Question 1

The Sherman Act has been called the "Magna Carta of free enterprise."

Accepted Answer

A) True 
 B)False

Question 2

Actual damages or treble damages are recoverable for violations of the Federal Trade Commission Act.

Accepted Answer

A) True 
 B)False

Question 3

Giving favorable shipping terms to one customer and not another is a form of direct price discrimination that violates the Robinson-Patman Act.

Accepted Answer

A) True 
 B)False

Question 4

Negligence is the prerequisite for criminal liability under the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 5

Conglomerate mergers are mergers between companies who each have no greater than $500,000 in assets.

Accepted Answer

A) True 
 B)False

Question 6

With the lowering of international trade barriers and a corresponding increase in the globalization of business,should the determination of the "relevant market" be modified? For products or services provided by foreign firms competing in the United States market,are United States antitrust laws obsolete?

Accepted Answer

The general approach is the same,except

Question 7

Which of the following best describes horizontal division of markets?

Accepted Answer

A)  an agreement by competitors to each only serve part of the market for their products 
B)  any action in which a company distributes some products in one geographic area, and other products in another geographic area 
C)  any action in which a company charges different prices for a product, depending on the geographic market 
D)  an agreement under which two companies agree to jointly market related products, such as sport utility vehicles and outdoor camping equipment 
E)  the granting of exclusive geographic territory to salespersons 
A)  an agreement by competitors to each only serve part of the market for their products 
B)  any action in which a company distributes some products in one geographic area, and other products in another geographic area 
C)  any action in which a company charges different prices for a product, depending on the geographic market 
D)  an agreement under which two companies agree to jointly market related products, such as sport utility vehicles and outdoor camping equipment 
E)  the granting of exclusive geographic territory to salespersons

Question 8

"OJ Everyday" is one of several national distributors of orange juice to retail grocery stores.OJ Everyday wants to help the Megafood retail stores by selling the orange juice to them at a lower price than it sells to other retailers.Because OJ Everyday knows that this would be illegal price discrimination,it provides marketing assistance to Megafood,but to no one else.For example,OJ Everyday runs national advertisements that include statements that state that Megafood has a special system to ensure that OJ Everyday juice is always fresh.These advertisements imply,but do not state,that other stores might sell outdated items.Discuss this situation.

Accepted Answer

This might be indirect price discriminat

Question 9

What is the usual effect of a defendant's nolo contendere plea in a government antitrust case?

Accepted Answer

A)  a penalty imposed on the defendant without an admission of guilt 
B)  a penalty imposed on the defendant without an admission of guilt, and automatic liability to any private plaintiffs in related cases 
C)  a requirement that a defendant cease business in the line of business or market where the violation occurred 
D)  an admission of guilt, accompanied by a lighter penalty than if a verdict of guilty was issued following a trial 
E)  no penalty in the current case, but an increased penalty for any similar future violation 
A)  a penalty imposed on the defendant without an admission of guilt 
B)  a penalty imposed on the defendant without an admission of guilt, and automatic liability to any private plaintiffs in related cases 
C)  a requirement that a defendant cease business in the line of business or market where the violation occurred 
D)  an admission of guilt, accompanied by a lighter penalty than if a verdict of guilty was issued following a trial 
E)  no penalty in the current case, but an increased penalty for any similar future violation

Question 10

Price fixing is a conditional violation of Section 1 of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 11

Robin has developed an exclusive line of book bags that are in high demand.Robin feels that she has been treated unfairly by Book Supply Company in the past,and as a result,she refuses to sell her popular book bags to them.Has Robin violated Section 1 of the Sherman Act?

Accepted Answer

Robin has not violated Section

Question 12

Robin developed a great soft drink marketed in the East Tennessee area.The major soft drink companies lost their market share and sued Robin for violation of the Sherman Act.She can prove,however,that her drink is enormously successful only because of her skill and foresight in recognizing the market need.Assume that Robin has seventy-five percent of the market share in the relevant market.How is a court likely to rule?

Accepted Answer

A)  Robin will be in violation of Section 2 of the Sherman Act, because a monopoly exists regardless of whether she attempted to monopolize. 
B)  Robin has not violated Section 2 of the Sherman Act, but she has violated Section 1 of the Act under the "rule of reason" analysis, since the other soft drink companies have been effectively shut out of the market. 
C)  Robin has not violated Section 2 of the Sherman Act, but she has violated Section 1 of the Act, because under a "per se" rule of illegality, Robin has cornered the market. 
D)  Robin is not in violation of the Sherman Act, because she innocently acquired the monopoly. 
E)  Robin is not in violation of the Sherman Act, because no monopoly exists. 
A)  Robin will be in violation of Section 2 of the Sherman Act, because a monopoly exists regardless of whether she attempted to monopolize. 
B)  Robin has not violated Section 2 of the Sherman Act, but she has violated Section 1 of the Act under the "rule of reason" analysis, since the other soft drink companies have been effectively shut out of the market. 
C)  Robin has not violated Section 2 of the Sherman Act, but she has violated Section 1 of the Act, because under a "per se" rule of illegality, Robin has cornered the market. 
D)  Robin is not in violation of the Sherman Act, because she innocently acquired the monopoly. 
E)  Robin is not in violation of the Sherman Act, because no monopoly exists.

Question 13

Which of the following is true about the Sherman Act?

