Exam 3 CHP 46, 47, 51 Flashcards
Agreements between or among firms that have the effect of reducing competition in the market place.
Restraints of trade
Sherman cases that are often concerned with whether an agreement (written or oral) leads to a restraint of trade between a group of individuals.
Section 1 cases
Sherman cases that deal with the structure of a monopoly that exists in the market places.
Section 2 cases
Illegal violations that are inherently under section 1 violation requirements. (Latin word)
Per se Violations
When the courts analyze anticompetitive agreements that allegedly violate section 1 of the Sherman Act to determine whether they actually constitute reasonable restraints of trade.
Rule of Reason
An agreement that in some way restrains competition between rival firms competing in the same market.
Horizontal restraint
Competitive decline from an agreement between firms at different levels in the manufacturing and distribution process.
Vertical restraint
When one firm attempts to drive its competitors from the market by selling its product at prices substantially below the normal costs of production.
Predatory pricing
What are the 2 parts of a relevant market?
- Relevant product market
- Relevant geographic market
Monopoly power, in and of itself, does not constitute the offense of monopolization under section 2 of the Sherman Act. The offense also requires an ________ to monopolize.
Intent
An act that strengthens federal antitrust laws. What sections are provided.
The Clayton Act
Sections 2, 3, 7, and 8
Section 2 also prohibits _______ monopolization of a market.
Attempted monopolization
What are the 3 requirements for attempted monopolization under section 2?
- Anticompetitive conduct
- Specific intent to gain monopoly power
- Dangerous probability of success of gaining monopoly
What is the section 2 of the Clayton Act?
Price discrimination
What are the 3 defenses for price discrimination?
- Cost justification
- Meeting a competitor’s price
- Changing market conditions
What is the section 3 of the Clayton Act?
Exclusionary practices
What are the 2 examples of exclusionary actions?
- Exclusive-dealing contracts
- Tying arrangements
What is section 7 of the Clayton Act?
Mergers (Both horizontal and vertical)
What is section 8 of the Clayton Act?
Interlocking Directorates
Who prosecutes violations of the Sherman Act?
DOJ
True or false.
Clayton Act violations are crimes.
False. Clayton Act violations are not crimes, and they are enforced by the DOJ or the FTC through civil court.
When a company is made to give up one or more of its operations.
Divestiture
Due to these laws, any conspiracy that has a substantial effect on U.S. commerce is within the reach of the Sherman Act. (Even if its done outside the U.S.)
Extraterritorial Application of U.S. Antitrust Laws
Name 4 industry exemptions to antitrust enforcement.
- Labor
- Fisheries
- Oil marketing
- State actions
True or false.
Accountants are required to discover every impropriety, defalcation, or fraud in a clients book.
False.
Accountants are NOT responsible for finding every issue
What are the 3 defenses accountants use for negligence?
- Accountant wasn’t negligent
- Accountant was negligent, but wasn’t cause for client loss
- Client was also negligent
Fraud, or misrepresentation, involves the following 3 elements….
- Misrepresentation of material fact
- Intent to deceive
- Justifiable reliance by the innocent party
When an professional is grossly negligent in performing his or her duties this is classified as ________ fraud.
Constructive fraud
What rule requires the need of privity for a liability to be imposed?
The Ultramares Rule
What rule requires a third parties reliance that is foreseen or known to impose liability?
The Restatement Rule
What rule requires a third party’s use being reasonably foreseeable to impose liability?
The “Reasonably Foreseeable Users” Rule
What are the 3 general professional liabilities who handle clients?
- Breach of contract
- Negligence
- Fraud
Which liability section from the Security Act of 1933 imposes civil liability on accountants for misstatements and omissions of material facts in registration statements?
Section 11
Which liability section from the Security Act of 1933 imposes civil liability on accountants for fraud in relation to offerings or sales of securities?
Section 12(2)
Which liability section from the Security Exchange Act of 1934 imposes civil liability on an accountant who makes a statement that was false or misleading with respect to any material fact?
Section 18
Which liability sections from the Security Exchange Act of 1934 imposes civil liability on accountants that uses deceptive plans or devices to counter SEC rules and regulations as well as mess with interstate commerce?
Section 10(b) and SEC rule 10b-5
