Question 1

Which of the following is true regarding conscious parallelism?

Accepted Answer

A)  Proof, standing alone, that firms changed prices at the same time is sufficient to prove a horizontal conspiracy to set prices regardless of whether the firms initially set prices at the same levels. 
B)  Proof, standing alone, that firms initially set prices at the same levels is sufficient to prove a horizontal conspiracy to set prices regardless of whether the firms later changed prices at the same time. 
C)  Showing that firms consistently set prices at the same levels and change prices at the same time is sufficient to prove a horizontal conspiracy to set prices. 
D)  Merely showing that firms consistently set prices at the same levels and change prices at the same time is insufficient to prove a horizontal conspiracy to set prices. 
A)  Proof, standing alone, that firms changed prices at the same time is sufficient to prove a horizontal conspiracy to set prices regardless of whether the firms initially set prices at the same levels. 
B)  Proof, standing alone, that firms initially set prices at the same levels is sufficient to prove a horizontal conspiracy to set prices regardless of whether the firms later changed prices at the same time. 
C)  Showing that firms consistently set prices at the same levels and change prices at the same time is sufficient to prove a horizontal conspiracy to set prices. 
D)  Merely showing that firms consistently set prices at the same levels and change prices at the same time is insufficient to prove a horizontal conspiracy to set prices. D

Question 2

One of the major differences between U.S.and European Union competition laws is the European Union's treatment of horizontal agreements.

Accepted Answer

A) True 
 B)False  False

Question 3

The Sherman Act applies only to "trade or commerce" within a state,between the states,or with foreign nations.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following is NOT true regarding Section 2 of the Sherman Act?

Accepted Answer

A)  Unilateral conduct may violate Section 2. 
B)  Section 2 allows the mere possession of monopoly power. 
C)  A firm violates Section 2 even if attains the monopoly power by superior performance. 
D)  The offense of monopolization has two elements: monopoly power and proof that the defendant willfully acquired or maintained that power through anticompetitive acts. 
A)  Unilateral conduct may violate Section 2. 
B)  Section 2 allows the mere possession of monopoly power. 
C)  A firm violates Section 2 even if attains the monopoly power by superior performance. 
D)  The offense of monopolization has two elements: monopoly power and proof that the defendant willfully acquired or maintained that power through anticompetitive acts.

Question 5

Predatory pricing is the attempt to eliminate rivals by undercutting their prices to the extent that their competitors lose money and go out of business.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a factor used in determining the anticompetitive effects of a horizontal merger under the Clayton Act?

Accepted Answer

A)  The level of concentration in the market. 
B)  The market shares of the firms involved in the transaction. 
C)  Whether the market is structurally conducive to anticompetitive behavior. 
D)  The market price of the buyer's stock. 
A)  The level of concentration in the market. 
B)  The market shares of the firms involved in the transaction. 
C)  Whether the market is structurally conducive to anticompetitive behavior. 
D)  The market price of the buyer's stock.

Question 7

With a(n)__________ distributorship,a manufacturer limits itself to a single distributor in a given territory.

Accepted Answer

A)  dual 
B)  exclusive 
C)  franchise 
D)  market-power 
A)  dual 
B)  exclusive 
C)  franchise 
D)  market-power

Question 8

__________ is the power to control prices or exclude competition in a relevant market.

Accepted Answer

A)  Horizontal price-fixing 
B)  Vertical market division 
C)  A tying arrangement 
D)  Market power 
A)  Horizontal price-fixing 
B)  Vertical market division 
C)  A tying arrangement 
D)  Market power

Question 9

In a __________ action under the Sherman Act,state attorneys general may bring civil actions for injuries sustained by residents of their respective states.

