Govmnt Reg of Business: Chapter 39

Question 1

Sherman Act in 1890

Answer 1

one of the first national laws designed to regulate competition, designed to prevent extreme concentrations of economic power

Question 2

Chicago School

Answer 2

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

Question 3

Post Chicago School

Answer 3

adherents are beginning to recognize that competition alone may not be enough protect consumers

Question 4

Section 1 of the Sherman Act

Answer 4

prohibits all agreements “in restraint of trade”

Question 5

Section 2 of the Sherman Act

Answer 5

bans “monopolization - the wrongful acquisition of a monopoly”

Question 6

Clayton Act

Answer 6

prohibits anticompetitive mergers, tying arrangements, and exclusive dealing agreements

Question 7

Robinson-Pathan Act

Answer 7

bans price discrimination that reduces competition; an amendment to the Clayton Act

Question 8

Why did Congress pass the Clayton Act in 1914?

Answer 8

courts weren’t enforcing the Sherman Act as strictly as had been intended

Question 9

Per se violation of an antitrust law

Answer 9

an automatic breach; courts will generally not consider mitigating factors

Question 10

Rule of reason

Answer 10

another breach of antitrust laws, not automatic, only if it harms competition

Question 11

Who has the authority to enforce the antitrust laws?

Answer 11

the Justice Department (criminal proceedings) and the Federal Trade Commission (limited to civil injunctions and other administrative remedies)

Question 12

Horizontal Agreements

Answer 12

among competitors, an agreement between Levi Strauss and Wrangler -both manufacturers of denim jeans

Question 13

Vertical Agreements

Answer 13

among participants at different stages of the production process, an agreement between Levi and Macy’s

Question 14

Mergers and joint ventures

Answer 14

among competitors, beyond simple and more permanent

Question 15

cooperative strategies

Answer 15

often harmful to competition, many per se

Question 16

What is a violation of section 1 of the Sherman Act?

Answer 16

any effort by a group of competitors to divide its market, price-fixing, bidrigging

Question 17

refusal to deal

Answer 17

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

Question 18

reciprocal dealing agreement

Answer 18

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

Question 19

rule of reason violation

Answer 19

an action that breaches the antitrust laws only if it has an anticompetitive impact

Question 20

Under the Robinson-Patman Act, it is illegal to charge different prices to different purchasers if:

Answer 20

the items are the same or the price discrimination lessens competition

Question 21

Does the clayton act prohibits mergers?

Answer 21

only those that are anticompetitive

Question 22

Joint Venture

Answer 22

a partnership for a limited purpose - the companies do not combine permanently, the simply work together on a specific project

Question 23

Is having a monopoly legal?

Answer 23

Monopolize means to acquire a monopoly in the wrong way, it’s legal unless gains or maintained by using wrongful tactics

Question 24

Predatory Pricing

Answer 24

a violation of act 2 of the Sherman Act in which a company lowers its prices below cost to drive competitors out of business

Question 25

What are the 3 elements a plaintiff must prove to win a predatory pricing case?

Answer 25

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

Question 26

Tying Arrangement

Answer 26

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

Question 27

exclusive deal contract

Answer 27

one in which a distributor or retailer agrees with a supplier not to carry the products of any other supplier

Question 28

Resale price maintenance

Answer 28

a per se violation of the Sherman Act in which a manufacturer enters into an agreement with retailers about the prices they will charge

Question 29

Vertical maximum price-fixing

Answer 29

a rule of reason violation of the Sherman Act