Question 1

The FTC blocked the merger of Staples,Inc.and Office Depot because of the large percentage of the national market for office supplies they would control if they merged.

Accepted Answer

A) True 
 B)False

Question 2

Assume that Lake Mirage Houseboats,Reflections Houseboats,and Upscale Houseboats all merged into one houseboat manufacturing company.Such a merger would be a(n):

Accepted Answer

A)  vertical merger. 
B)  vertical cooperative arrangement merger. 
C)  horizontal merger. 
D)  intracompetitive merger. 
A)  vertical merger. 
B)  vertical cooperative arrangement merger. 
C)  horizontal merger. 
D)  intracompetitive merger.

Question 3

A vertical merger involves companies at different stages of the production process.

Accepted Answer

A) True 
 B)False

Question 4

Most countries other than the United States do not permit private parties to sue for violation of antitrust laws.

Accepted Answer

A) True 
 B)False

Question 5

Larger Hardware advertises very low prices on standard items.Smalltown Hardware is having trouble competing and files a predatory pricing lawsuit against Larger.To win the case,Smalltown must prove:

Accepted Answer

A)  Larger Hardware is selling its products below cost. 
B)  Larger Hardware intends Smalltown to go out of business. 
C)  if Smalltown goes out of business, Larger will be able to earn sufficient profits to recoup its prior losses. 
D)  All of the above. 
E)  Only (a) and (b). 
A)  Larger Hardware is selling its products below cost. 
B)  Larger Hardware intends Smalltown to go out of business. 
C)  if Smalltown goes out of business, Larger will be able to earn sufficient profits to recoup its prior losses. 
D)  All of the above. 
E)  Only (a) and (b).

Question 6

The U.S.Attorney General brought a Sherman Act lawsuit against competitors in the widget market.The Attorney General alleged that these companies agreed to charge $20 for widgets.Which of the following defenses may apply?

Accepted Answer

A)  That the $20 price was fair. 
B)  That the $20 price was lower than the price before the agreement. 
C)  That the businesses did not agree to charge $20 for widgets. 
D)  That the competitors would have gone out of business without the agreement. 
A)  That the $20 price was fair. 
B)  That the $20 price was lower than the price before the agreement. 
C)  That the businesses did not agree to charge $20 for widgets. 
D)  That the competitors would have gone out of business without the agreement.

Question 7

The most accurate statement about the Robinson-Patman Act is that:

Accepted Answer

A)  it has rarely been enforced in recent years. 
B)  the U. S. government has stepped up its enforcement during the last decade. 
C)  it has been declared unconstitutional. 
D)  it was repealed by Congress in 2004. 
A)  it has rarely been enforced in recent years. 
B)  the U. S. government has stepped up its enforcement during the last decade. 
C)  it has been declared unconstitutional. 
D)  it was repealed by Congress in 2004.

Question 8

Two universities located within 30 miles of each other agree to divide their market so as to help them both. The two schools draw a line down a map and each university agrees to accept students only on their side of the line.
-Such an agreement is:

Accepted Answer

A)  a per se violation of antitrust law. 
B)  subject to the rule of reason test to determine if it violates antitrust law. 
C)  not governed by antitrust law since educational institutions are exempt from this area of law. 
D)  subject to state regulations but not to the Justice Department. 
A)  a per se violation of antitrust law. 
B)  subject to the rule of reason test to determine if it violates antitrust law. 
C)  not governed by antitrust law since educational institutions are exempt from this area of law. 
D)  subject to state regulations but not to the Justice Department.

Question 9

Violations of antitrust law are either "per se" violations or "rule of reason" violations.What are the differences between these two types of violations? Give examples of each.

Accepted Answer

A "per se" violation is a violation that

Question 10

Recently the Supreme Court held resale price maintenance is a rule of reason violation of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 11

Gary,Louise,and Brian,who own competing gas stations in town,happen to see each other at a restaurant one morning and have breakfast together.While talking,they decide to set their gas prices at the same amount.They have committed an illegal act only if the agreed price is unfair to consumers.

Accepted Answer

A) True 
 B)False

Question 12

Great Source Co.has an 85 percent market share.Under modern antitrust law,Great Source necessarily has a monopoly.

Accepted Answer

A) True 
 B)False

Question 13

Per se violations of the antitrust laws are subject to both civil and criminal penalties.

Accepted Answer

A) True 
 B)False

Question 14

In the Fears v.Wilhelmina Model Agency,Inc.case,the court held:

Accepted Answer

A)  parallel business behavior conclusively establishes agreement sufficient to constitute a Sherman Act offense. 
B)  in this case the defendants did not possess a common rational motive to conspire. 
C)  plaintiffs offering parallel conduct as evidence of an antitrust conspiracy must demonstrate additional circumstances in order to infer a conspiracy. 
D)  plaintiffs did not need to demonstrate "plus factors" in this case since the defendants' conduct was egregious. 
A)  parallel business behavior conclusively establishes agreement sufficient to constitute a Sherman Act offense. 
B)  in this case the defendants did not possess a common rational motive to conspire. 
C)  plaintiffs offering parallel conduct as evidence of an antitrust conspiracy must demonstrate additional circumstances in order to infer a conspiracy. 
D)  plaintiffs did not need to demonstrate "plus factors" in this case since the defendants' conduct was egregious.

