Business Law II Anti Trust Quiz Studyguide
If a seller of a product conditions its sale upon the buyer's purchasing a second product from the seller, this is known as a: a. tying arrangement. b. vertical restraint. c. horizontal restraint. d. disparagement.
A
To determine "market share" requires knowledge of which of the following? a. What other products are substitutable for the product. b. Where the product is sold. c. How much of the product is sold. d. All of the above
D
The 1992 and 1997 Horizontal Merger Guidelines: a. were issued by the Justice Department to be additional to the FTC's separate guidelines. b. require a mechanical application; in order to reduce the previously used analytic framework, which was far too subjective and uncertain. c. rejects use of the Herfindahl-Hirschman Index. d. consist of four market concentration categories. e. None of the above.
E
The Sherman Act prohibits contracts that unreasonably restrain trade.
T
Under the 2004 amendments, individuals who violate the Sherman Antitrust Act, Sections 1 or 2, may be imprisoned for ten years and fined up to $1 million.
T
Under the Clayton Act, private parties can bring civil actions in federal court for treble damages and attorneys' fees.
T
Conglomerate mergers have been challenged only when: a. one of the merging firms would be highly likely to enter the other firm's market. b. the merged company would be disproportionately large, compared with the smallest competitors in its industry. c. (a) and (b) are correct. d. None of the above.
A
Congress passed the National Cooperative Research Act to encourage joint ventures for research and development. The Act provides that: a. joint ventures in the research and development of new technology are to be judged under the rule of reason test. b. treble damages apply to all joint ventures formed in violation of the antitrust laws. c. joint venture participants must under all circumstances report their intent to the Justice Department. d. joint ventures formed to divide markets and fix prices are not illegal.
A
In order for there to be a violation of Section 2 of the Sherman Act, in addition to monopoly power, the courts must find: a. unfair conduct or abuse of power. b. concerted action. c. competitive behavior. d. economic advantage.
A
The National Tax Accountants Professional Association (TAPA) has recommended that its members charge a minimum of $25 per hour for completing tax forms. This recommendation is probably: a. a per se price fixing violation of the Sherman Act. b. not a violation of the Sherman Act, because it has been made by a professional association. c. not a violation of the Sherman Act, because a fee is different from a price. d. subject to the rule of reason.
A
The rule of reason test, under the Sherman Antitrust Act: a. considers the makeup of a relevant industry. b. does not consider the defendant's position in that industry. c. considers the defendant's need for the financial gain from the restraint of trade. d. does not consider competitor's ability to respond to the challenged practice of restraint of trade.
A
Which of the following is correct regarding the Clayton Act? a. It deals with price discrimination, tying contracts, and mergers. b. It added criminal sanctions to the Sherman Act. c. It repealed the Robinson-Patman Act. d. It included labor organizations in its coverage.
A
Which of the following remedies is available under the Sherman Act? a. Injunctions. b. Consequential damages. c. Restitution. d. None of the above.
A
A restraint involving collaboration among competitors at the same level in the chain of distribution is: a. a vertical restraint. b. a horizontal restraint. c. price fixing. d. a trust.
B
Agreements by which the seller or lessor of a product conditions the agreement upon the buyer's or lessee's promise not to deal in a competitor's goods are: a. tying arrangements. b. exclusive dealing arrangements. c. attempts to monopolize. d. None of the above.
B
Harry Jones at Jones Brothers Furniture Co. does not like the Brite Lamp Co. representative, so he decided that Jones Brothers would boycott Brite. Under the Sherman Act, this is: a. per se illegal. b. no violation. c. a tying arrangement. d. vertical market allocation.
B
If a small manufacturer of vacuum cleaners conditions the sales of its cleaners on the buyer's purchasing only that manufacturer's bags, under the Sherman Act this is: a. illegal per se. b. a tying arrangement, which will be closely scrutinized by the law. c. a vertical customer restriction. d. no violation.
B
In enacting Section 2 of the Clayton Act, Congress was concerned with sellers who sought to harm or eliminate their competitors through: a. mergers. b. price discrimination. c. tying arrangements. d. None of the above.