Accepted Answer

A)  parens patriae 
B)  private attorneys general 
C)  Herfindahl-Hirschman 
D)  resale price maintenance 
A)  parens patriae 
B)  private attorneys general 
C)  Herfindahl-Hirschman 
D)  resale price maintenance

Question 10

A manufacturer that sells its goods both wholesale and at retail is called a(n):

Accepted Answer

A)  conglomerate merger. 
B)  dual distributor. 
C)  essential facility. 
D)  franchise. 
A)  conglomerate merger. 
B)  dual distributor. 
C)  essential facility. 
D)  franchise.

Question 11

Set forth when a monopolist has a duty to deal with its rivals and the four elements considered in determining such a duty.

Accepted Answer

A monopolist has a duty to deal with its

Question 12

__________ competition is competition between companies producing the same type of product.

Accepted Answer

A)  Intrabrand 
B)  Interbrand 
C)  Vertical 
D)  Oriented 
A)  Intrabrand 
B)  Interbrand 
C)  Vertical 
D)  Oriented

Question 13

The merger of an airplane manufacturer and an airplane engine manufacturer would normally be considered a conglomerate merger.

Accepted Answer

A) True 
 B)False

Question 14

Section 5 of the Federal Trade Commission Act is broader than the other antitrust laws.

Accepted Answer

A) True 
 B)False

Question 15

In theIllinois Tool Works,Inc.v.Independent Ink,Inc.case discussed in the text,the question was whether a patented product in a tying arrangement creates a presumption of market power in that product.

Accepted Answer

A)  The court upheld earlier law and ruled that the existence of a patent in a tying arrangement creates a presumption of market power. 
B)  The court ruled that a tying arrangements involving a patented product should be evaluated under the rule of reason standard rather than under the per se rule. 
C)  The court ruled that a tying arrangements involving a patented product should be evaluated under the per se rule rather than under the rule of reason standard. 
D)  Overturning prior law the court ruled that the matter was irrelevant because all tying arrangements are illegal regardless of whether or not a patented product is involved. 
A)  The court upheld earlier law and ruled that the existence of a patent in a tying arrangement creates a presumption of market power. 
B)  The court ruled that a tying arrangements involving a patented product should be evaluated under the rule of reason standard rather than under the per se rule. 
C)  The court ruled that a tying arrangements involving a patented product should be evaluated under the per se rule rather than under the rule of reason standard. 
D)  Overturning prior law the court ruled that the matter was irrelevant because all tying arrangements are illegal regardless of whether or not a patented product is involved.

Question 16

How would a plaintiff establish the existence of a tying arrangement,and under what laws may tying arrangements be challenged?

Accepted Answer

To establish a tying arrangement,a plain

Question 17

Molly runs the best dog grooming shop in town.All the dogs love her,as do the owners.She is particularly popular because of a special type of dog biscuit she gives for treats that provides such energy that owners have been known to try them too.Slowly but surely all the other dog grooming shops start to go out of business.Molly claims surprise when one day she is charged with unlawfully monopolizing the dog grooming business.Which of the following would be her best defense?

Accepted Answer

A)  That she primarily provided biscuits, not grooming. 
B)  That she did not intentionally obtain monopoly power or retain it through anticompetitive acts. 
C)  That she did not intentionally obtain monopoly power, and that it was legally acceptable for her to willfully attempt to keep it. 
D)  That services, not goods, were involved. 
A)  That she primarily provided biscuits, not grooming. 
B)  That she did not intentionally obtain monopoly power or retain it through anticompetitive acts. 
C)  That she did not intentionally obtain monopoly power, and that it was legally acceptable for her to willfully attempt to keep it. 
D)  That services, not goods, were involved.

Question 18

In CASE 16.1 Federal Trade Commission v.Actavis,Inc.(2013),Actavis sought to market a generic version of AndroGel,which was owned by Solvay.The parties entered into a settlement agreement which required Solvay to pay Actavis millions as compensation for "other services." The FTC sued all parties,alleging violations of the Sherman Act.The caseinvolved a question of whether __________ should be analyzedunder the __________ standard.

