AntiTrust Laws Flashcards
Sherman Act
Prohibits
1) Restraint of Trade
2) Monopolies
Clayton Act
Stop activities BEFORE they become violations of the Sherman Act
- Tying arrangements - must buy one prod to get another
- Exclusive dealing arrangements
- Mergers & Acquisitions
a. Horizontal - Mergers between Co’s
b. Vertical - Firm acquires it’s customers or suppliers
c. Conglomerate - merger between different businesses
d. Failing Co. Exception-even if lessens competition it’s okay if it’s a failing Co. and no other buyer.
Robinson-Patman Act
Strengthens Section 2 of the Clayton Act - that prohibited price discrimination.
Only apply to price discrimination of commodities of like grade & quality. NOT services, real estate or intangibles.
By its very nature a patent grants a limited monopoly to the patent holder.
The patent holder may sell the item at whatever price it desires.
Horizontal price fixing (i.e., agreements among competitors to fix prices) and/or market allocations are
per se violations of the Sherman Act.
In a conglomerate merger, a firm acquires a company in a completely different business
That is a merger between firms that neither compete nor have a customer/supplier relationship.
Monopoly power exists when a firm has sufficient market power to
- control prices
OR - exclude competition.
There is a “Failing Company” exception that applies to acquiring companies that might create a monopoly .
Under this exception, if the acquired firm is in danger of becoming insolvent and no other purchasers are interested in acquiring it, a merger can be lawful even if the effect is to lessen competition
A tying arrangement is one in which a seller requires
the buyer to purchase one product to obtain another. They are illegal per se if the seller has a considerable amount of economic power in the tying product market.