B
Margaret tells the members of the Raleigh Association of Restaurant Owners that they will be able to get a better price on linen supplies (tablecloths, napkins) if they will deal with one supplier rather than split their business between two. They all know Margaret deals with Niagara Linen rather than Cayuga. Under the Sherman Act, if they all sign contracts with Niagara: a. there is no violation since there is no express agreement to boycott Cayuga. b. illegality may be implied from this conduct. c. there is no concerted action. d. this is horizontal market allocation.
B
The Clayton Act deals with which of the following provisions? a. Supply discrimination. b. Tying contracts and mergers. c. Interlocking ties. d. Monopoly conspiracies.
B
The National Cooperative Research Act: a. prohibits using the rule of reason test in judging joint ventures in research and development of new technology. b. is designed to clear up uncertainty about the legality of joint ventures. c. now requires treble damages if joint ventures are formed in violation of Section 1 of the Sherman Act. d. All of the above.
B
The manufacturer of Rubberware agrees to sell the distributor 1,000 boxes of 2-quart bowls only if he agrees to resell to the retailer at cost plus $1.10 per bowl and the retailer must agree to sell at no less than his cost plus $ .50 per bowl. This is: a. horizontal price fixing. b. vertical price fixing. c. vertical market allocation. d. a group boycott.
B
Which of the following is true in relation to market share and monopoly power? a. A market share greater than 50% generally indicates monopoly power. b. A market share between 50 and 75% is, in itself, inconclusive in determining monopoly power. c. Market share is rarely used as a test of monopoly power because it is difficult to determine. d. Market share is a common test for monopoly power because it is an easy, objective measurement for courts to determine.
B
Which of the following occurs when the seller of a product, service, or intangible conditions its sale on the buyer's purchasing a second product, service, or intangible from the seller? a. Boycott. b. Tying agreement. c. Monopoly. d. Price fixing.
B
A form of business association organized to carry out a particular business enterprise is a: a. sole proprietorship. b. tenancy in common. c. joint venture. d. competitor.
C
A merger involving noncompeting firms producing unrelated goods and services is termed a: a. tying arrangement. b. vertical merger. c. conglomerate merger. d. horizontal merger.
C
Boycotts that are in violation of the Sherman Act include: a. a seller's refusal to deal with any particular buyer. b. a manufacturer who refuses to sell to a retailer who persists in selling below the manufacturer's suggested retail price. c. when two or more firms agree not to deal with a third party. d. cooperative agreements designed to increase economic efficiency and render markets more competitive.
C
If all milk producers in the area agree to set a minimum price for raw milk, this would be an example of: a. horizontal allocation. b. vertical market restraint. c. horizontal price fixing. d. a tying arrangement.
C
In an attempt to limit the power of large purchasers, Congress amended Section 2 of the Clayton Act in 1936 by adopting the: a. Sherman Act. b. Federal Trade Commission Act. c. Robinson-Patman Act. d. All of the above.
C
McDonald's Corporation grants to Bob a franchise in which he will be the only one who has the right to sell McDonald's products in his small hometown. Under the Sherman Act: a. this is per se illegal. b. there is no violation. c. this will be tested under the rule of reason. d. there is a tying arrangement.
C
The State Oil Company v. Khan case, held that: a. horizontal maximum price fixing is per se lawful. b. vertical maximum price fixing is per se lawful. c. vertical maximum price fixing should be evaluated under the rule of reason. d. vertical maximum and minimum price fixing are illegal per se.
C
Failure to comply with Section 1 or 2 of the Sherman Act: a. is a felony and can result in imprisonment. b. may subject an individual to a fine of up to $1 million per violation. c. may subject a corporation to a fine of $100 million per violation. d. All of the above.
D
The courts may establish a seller's economic power by showing that: a. the seller occupied a dominant position in the tying market. b. the seller's product enjoys an advantage not shared by its competitors in the tying market. c. a substantial number of customers have accepted the tying arrangement and the only explanation for their willingness to comply is the seller's economic power in the tying market. d. Any of the above. e. (a) and (c), but not (b)
D
The definition of price-fixing includes agreements that: a. may, among other things, depress prices. b. stabilize prices. c. raise prices. d. All of the above.
D
Three of the airline companies agree that they will not go any lower than $100 each way for coast-to-coast tickets. This is: a. vertical price maintenance. b. a horizontal group boycott. c. vertical market allocation. d. horizontal price fixing.
D
Under Section 1 of the Sherman Act, which of the following is illegal per se? a. Vertical market allocations. b. Horizontal market allocations. c. Vertical price fixing. d. (b) and (c).
