Question 1

antitrust law

Accepted Answer

- The body of federal and state laws and statutes protecting trade and commerce from unlawful restraints, price discrimination, price-fixing, and monopolies - the principal federal antitrust statutes are the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914

Question 2

attempted monopolization

Accepted Answer

- any actions by a firm to eliminate competition and gain monopoly power

Question 3

concentrated industry

Accepted Answer

- an industry in which a large percentage of market sales is controlled by either a single firm or a small number of firms

Question 4

divestiture

Accepted Answer

- the act of selling one or more of a company's parts, such as a subsidiary or plant; often mandated by courts in merger or monopolization cases

Question 5

exclusive-dealing contract

Accepted Answer

- an agreement under which a seller forbids a buyer to purchase products from the seller's competitors.

Question 6

group boycott

Accepted Answer

- the refusal to deal with a particular person or firm by a group of competitors - prohibited by the Sherman Act

Question 7

horizontal merger

Accepted Answer

- a merger between two firms that are competing in the same market

Question 8

horizontal restraint

Accepted Answer

- any agreement that in some way restrains competition between rival firms competing in the same market

Question 9

market concentration

Accepted Answer

- a situation that exists when a small number of firms share the market for a particular good or service - for example, if the four largest grocery stores in Chicago accounted for 80 percent of all retail food sales, the market clearly would be concentrated in those four firms

Question 10

market power

Accepted Answer

- the power of a firm to control the market price of its product - a monopoly has the greatest degree of market power

Question 11

monopolization

Accepted Answer

- the possession of monopoly power in the relevant market and the willful acquisition or maintenance of that power, as distinguished from growth or development as a consequence of superior product, business acumen, or historic accident - the United States Supreme Court has defined monopolization as involving the following two elements : 1. The possession of monopoly power in the relevant market 2. "The willful acquisition or maintenance of the power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident

Question 12

monopoly

Accepted Answer

- a term generally used to describe a market in which there is a single seller or a limited number of sellers

Question 13

monopoly power

Accepted Answer

- the ability of a monopoly to dictate what takes place in a given market

Question 14

per se violation

Accepted Answer

- a type of anticompetitive agreement - such as a horizontal price-fixing agreement - that is considered to be so injurious to the public that there is no need to determine whether it actually injures market competition ; rather, it is in itself (per se) a violation of the Sherman Act

Question 15

predatory pricing

Accepted Answer

- the pricing of a product below cost with the intent to drive competitors out of the market - occurs when one firm (the predator) attempts to drive its competitors from the market by selling its products at prices substantially below the normal costs of production - once their competitors are eliminated, the predator presumably will raise its prices far above their competitive levels to recapture its losses and earn higher profits

Question 16

price discrimination

Accepted Answer

- setting prices in such a way that two competing buyers pay two different prices for an identical product or service

Question 17

price-fixing agreement

Accepted Answer

- an agreement between competitors in which the competitors agree to fix the price of products or services at a certain level; prohibited by the Sherman Act

Question 18

resale price maintenance agreement

Accepted Answer

- an agreement between a manufacturer and a retailer in which the manufacturer specifies the minimum retail price of its products - resale price maintenance agreements are illegal per se under the Sherman Act

Question 19

restraint of trade

Accepted Answer

- any contract or combination that tends to eliminate or reduce competition, effect a monopoly, artificially maintain prices, or otherwise hamper the course of trade and commerce as it would be carried on if left to the control of natural economic forces

Question 20

rule of reason

Accepted Answer

- a test by which a court balances the positive effects (such as economic efficiency) of an agreement against its potentially anticompetitive effects - in antitrust litigation, many practices are analyzed under the rule of reason

Question 21

treble damages

Accepted Answer

- damages consisting of three times the amount of damages determined by a jury in certain cases as required by statute

Question 22

tying arrangement

Accepted Answer

- an agreement between a buyer and a seller in which the buyer if a specific product or service becomes obligated to purchase additional products or services from the seller

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Chapter 26 - Antitrust Laws Flashcards

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