Chapter 23 - antitrust

Question 1

pre se versus rule of reason

Answer 1

per se violations are automatic; courts do not consider mitigating circumstances. Rule of reason violations, on the other hand, are illegal only if they have an anticompetitive effect

Question 2

monopolization

Answer 2

possessing a monopoly is illegal only if it is acquired or maintained through improper conduct. To determine if a company is guilty of monopolization, ask three questions:
1. what is the market?
2. does the company control the market?
3. how did the company acquire or maintain its control?

Question 3

tying arrangement

Answer 3

a tying arrangement is illegal is:
- the two products are clearly separate
- the seller requires that the buyer purchase the two products together
- the seller has significant power in the market for the tying product, and
- the seller is shutting out a significant part of the market for the tied product

Question 4

Robinson-patman act

Answer 4

the Robinson-patman act prohibits companies from selling the same item at different prices if the sales lessens competition. However, a seller may charge different prices if these prices reflect different costs or the seller os simply meeting competition

Question 5

predatory pricing

Answer 5

to win a predatory pricing case, a plaintiff must prove three elements:
- the defendant is selling its product below cost
- the defendant intends that the plaintiff go out of business
- if the plaintiff does go out of business, the defendant will be able to earn sufficient profit to recoup its prior losses

Question 6

mergers and joint ventures

Answer 6

under the Clayton act, the federal government has the authority to prohibit anticompetitive mergers and joint ventures

Question 7

collusion

Answer 7

collusion enables a group of companies to increase their market power and, in come cases, to achieve monopoly power

Question 8

market division

Answer 8

any effort by a group of competitors to divide their market is per se violation of the Sherman act. illegal arrangements include agreements to allocate customers, territory or products

Question 9

horizontal price-fixing

Answer 9

a per se violation of the Sherman act

Question 10

resale price maintenance

Answer 10

if a manufacturer enters into a an agreement with distributors or retailers to fix minimum prices, this arrangement is subject to the rule of reason standard - illegal only if it has an anticompetitive effect

Question 11

vertical maximum price-fixing

Answer 11

an arrangement whereby a manufacturer sets maximum is subject, this arrangement is subject with distributors or retailers to fix minimum prices, this arrangement is subject to the rule of reason standard - illegal only if it has an anticompetitive effect

Question 12

vertical maximum price-fixing

Answer 12

an arrangement whereby a manufacturer sets maximum prices is subject to the rule of reason standards - illegal only if it has an anticompetitive effect

Question 13

refusals to deal

Answer 13

any agreement by competitors to exclude a particular supplier, buyer, or even competitor is a rule of reason violation if the Sherman Act - illegal if the agreement would have an anticompetitive effect

Question 14

reciprocal dealing agreement

Answer 14

under a reciprocal dealing agreement, a buyer refuses to purchase goods from a supplier unless the supplier to be a problem only is they foreclose a significant share of the market and if the participants agree not to buy from others

Question 15

controlling distribution

Answer 15

efforts by a manufacturer to allocate customers or territory among its distributors are subject to rule of a rule of reason. These allocations are illegal only if they have an anticompetitive effect

Question 16

exclusive dealing

Answer 16

an exclusive dealing contract is one in which a distributor or retailer agrees with a supplier not to carry the products of any other suppliers. These contracts are subject to a rule of reason and are illegal only if they have an anticompetitive effect