Question 1

Under modern antitrust law analysis,a company with a market share between 70 and 90 percent has a monopoly.

Accepted Answer

A) True 
 B)False  False

Question 2

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 is automatically illegal.It is irrelevant what the effect of the given conduct is on competition;the conduct,in and of itself,is illegal.Defendants are subject to both criminal and civil penalties.The Justice Department has sought criminal sanctions against per se violators.Examples would include price fixing,bid-rigging,or an agreement by competitors to divide their market among themselves.
A rule of reason violation will be illegal only if it results in harm to competition.Such violations are viewed on a case-by-case basis.Examples of rule of reason situations would include refusal to deal arrangements and reciprocal dealing agreements.

Question 3

What type of collusion does the Supreme Court refer to as "the supreme evil of antitrust"?

Accepted Answer

A) Price fixing 
B) Reciprocal dealing 
C) Price discrimination 
D) Vertical mergers 
A) Price fixing 
B) Reciprocal dealing 
C) Price discrimination 
D) Vertical mergers A

Question 4

The most accurate statement about the Robinson-Patman Act is

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D) It was repealed by Congress in 1998. 
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D) It was repealed by Congress in 1998.

Question 5

A vertical allocation of customers or territory

Accepted Answer

A) is a per se violation of Section 1 of the Sherman Act. 
B) is a rule of reason violation of the Sherman Act. 
C) is not a violation of the Sherman Act. 
D) is illegal if it adversely affects one party over the other. 
A) is a per se violation of Section 1 of the Sherman Act. 
B) is a rule of reason violation of the Sherman Act. 
C) is not a violation of the Sherman Act. 
D) is illegal if it adversely affects one party over the other.

Question 6

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) both the Justice Department and the Federal Trade Commission can bring criminal proceedings. 
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) both the Justice Department and the Federal Trade Commission can bring criminal proceedings.

Question 7

Horizontal cooperative strategies would include all EXCEPT

Accepted Answer

A) market division. 
B) price fixing. 
C) reciprocal dealing. 
D) bid-rigging. 
A) market division. 
B) price fixing. 
C) reciprocal dealing. 
D) bid-rigging.

Question 8

If competitors act in concert but without an explicit agreement,they are engaged in

Accepted Answer

A) a tying arrangement. 
B) monopolization. 
C) reciprocal dealing. 
D) conscious parallelism. 
A) a tying arrangement. 
B) monopolization. 
C) reciprocal dealing. 
D) conscious parallelism.

Question 9

Pat's Pen Co.manufacturers and sells an inexpensive ball-point pen.Salley's Stationery purchases the pens for $.25 each in quantities of 1,000.Salley's discovered that a national chain,a competitor of Salley's,buys the pen at $.20 for 1,000.If Salley's Stationery sues Pat's Pen Co.for price discrimination

Accepted Answer

A) Pat's Pen Co.will win if it can prove that it has been selling to the national chain continuously at the cheaper rate. 
B) Pat's Pen Co. will win if it can prove that it did not intend to economically harm Salley's Stationery. 
C) Salley's Stationery will win if it can prove price discrimination occured and that it lessened competition. 
D) Salley's Stationery will win since price discrimination is a per se violation with no real defenses. 
A) Pat's Pen Co.will win if it can prove that it has been selling to the national chain continuously at the cheaper rate. 
B) Pat's Pen Co. will win if it can prove that it did not intend to economically harm Salley's Stationery. 
C) Salley's Stationery will win if it can prove price discrimination occured and that it lessened competition. 
D) Salley's Stationery will win since price discrimination is a per se violation with no real defenses.

Question 10

Per se violations are subject to both civil and criminal penalties.

Accepted Answer

A) True 
 B)False

Question 11

Predatory pricing occurs when a company lowers its prices below cost to drive competitorsout of business.