Question 15

Ed was an independent owner of a chain of TV stores.He successfully got customers into his store by cutting his prices on widely advertised name-brand products in order to sell other products for which he received a bigger profit.When the manufacturers of three of the name-brand products discovered Ed's actions,they agreed secretly to stop selling him their TVs.The three manufacturers:

Accepted Answer

A)  are doing nothing illegal, as they did not get Ed to agree to anything. 
B)  are free to agree not to deal with Ed since the public can go elsewhere and will not be hurt economically. 
C)  can choose either as a group to deal or not to deal with any retailer they want. 
D)  are engaged in a rule of reason violation of the antitrust laws. 
A)  are doing nothing illegal, as they did not get Ed to agree to anything. 
B)  are free to agree not to deal with Ed since the public can go elsewhere and will not be hurt economically. 
C)  can choose either as a group to deal or not to deal with any retailer they want. 
D)  are engaged in a rule of reason violation of the antitrust laws.

Question 16

Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.

Accepted Answer

Under Section 2 of the Sherman Act,it is

Question 17

Cowan Manufacturing would commit:

Accepted Answer

A)  a rule of reason violation of the Sherman Act by setting a maximum, but not a minimum, price its distributors can charge. 
B)  a rule of reason violation of the Sherman Act by setting a minimum, but not a maximum, price its distributors can charge. 
C)  a rule of reason violation of the Sherman Act by setting either a minimum or a maximum price its distributors can charge. 
D)  a per se violation of the Sherman Act by setting a minimum price its distributors can charge and a rule of reason violation of the Sherman Act by setting a maximum price its distributors can charge for its products. 
E)  no violation of the Sherman Act by setting minimum or maximum prices its distributors can charge for its products. 
A)  a rule of reason violation of the Sherman Act by setting a maximum, but not a minimum, price its distributors can charge. 
B)  a rule of reason violation of the Sherman Act by setting a minimum, but not a maximum, price its distributors can charge. 
C)  a rule of reason violation of the Sherman Act by setting either a minimum or a maximum price its distributors can charge. 
D)  a per se violation of the Sherman Act by setting a minimum price its distributors can charge and a rule of reason violation of the Sherman Act by setting a maximum price its distributors can charge for its products. 
E)  no violation of the Sherman Act by setting minimum or maximum prices its distributors can charge for its products.

Question 18

If a company has violated antitrust laws:

Accepted Answer

A)  the Justice Department can initiate only noncriminal charges against the violator. 
B)  the Federal Trade Commission may file criminal proceedings against the violator. 
C)  any private person or company that has been harmed by the violator can file a lawsuit to recover damages. 
D)  All the above. 
A)  the Justice Department can initiate only noncriminal charges against the violator. 
B)  the Federal Trade Commission may file criminal proceedings against the violator. 
C)  any private person or company that has been harmed by the violator can file a lawsuit to recover damages. 
D)  All the above.

Question 19

John D.Rockefeller was the main reason which legislation was enacted?

Accepted Answer

A)  Sherman Act. 
B)  Robinson-Patman Act. 
C)  Clayton Act. 
D)  NLRA. 
A)  Sherman Act. 
B)  Robinson-Patman Act. 
C)  Clayton Act. 
D)  NLRA.

Question 20

The traditional formula for determining damages for a violation of the Robinson-Patman Act was to:

Accepted Answer

A)  calculate the estimated amount of lost profits. 
B)  determine the difference between the two prices and multiply the difference by the number of units purchased. 
C)  allow a jury to determine the amount of punitive damages without using any particular formula. 
D)  All the above. 
A)  calculate the estimated amount of lost profits. 
B)  determine the difference between the two prices and multiply the difference by the number of units purchased. 
C)  allow a jury to determine the amount of punitive damages without using any particular formula. 
D)  All the above.

Exam 21: Antitrust

The FTC blocked the merger of Staples,Inc.and Office Depot because of the large percentage of the national market for office supplies they would control if they merged.

Assume that Lake Mirage Houseboats,Reflections Houseboats,and Upscale Houseboats all merged into one houseboat manufacturing company.Such a merger would be a(n):

A vertical merger involves companies at different stages of the production process.

Most countries other than the United States do not permit private parties to sue for violation of antitrust laws.

Larger Hardware advertises very low prices on standard items.Smalltown Hardware is having trouble competing and files a predatory pricing lawsuit against Larger.To win the case,Smalltown must prove:

The U.S.Attorney General brought a Sherman Act lawsuit against competitors in the widget market.The Attorney General alleged that these companies agreed to charge $20 for widgets.Which of the following defenses may apply?

The most accurate statement about the Robinson-Patman Act is that:

Two universities located within 30 miles of each other agree to divide their market so as to help them both. The two schools draw a line down a map and each university agrees to accept students only on their side of the line. -Such an agreement is:

Violations of antitrust law are either "per se" violations or "rule of reason" violations.What are the differences between these two types of violations? Give examples of each.

Recently the Supreme Court held resale price maintenance is a rule of reason violation of the Sherman Act.

Gary,Louise,and Brian,who own competing gas stations in town,happen to see each other at a restaurant one morning and have breakfast together.While talking,they decide to set their gas prices at the same amount.They have committed an illegal act only if the agreed price is unfair to consumers.

Great Source Co.has an 85 percent market share.Under modern antitrust law,Great Source necessarily has a monopoly.

Per se violations of the antitrust laws are subject to both civil and criminal penalties.

In the Fears v.Wilhelmina Model Agency,Inc.case,the court held:

Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.

Cowan Manufacturing would commit:

If a company has violated antitrust laws:

John D.Rockefeller was the main reason which legislation was enacted?

The traditional formula for determining damages for a violation of the Robinson-Patman Act was to:

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