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.