Ch 18

Standard Oil case

1911 antitrust case which Standard Oil was found guilty of violating Sherman Act by illegally monopolizing petroleum industry. as remedy the company was divided into several competing firms

Alcoa case

1945 case which courts ruled that possession of monopoly power, no matter how reasonably that power had been used, was a violation of antitrust laws; temporarily overturned that rule of reason applied in US Steel case

Microsoft case

2002 antitrust case which Microsoft was found guilty of violating the Sherman Act by engaging in series of unlawful act. designed to maintain its monopoly in operating systems for personal comp; as a remedy the company was prohibited from engaging in a set of specific anticompetitive business pract.

Wheeler- Lea Act

Federal law of 1938 that amended Federal Trade Commission Act by prohibiting and giving the commission power to investigate unfair and deceptive acts or practices of commerce

Cease- and- desist order

an order from a court/ gov. agency to a corporation/ individual to stop engaging in specified pract.

U.S. Steel case

antitrust action brought by Federal gov. against the US Steel Cor. in which courts ruled that only unreasonable restraints of trade were illegal and that size and possession of monopoly power were not by themselves violations of antitrust laws

DuPont Cellophane case

antitrust case brought against DuPont in which US Supreme Court ruled that while DuPont had a monopoly in narrowly defined market for cellophane, it did not monopolize the more broadly defined market for flexible pakaging materials

Per se violations

collusive actions that are violations of the antitrust laws, even if actions themselves are unsuccessful

Sherman Act

federal antitrust law of 1890 that makes monopoly and conspiracies to restrain trade criminal offenses

Clayton Act

federal antitrust law of 1914 that strengthened the Sherman Act by making it illegal for firms to engage in certain specified pract.

Legal cartel theory of regulation

hypothesis that some industries eek regulation or want to maintain regulation so that they may for or maintain a legal cartel

Natural monopoly

industry which economies of scale are so great that a single firm can produce the product at a lower average total cost than would be possible if more than one firm produced the product

Antitrust policy

legislation that prohibits anticompetitive business act. such as price fixing, bid rigging, monopolization, tying contracts

Horizontal merger

merger into single firm of 2 firms producing same product and selling it to same geographic market

Conglomerate merger

merger of a firm in one industry with a firm in another industry

Vertical merger

merger of one or more firm engaged in diff. stages of production of final product

Industrial regulation

older and more traditional type of regulation which gov. is concerned w/ prices charged and services provided to public in specific industries, in contrast to social regulation

Public interest theory of regulation

presumption that purpose of regulation of an industry is to protest the public from abuse of power possessed by natural monopolies

Social regulation

regulation which gov. is concerned w/ conditions under which goods and services are produced, physical characteristics, impact of their production on society

Tying contracts

requirement imposed by seller that a buyer purchase another of its products as a condition for buying a desired product

Rule of reason

rule stated and applied in US Steel case that only combo and contracts unreasonably restraining trade are subject to action under the antitrust laws and that size and possession of monopoyl power are not illegal

Interlocking directorates

situation where one or more members of board of directors of a corporation are also on board of directors of competing corporation, illegal

Federal Trade Commission Act

the commission of 5 members established by federal trade commission act of 1914 to investigate unfair competitive pract. of firms, to hold hearings on complaints of such pract., to issue cease- and -desist orders when firms are found to engage in such pract.