Accepted Answer

A)  reverse payment settlements, rule of reason 
B)  vertical conspiracy, rule of reason 
C)  horizontal conspiracy, rule of reason 
D)  group boycotts, per se 
A)  reverse payment settlements, rule of reason 
B)  vertical conspiracy, rule of reason 
C)  horizontal conspiracy, rule of reason 
D)  group boycotts, per se

Question 19

The plaintiffs in theWilliamson Oil Co.v.Philip Morris USA case discussed in the text,alleged that tobacco companies had conspired to fix prices.How did the court rule?

Accepted Answer

A)  The suit was dismissed because the plaintiffs could not establish any "plus factor" needed to proceed. 
B)  The suit was allowed to proceed because no "plus factor" was needed. 
C)  The suit was allowed to proceed because "plus factors" were established by plaintiffs. 
D)  The suit was dismissed because the plaintiffs lacked standing. 
A)  The suit was dismissed because the plaintiffs could not establish any "plus factor" needed to proceed. 
B)  The suit was allowed to proceed because no "plus factor" was needed. 
C)  The suit was allowed to proceed because "plus factors" were established by plaintiffs. 
D)  The suit was dismissed because the plaintiffs lacked standing.

Question 20

Fact Pattern 16-1
Patty owns and operates a gym. Her main competitor is Jason who runs another gym three streets from her. They cater to the same clientele. Patty and Jason keep trying to undercut each other in order to attract customers. One evening Patty sees Jason in the local coffee shop and sits down to talk with him. They discuss how difficult it is to do upgrades and make money with the prices they are charging. Patty winked at Jason and said "You know, charging $80 per month would enable a good profit margin." The next day Patty started charging $80 per month as did Jason. Customers started complaining particularly after another coffee drinker and gym customer at a table sitting at a table near Patty and Jason made it known that they had seemed very cozy. Patty and Jason deny any agreement to set the same price for gym membership. They avow that the decision was made by each of them independently.
-Refer to Fact Pattern 16-1.Frank,a first year law student and gym member,is suspicious; but he does not know what violation to claim.Which of the following is the correct term for an illegal agreement by providers of the same good or service to charge a set fee?

Accepted Answer

A)  Horizontal price fixing 
B)  Vertical price fixing 
C)  Substantial price fixing 
D)  Predatory price fixing 
A)  Horizontal price fixing 
B)  Vertical price fixing 
C)  Substantial price fixing 
D)  Predatory price fixing

Exam 16: Antitrust.

Which of the following is true regarding conscious parallelism?

One of the major differences between U.S.and European Union competition laws is the European Union's treatment of horizontal agreements.

The Sherman Act applies only to "trade or commerce" within a state,between the states,or with foreign nations.

Which of the following is NOT true regarding Section 2 of the Sherman Act?

Predatory pricing is the attempt to eliminate rivals by undercutting their prices to the extent that their competitors lose money and go out of business.

Which of the following is not a factor used in determining the anticompetitive effects of a horizontal merger under the Clayton Act?

With a(n)__________ distributorship,a manufacturer limits itself to a single distributor in a given territory.

__________ is the power to control prices or exclude competition in a relevant market.

In a __________ action under the Sherman Act,state attorneys general may bring civil actions for injuries sustained by residents of their respective states.

A manufacturer that sells its goods both wholesale and at retail is called a(n):

Set forth when a monopolist has a duty to deal with its rivals and the four elements considered in determining such a duty.

__________ competition is competition between companies producing the same type of product.

The merger of an airplane manufacturer and an airplane engine manufacturer would normally be considered a conglomerate merger.

Section 5 of the Federal Trade Commission Act is broader than the other antitrust laws.

In theIllinois Tool Works,Inc.v.Independent Ink,Inc.case discussed in the text,the question was whether a patented product in a tying arrangement creates a presumption of market power in that product.

How would a plaintiff establish the existence of a tying arrangement,and under what laws may tying arrangements be challenged?

The plaintiffs in theWilliamson Oil Co.v.Philip Morris USA case discussed in the text,alleged that tobacco companies had conspired to fix prices.How did the court rule?

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