Accepted Answer

A)  Liability under Section 1 for restraint of trade requires an agreement with another party, but liability under Section 2 for monopolization does not. 
B)  Liability under Section 2 for monopolization requires an agreement with another party, but liability under Section 1 for restraint of trade does not. 
C)  Liability under either Section 1 or Section 2 requires an agreement with another party. 
D)  A business can be held liable under either Section 1 or Section 2 without an agreement with another party. 
E)  A violation of Section 1 is "per se" proof of a violation of Section 2. 
A)  Liability under Section 1 for restraint of trade requires an agreement with another party, but liability under Section 2 for monopolization does not. 
B)  Liability under Section 2 for monopolization requires an agreement with another party, but liability under Section 1 for restraint of trade does not. 
C)  Liability under either Section 1 or Section 2 requires an agreement with another party. 
D)  A business can be held liable under either Section 1 or Section 2 without an agreement with another party. 
E)  A violation of Section 1 is "per se" proof of a violation of Section 2.

Question 14

A company that bundles its products and requires the bundle be purchased such that competitors are excluded violates Section 2 of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 15

Under the Sherman Act,horizontal price-fixing arrangements are per se illegal.

Accepted Answer

A) True 
 B)False

Question 16

Many laws require a determination of actual injury before liability or guilt is determined.Is it fair that under the Clayton Act,a merger may be prevented merely because the merger is "likely" to substantially lessen competition or create a monopoly? Even if you do not agree with this regulation,why do you think it was enacted?

Accepted Answer

Once a merger is allowed,it ca

Question 17

The government may seek quadruple damages for violations of antitrust laws.

Accepted Answer

A) True 
 B)False

Question 18

Resale price maintenance occurs when:

Accepted Answer

A)  a retailer refuses to lower its price, even though competitors have lowered their prices. 
B)  a wholesaler refuses to offer volume discounts to its high-volume customers. 
C)  a manufacturer sells its products only to those dealers who agree to charge a certain price for the product's resale. 
D)  a manufacturer sells its products to its dealers for the same price in all states, even though the retail market is much more competitive in some states than in other states. 
E)  competitors agree to sell their products for the same price. 
A)  a retailer refuses to lower its price, even though competitors have lowered their prices. 
B)  a wholesaler refuses to offer volume discounts to its high-volume customers. 
C)  a manufacturer sells its products only to those dealers who agree to charge a certain price for the product's resale. 
D)  a manufacturer sells its products to its dealers for the same price in all states, even though the retail market is much more competitive in some states than in other states. 
E)  competitors agree to sell their products for the same price.

Question 19

Under Section 2 of the Sherman Act,monopolies are not outlawed,although acts of monopolizing are outlawed.

Accepted Answer

A) True 
 B)False

Question 20

Two car dealers,one a Honda dealer and the other a Toyota dealer,are located across the street from each other in a large city.There are several other Toyota dealers and several other Honda dealers in the same city.These two dealers have become fiercely competitive,and the competition has resulted in severe price-cutting.In fact,neither dealer can survive over the long term by selling cars at the current prices.The dealers meet and decide to stop this brutal competition.They agree on the prices to be charged for each of their models.The prices agreed to are based on many factors.As a result,there are no competing models for which the Toyota dealer and Honda dealer are charging the same price.For example,the agreed price to sell the most basic Honda Accord is different than the agreed price for the most basic Toyota Camry.Have the dealers engaged in illegal price-fixing?

Accepted Answer

A)  no, because the prices agreed to are different for competing products 
B)  no, because the price-fixing was necessary for the competitors to survive 
C)  no, because there are additional dealers in the relevant geographic market selling the same brand products who are not part of this agreement 
D)  no, because the agreement includes dealers selling cars from only two manufacturers 
E)  yes, this is illegal price-fixing 
A)  no, because the prices agreed to are different for competing products 
B)  no, because the price-fixing was necessary for the competitors to survive 
C)  no, because there are additional dealers in the relevant geographic market selling the same brand products who are not part of this agreement 
D)  no, because the agreement includes dealers selling cars from only two manufacturers 
E)  yes, this is illegal price-fixing

Exam 33: Antitrust Law

The Sherman Act has been called the "Magna Carta of free enterprise."

Actual damages or treble damages are recoverable for violations of the Federal Trade Commission Act.

Giving favorable shipping terms to one customer and not another is a form of direct price discrimination that violates the Robinson-Patman Act.

Negligence is the prerequisite for criminal liability under the Sherman Act.

Conglomerate mergers are mergers between companies who each have no greater than $500,000 in assets.

Which of the following best describes horizontal division of markets?

What is the usual effect of a defendant's nolo contendere plea in a government antitrust case?

Price fixing is a conditional violation of Section 1 of the Sherman Act.

Robin has developed an exclusive line of book bags that are in high demand.Robin feels that she has been treated unfairly by Book Supply Company in the past,and as a result,she refuses to sell her popular book bags to them.Has Robin violated Section 1 of the Sherman Act?

Which of the following is true about the Sherman Act?

A company that bundles its products and requires the bundle be purchased such that competitors are excluded violates Section 2 of the Sherman Act.

Under the Sherman Act,horizontal price-fixing arrangements are per se illegal.

The government may seek quadruple damages for violations of antitrust laws.

Resale price maintenance occurs when:

Under Section 2 of the Sherman Act,monopolies are not outlawed,although acts of monopolizing are outlawed.

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