Govmnt Reg of Business: Chapter 39 Flashcards
Sherman Act in 1890
one of the first national laws designed to regulate competition, designed to prevent extreme concentrations of economic power
Chicago School
a theory of antitrust law first developed at the University of Chicago. Adherents to this theory believe that antitrust enforcement should focus on promoting efficiency and should not generally be concerned about the size or number of competitors in any market
Post Chicago School
adherents are beginning to recognize that competition alone may not be enough protect consumers
Section 1 of the Sherman Act
prohibits all agreements “in restraint of trade”
Section 2 of the Sherman Act
bans “monopolization - the wrongful acquisition of a monopoly”
Clayton Act
prohibits anticompetitive mergers, tying arrangements, and exclusive dealing agreements
Robinson-Pathan Act
bans price discrimination that reduces competition; an amendment to the Clayton Act
Why did Congress pass the Clayton Act in 1914?
courts weren’t enforcing the Sherman Act as strictly as had been intended
Per se violation of an antitrust law
an automatic breach; courts will generally not consider mitigating factors
Rule of reason
another breach of antitrust laws, not automatic, only if it harms competition
Who has the authority to enforce the antitrust laws?
the Justice Department (criminal proceedings) and the Federal Trade Commission (limited to civil injunctions and other administrative remedies)
Horizontal Agreements
among competitors, an agreement between Levi Strauss and Wrangler -both manufacturers of denim jeans
Vertical Agreements
among participants at different stages of the production process, an agreement between Levi and Macy’s
Mergers and joint ventures
among competitors, beyond simple and more permanent
cooperative strategies
often harmful to competition, many per se
What is a violation of section 1 of the Sherman Act?
any effort by a group of competitors to divide its market, price-fixing, bidrigging
refusal to deal
an agreement among competitors that they will not trade with a particular supplier or buyer, such an agreement is a rule of reason violation of the Sherman Act
reciprocal dealing agreement
an agreement under which Company A will purchase from Company B only if Company B also buys from Company A. These agreements are rule of reason violations of the Sherman Act
rule of reason violation
an action that breaches the antitrust laws only if it has an anticompetitive impact
Under the Robinson-Patman Act, it is illegal to charge different prices to different purchasers if:
the items are the same or the price discrimination lessens competition
Does the clayton act prohibits mergers?
only those that are anticompetitive
Joint Venture
a partnership for a limited purpose - the companies do not combine permanently, the simply work together on a specific project
Is having a monopoly legal?
Monopolize means to acquire a monopoly in the wrong way, it’s legal unless gains or maintained by using wrongful tactics
Predatory Pricing
a violation of act 2 of the Sherman Act in which a company lowers its prices below cost to drive competitors out of business
What are the 3 elements a plaintiff must prove to win a predatory pricing case?
defendant selling product below cost, def intends that plain go out of business, if the plain does go out of business, the def will be able to earn sufficient profits to recoup its prior losses
Tying Arrangement
a violation of the Sherman and Clayton Acts in which a seller requires that two distinct products be purchased together. The seller uses its significant power in the market for the tying product to shut out a substantial part of the market for the tied product
exclusive deal contract
one in which a distributor or retailer agrees with a supplier not to carry the products of any other supplier
Resale price maintenance
a per se violation of the Sherman Act in which a manufacturer enters into an agreement with retailers about the prices they will charge
Vertical maximum price-fixing
a rule of reason violation of the Sherman Act