Business Law 5

Conglomerate.

A _________________ merger occurs when a firm merges with another firm in an unrelated field.

Justice department.

Because it is a crime to violate the Sherman Act, the _________________ may file charges against offenders.

Federal Trade Commission.

The Sherman Act is administered by the _________________.

His or her decision is final and may not be appealed.

Which of the following is not true of an administrative law judge? -He or she judges both the law and the facts. -His or her decision is final and may not be appealed. -His or her ruling may be appealed to the agency itself. -He or she is a neutral magistrate.

Market extension.

A _________________ merger occurs when businesses in similar fields merge to gain geographic or product extension.

Line of commerce.

A _________________ refers to the range of available substitutes of a specific product.

Innocent acquisition.

A firm claiming that it gained monopoly power as an unintended consequence of another purpose is employing the _________________ defense.

Price discrimination.

A seller's securing more favorable prices for a product than another seller with the same product is known as _________________.

Exclusive dealing agreement.

A(n) _________________ is an agreement where a distributor may only purchase goods from a certain manufacturer.

Exercising legislative power.

An administrative agency is prohibited from doing all but which of the following? -Violating judicial decisions -Making arbitrary laws -Extending beyond its authority -Exercising legislative power

Boycott.

An agreement to refuse to deal with another business is known as a _________________.

Price maintenance.

In a _________________ agreement, a manufacturer requires a retailer to sell a product at a particular price, under threat of not allowing the retailer to deal in the product at all.

Product.

In a relevant market, the _________________ market refers to what goods and services are at issue.

Geographic.

In a relevant market, the _________________ market refers to where the goods and services are being sold.

Tying arrangement.

In a(n) _________________, the distributor requires the purchaser of another product to buy another associated product.

Clayton.

The _________________ Act is a federal law that prohibits price discrimination.

Acquisition.

The purchase of another firm is known as a(n) _________________.

False.

True or false: A firm's behavior motivated by animus is a violation of the Sherman Act.

False.

True or false: A seller who has higher prices of perishable goods than another seller with similar goods is in violation of the Clayton Act.

True.

True or false: Administrative agencies have executive, legislative, and judicial power.

True.

True or false: In creating a substantive rule, an administrative agency is required to allow for public participation on its interpretation.

False.

True or false: In creating an interpretive rule, an administrative agency is required to allow for public participation on its interpretation.

False.

True or false: Independent federal administrative agencies are responsible for enforcing specific laws enacted by Congress.

True.

True or false: It is a violation of the Sherman Act for a trade association to establish rules regulating competitive practices.

True.

True or false: Meeting the competition's cost may be used as a defense against a company accused of price discrimination.

True.

True or false: Once an administrative agency has established a substantive rule, that rule has the full force and effect of the law.

True.

True or false: Production cost may be used as a defense against a company accused of price discrimination.

Rule of reason.

The U.S. Supreme Court has developed two tests for determining the lawfulness of an agreement: the illegal per se and the _________________.

Administrative Procedure.

The _________________ Act governs the administrative agency rule-making process.

Clayton.

The _________________ Act prohibits the suppression of competition by making unlawful business practices.

Hart-Scott-Rodino Antitrust Improvements.

The _________________ Act requires firms of a certain size to make a detailed filing with the FTC and the Department of Justice, prior to effectuating a merger or acquisition.

Price fixing.

The act of controlling prices for goods and services is known as _________________.

Administrative law.

The combined rules, procedures, and enforcement mechanisms of federal agencies is called _________________.

False.

True or false: Section 1 of the Sherman Act declares price fixing to be illegal.

True.

True or false: Setting a minimum price is a per se violation of the Sherman Act.

False.

True or false: The U.S. Supreme Court has found that setting a maximum price is a per se violation of the Sherman Act.

False.

True or false: The calculation of monopoly power rests squarely on a firm's percentage of dominance in the relevant market.

False.

True or false: There are two defenses available to parties guilty of illegal per se acts.

Meeting the competition.

Under the _________________ defense, a seller may lower the price of a product in order to meet the competition in a specific area for a limited time.

The rule of reason.

Under the application of _________________, the U.S. Supreme Court uses a case-by-case approach to determine whether certain agreements are illegal.

Vertical.

When two firms at different levels of distribution make an agreement to restrain trade, this is known as a _________________ restraint of trade.

Horizontal.

When two firms at the same distribution level make an agreement to restrain trade, this is known as a _________________ restraint of trade.

The business acquired the monopoly innocently as an unintended consequence of another purpose.

Which of the following is a legitimate defense against a claim of exercise of monopoly power? -The business owns 75 percent of the product market. -The business acquired the monopoly innocently as an unintended consequence of another purpose. -The business owns 25 percent of the geographical market. -The business engaged in a tying arrangement with another business.

The business has 70 percent share of the relevant market.

Which of the following is not a legitimate defense against a claim of exercise of monopoly power? -The business has power based on a natural monopoly. -The business gained dominance on the strength of a superior product. -The business has 70 percent share of the relevant market. -The business acquired the monopoly innocently, as an unintended consequence of another purpose.

Too much competition exists in a particular geographical area.

Which of the following is not a prerequisite to be considered a failing company? -Its assets would evaporate but for a merger -Too much competition exists in a particular geographical area -No other buyer is available to rescue -No other reasonable alternative

Allowing the public to vote on the proposed rule.

Which of the following is not required of an administrative agency before adopting, amending, or repealing a new law? -Allowing the public to vote on the proposed rule -Publishing the proposed action in the Federal Register -Allowing a public comment period -Detailing the proposed rule changes and stating any time and place information for public comment purposes

An existing administrative agency may not administer a new law.

Which of the following is not true of administrative agencies? -Administrative agencies have executive, legislative, and judicial power. -Administrative agencies create substantive and procedural laws. -An existing administrative agency may not administer a new law. -Rules created by administrative agencies may not violate public interest.

A trade association may not allow its participants to discuss average industry prices.

Which of the following is not true of price fixing? -A price violation occurs if competitors exchange price information, even if there is no formal agreement to set a price in order. -It is any scheme designed to control prices for goods and services. -It applies to sellers as well as buyers. -A trade association may not allow its participants to discuss average industry prices.

Each state and local government has administrative agencies.

Which of the following is true of administrative agencies? -Each state and local government has administrative agencies. -All administrative agencies answer directly to the President. -An existing administrative agency may not create a new law. -Administrative agencies may overrule judicial decisions.

There are no defenses available to offenders of illegal per se acts.

Which of the following is true of the illegal per se application? -A court must look at a party's intent to determine if a violation has occurred. -A court must look at the intention of the accused industry. -There are no defenses available to offenders of illegal per se acts. -A court must balance issues related to past practices.

Procedural law; substantive law.

_________________ establishes the protocol that must be followed by an administrative agency while enforcing a(n) _________________.

Geographic allocation agreement.

A(n) _________________ is an agreement where a manufacturer limits the number of businesses in a geographical area that are authorized to sell its products.

Interpretive.

A(n) _________________ rule explains or defines terms in current statutory language.

Monopoly.

One business having almost all of one product type or service within a geographical area is known as _________________ power.

7.

Section _________________ of the Clayton Act prevents corporations from obtaining monopoly power through merger or acquisition of another firm.

Dividing markets.

Splitting markets according to products sold is an example of _________________.