Accepted Answer

A) True 
 B)False

Question 12

Exclusive dealing contracts,if they have an anticompetitive effect,are illegal under the

Accepted Answer

A) Sherman Act only. 
B) Clayton Act only, 
C) Sherman Act and Clayton Act. 
D) Sherman Act, Clayton Act, and Robinson-Patman Act. 
A) Sherman Act only. 
B) Clayton Act only, 
C) Sherman Act and Clayton Act. 
D) Sherman Act, Clayton Act, and Robinson-Patman Act.

Question 13

John D.Rockefeller's oil business was the main reason which legislation was enacted?

Accepted Answer

A) Sherman Act 
B) Robinson-Patman Act 
C) Clayton Act 
D) Chicago School Act 
A) Sherman Act 
B) Robinson-Patman Act 
C) Clayton Act 
D) Chicago School Act

Question 14

Gorhan Construction,Brighton Bros.,and Tirenn Construction agreed that on three upcoming projects,Gorhan would bid lowest on one,Brighton would submit the lowest bid on the second project,and Tirenn would submit the lowest bid on the third project.In this way,they would each be assured of work for the upcoming season.This behavior

Accepted Answer

A) is legal and acceptable practice in the construction industry to spread work more evenly. 
B) is a per se violation of the Sherman Act. 
C) is a rule of reason violation of the Sherman Act. 
D) violates ethical, but not legal, standards. 
A) is legal and acceptable practice in the construction industry to spread work more evenly. 
B) is a per se violation of the Sherman Act. 
C) is a rule of reason violation of the Sherman Act. 
D) violates ethical, but not legal, standards.

Question 15

The FTC blocked the merger of Staples,Inc.and Office Depot because they controlled a large percentage of the national market for office supplies.

Accepted Answer

A) True 
 B)False

Question 16

The chain of Mega Hardware stores agreed with Lock Tight Manufacturing not to carry any brand of locks and door handles other than those manufactured by Lock Tight.Mighty Lock threatened to sue for antitrust violations.On what basis and under what statute(s)would Mighty Lock sue?

Accepted Answer

Mighty Lock would sue Mega Hardware for

Question 17

An advocate of the Chicago School's position on antitrust legislation would ask which of the following questions?

Accepted Answer

A) "Has a competitor been harmed?" 
B) "Has competition been harmed?" 
C) "Will competitors be allowed to freely enter the market?" 
D) "Will interstate commerce be affected?" 
A) "Has a competitor been harmed?" 
B) "Has competition been harmed?" 
C) "Will competitors be allowed to freely enter the market?" 
D) "Will interstate commerce be affected?"

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Explain horizontal price-fixing and vertical minimum and maximum price-fixing.Discuss their status under antitrust laws.

Accepted Answer

Horizontal price-fixing is the agreement

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) add both prices together and divide by the number of units purchased. 
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) add both prices together and divide by the number of units purchased.

Exam 38: Antitrust

Under modern antitrust law analysis,a company with a market share between 70 and 90 percent has a monopoly.

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.

What type of collusion does the Supreme Court refer to as "the supreme evil of antitrust"?

The most accurate statement about the Robinson-Patman Act is

A vertical allocation of customers or territory

If a company has violated antitrust laws,

Horizontal cooperative strategies would include all EXCEPT

If competitors act in concert but without an explicit agreement,they are engaged in

Per se violations are subject to both civil and criminal penalties.

Predatory pricing occurs when a company lowers its prices below cost to drive competitorsout of business.

Exclusive dealing contracts,if they have an anticompetitive effect,are illegal under the

John D.Rockefeller's oil business was the main reason which legislation was enacted?

The FTC blocked the merger of Staples,Inc.and Office Depot because they controlled a large percentage of the national market for office supplies.

The chain of Mega Hardware stores agreed with Lock Tight Manufacturing not to carry any brand of locks and door handles other than those manufactured by Lock Tight.Mighty Lock threatened to sue for antitrust violations.On what basis and under what statute(s)would Mighty Lock sue?

An advocate of the Chicago School's position on antitrust legislation would ask which of the following questions?

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

Explain horizontal price-fixing and vertical minimum and maximum price-fixing.Discuss their status under antitrust laws.

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

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