D
Sarreno Cheese Co. supplies mozzarella cheese to pizza restaurants at $1.50 per pound. In order to snare the business from one large pizza chain, Sarreno offers to sell them cheese at $1.25 per pound. This will violate the Robinson-Patman Act unless: a. the pizza chain can already get the cheese for $1.25 elsewhere. b. Sarreno can show its price is justified because of a cost savings based on quantity. c. Sarreno lowers the price to all its customers. d. Two of the above, (b) and (c). e. Any of the above.
E
All price discrimination is illegal under the Robinson-Patman Act.
F
All tying arrangements are per se illegal.
F
An agreement between a manufacturer and a wholesaler is horizontal.
F
Failure to comply with Section 1, but not Section 2, of the Sherman Act is a criminal violation.
F
Group boycotts are not prohibited by the Sherman Act.
F
If a wholesaler gets a retail outlet for its goods through merger, this is a horizontal merger.
F
In the case of Eastman Kodak Co. v. Image Technical Services, Inc. the U.S. Supreme Court found that Kodak not only had monopoly power, it used that power to gain a competitive advantage without valid business reasons, which violated Section 2 of the Sherman Act.
F
It is per se illegal under the Sherman Act for sellers to agree to a maximum price, but not a minimum price.
F
Monopoly power is tested by determining how big the corporation is in terms of total assets.
F
Section 1 of the Sherman Act does not prohibit concerted action.
F
Section 1 of the Sherman Act outlaws monopolies and attempts to monopolize
F
Section 2 of the Sherman Act prohibits contracts, combinations, and conspiracies that restrain trade.
F
The Clayton Act weakened the Sherman Act by eliminating illegal acts that had previously been prohibited.
F
The Robinson-Patman Act adds to the Clayton Act merger provisions.
F
The courts have interpreted the Sherman Act as prohibiting all monopolies.
F
The main goal of antitrust regulation is to prevent competitive behavior among firms.
F
A "Vertical Restraint Index" is a measure of relative market share.
T
A restraint of trade may be classified as either horizontal or vertical.
T
Any violation of Section 2 of the Sherman Act constituting a conspiracy to monopolize would also constitute a violation of Section 1.
T
Characterizing a type of restraint as per se illegal significantly affects the prosecution of an antitrust suit.
T
If United Widgets lowers its price to all buyers of 10 or more widgets, it is not a violation of the Robinson-Patman Act.
T
In 1992 Horizontal Merger Guidelines were jointly issued by the Justice Department and the Federal Trade Commission.
T
Price fixing is the primary example of a per se violation of the Sherman Act.
T
Some group boycotts are illegal per se while others are subject to the rule of reason.
T
The "rule of reason" requires the courts to balance the anticompetitive effects of behavior in restraint of trade with its positive effects on competition.
T
The Clayton Act exempts labor, agricultural, and horticultural organizations from all antitrust laws.
T
The Federal Trade Commission may issue a cease and desist order having the effect of an injunction.
T
The Justice Department has expanded its enforcement policy of the Sherman Act to cover foreign companies' conduct that harms U.S. exports.
T
The National Cooperative Research Act was passed to facilitate the use of joint ventures for joint research and development.
T
The case of California Dental Association v. Federal Trade Commission deals with violation of Section 5 of the FTC Act.
T
The principal objective of antitrust law governing mergers is to maintain competition.
T
The states' settlement with Microsoft, reached after an ordered breakup of Microsoft for violating the Sherman Antitrust Act and affirmed by the D.C. Circuit Court of Appeals in 2004, required Microsoft to reveal previously confidential programming interfaces that its products rely on to link to Windows code.
T
The validity, under antitrust law, of a joint venture depends on the competitors' purpose in forming it.
T
To find a violation of Section 2 of the Sherman Act, if sufficient monopoly power has been proved, the law must then show that the firm has engaged in unfair conduct.
T
Under the 2004 amendments, corporate offenders who violate Sections 1 or 2 of the Sherman Act face fines of up to $100 million per violation.
T
Under the Sherman Act, price fixing is the primary and most serious example of a per se violation.
T
When the per se approach is inappropriate in a Section 1 Sherman Act case but the challenged conduct has obvious anticompetitive effects, courts may use an intermediate test which is a "quick look" rule of reason analysis.
T
