Chapter 16 Business Law
Predatory pricing
involves a company charging below cost prices to drive competition out of business.
Exemptions from the antitrust laws
labor, agricultural associations, insurance, foreign trade, professional baseball, certain oil marketing by states, cooperative research and production, lobbying and state actions.
Section 1 of the Sherman Act
makes it illegal for two or more companies to combine in some way to restrain trade
In economic terms, monopoly means
one seller
Clayton Act of 1914
provides further clarification and substance to the Sherman Antitrust Act of 1890.
Section 2 of the Sherman Act
refers to attempts to monopolize
In legal terms, monopoly refers to
the ability of a company to control supply or dictate price
Sherman Antitrust Act of 1890
to curb concentrations of power that interfere with trade and reduce economic competition.
Tying arrangements
when a company with a monopoly in one product requires buyers to buy a product in which the company does not have monopoly power. By tying the two products together, the company achieves monopoly power for both products and restricts competition.
Exclusive dealing contracts are
where a seller forbids a buyer from purchasing and selling products of its competitor.
U. S. Antitrust Laws apply
worldwide
True
(T/F)It is not against the law to be a monopoly. It is only against the law to obtain or maintain monopoly power in an illegal manner.
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A company with more than ____% market share probably possesses sufficient monopoly power to cause a concern even though there may be numerous other competitors.
the Department of Justice and the Federal Trade Commission.
Antitrust laws are enforced by
companies in different markets or product lines
Conglomerate mergers occur among
where two or more companies agree to refuse to deal with a company for the purpose of eliminating competition or preventing entry into the market.
Group boycotts is
companies dividing up the territory in which they compete. This could be along geographical boundaries or along product lines
Horizontal market divisions involve
among companies at the same level
Horizontal mergers occur
restraints on trade between companies at the same level (i.e. manufacturer, wholesaler, retailer, etc.)
Horizontal restraints are
price fixing, group boycotts, horizontal market divisions, trade associations and joint ventures.
Horizontal restraints include
acts taken by companies that automatically violate the law regardless of the defense or reason for the act
Per se violations of the Antitrust laws are
where two or more companies agree to charge the same price for their products or services.
Price-fixing is
a manufacturer from forcing a retailer to sell their products at a given price
Resale Price Maintenance Agreements prevents
those acts that given the negative effect on competition violate antitrust laws.
Rule of reason violations are
a manufacturer tries to restrict or prevent wholesalers or retailers from selling products to certain buyers
Territorial or customer restrictions violate antitrust laws if
interlocking directorates
This prevents a person from serving on the board of directors of competing companies.
among companies at different levels of the production stage
Vertical mergers occur
companies at different levels (e.g. wholesaler and retailer, manufacturer and wholesaler).
Vertical restraints are between
territorial or customer restrictions, resale price maintenance agreements, vertical price fixing, and refusals to deal.
Vertical restraints on trade include
from the legislation passed in the late 19th century to curb the abuses of the oil trusts, particularly the Standard Oil Trust.
Where did the term Antitrust come from?
price discrimination
charging buyers different prices for the same goods
