide a tool for attacking ________ , which broadly means the acquisition of one company by another.
mergers
Section 2 of the Sherman Act does not outlaw monopolies; rather it outlaws the act of "_______."
monopolizing
To avoid liability under Robinson-Patman, sellers may lawfully provide discriminatory payments or services of: _______. (Check the two correct answers)
notifying customers of the availability of such services and distributing them according to some rational basis flexible plans that enables various classes of buyers, large chains or small independents, to participate.
The Clayton Act was intended to be preventive in nature, and in most cases __________ of a significant anticompetitive effect must be shown to establish a violation.
only the probability
Although a single firm can lawfully agree to deal only on certain terms, if two firms agree to deal on certain terms, the agreement is a _______ violation of Section 1.
per se
While _______ rules have been criticized as shortcuts that sometimes oversimplify economic realities, they do speed up lengthy trials and provide sure guidelines for business.
per se
Actions that result in a restraint of trade are classified as ______, and are conclusively presumed to be illegal.
per se illegal
If a distributor persuades a manufacturer to refuse to deal with a rival distributor, the two conspiring parties would have committed a(n) _______ of Section 1 of the Sherman Act.
per se violation
If the court finds a joint action, it will be treated as either a(n) _______ or a(n) ______ violation.
per se, rule of reason
Recent United States Supreme Court antitrust decisions indicate that the Court is moving away from ______ rules in favor of ______ treatment for many kinds of economic activity.
per se, rule of reason
Assuming a competitive market, evidence that a defendant acted contrary to its interests would be considered a(n) _______ because it would show circumstantial evidence of a contract.
plus factor
The intent to monopolize often occurs when a monopolist engages in ________.
predatory pricing
After the Civil War, the growth of large industrial trusts led to a public outcry for legislation designed to: _______.
preserve competitive market structures and prevent the accumulation of great economic power in the hands of a few firms
Evidence that the defendant had a motive to enter into a(n) ________ conspiracy means evidence that the industry is conducive to oligopolistic price-fixing.
price-fixing
Examples of circumstantial evidence of collusion would involve: _______. (Check all the correct answers)
proof that defendants adopted a common plan, proof defendants got together and exchanged assurances of common action
There are two prerequisites to recovery on claims of predatory pricing: ________. (Check the two correct answers)
proof that the low prices were below an appropriate measure of its rival's costs a dangerous probability that the monopolist will later recoup its investment in below-cost prices.
Based on the courts analysis and transportation costs, the ______ may be a small area for cement but the whole nation for transistors.
relevant geographic market
The ________ is composed of those products that are "reasonably interchangeable by consumers for the same purposes". Multiple choice question.
relevant product market
Attempts by manufacturers to control the ________ of their products are also within the scope of Section 1.
resale price
Another name for vertical price-fixing is _________.
resale price maintenance
The Noerr Doctrine is based on the ______ the United States Constitution.
right to petition recognized by
Vertical agreements establishing minimum resale prices can have either pro-competitive or anti-competitive effects, depending upon the circumstances in which they are formed, and are generally analyzed under the ________.
rule of reason
Joint ventures are also known as ______.
strategic alliances
A vertical merger is a(n) ______ that occurs when a firm acquires a captive market for its products.
supplier-customer merger
For predatory-pricing to make economic sense, the losses suffered from pricing goods below cost must be recouped during the _________ stage of the scheme.
supracompetitive-pricing
If a manufacturer terminates a dealer who has failed to sell its product below the suggested resale price, Section 1 of the Sherman Act is not violated because:_______.
the action was unilateral
A seller is not liable under Section 2(a) of the Robinson-Patman Act if he can show: _______. (Check the two correct answers)
the difference in prices is based on lower transportation costs the difference in prices is based on manufacturing costs
A seller is not liable under Section 2(a) of the Robinson-Patman Act Sellers if she can show the price discrimination reflects: ________.
the marketability of the goods the product's deterioration or obsolescence changing conditions in the marketplace
In order to show monopoly power relevant market must be analyzed which includes the following two factors: ________. (Check the two correct answers)
the product market the geographic market
Tie-in contracts are illegal under Section 3 of the Clayton Act ONLY if either of the following two requirements are met: ________. (Check the two correct answers)
the seller has monopoly power in the tie-in product the seller has foreclosed competitors from a substantial volume of commerce in the tied product.
A successful antitrust plaintiff may recover _________ (three times its actual losses) plus court costs and attorney's fees.
treble damages
Private plaintiffs who seek to recover _________ damages must first convince the court that they have _______ to sue, that is, that they have suffered a direct injury as a result of the defendant's claimed antitrust violations
treble, standing
Vertical, nonprice restraints are analyzed: _______.
under the rule of reason
For the purposes of Section 1 of the Sherman Act, consignments have been held to be a _______ action.
unilateral
Monopolists have the power to fix prices _______ because they have no effective competition and Section 2 of the Sherman Act was designed to attack monopolies.
unilaterally
A single manufacturer's use of _______ restraints on price or territory tends to eliminate intrabrand competition.
vertical
The competitors of a manufacturer that acquires a chain of retail stores are no longer able to compete for sales to the acquired stores due to a(n) _________.
vertical merger
A group of retailers colluding to fix prices to consumers while compelling a manufacturer to aid in the arrangement, would be unlawful as a(n) __________.
vertical price fixing because of the joint action
