Exam 14: Business Competition: Antitrust

A covenant in the sale of a dry cleaning business that prohibits the seller from operating a dry cleaning business anywhere in that state is too restrictive to be enforced.

The Celler-Kefauver Act:

Sales representatives of several college-book publishers have met together and decided that calling on all schools in their territories is often fruitless,since only one of each of their books can be adopted.They have agreed to split the colleges and only make sales calls on their designated schools.Are there any anticompetitive problems?

A tying arrangement requires the seller to have market power in the tying product.

Toys R Us is an international toy retailer.The Justice Department has just filed a complaint against the giant retailer alleging that Toys R Us refuses to carry toy lines or toys if the manufacturers sell their products to discount warehouse stores such as Sam's Club or Costco.Toys R Us maintains that when manufacturers sell toys to these warehouses,they sell only the hot toy items for the Christmas season at large discounts.Their pricing undercuts Toys R Us and Toys R Us must carry a full line of toys,even those they do not share the same demand levels.Toys R Us:

A tying arrangement requires the seller to have market power in the tied product.

Setting minimum prices is a per se violation of the Sherman Act.

The Justice Department refused to approve a merger between office supplier Staples and office supplier Office Depot,a merger that would have given the two 70% of the office supply store market.Which of the following would be a valid reason for denying the approval for the merger?​

Section 1 of the Sherman Act covers monopolization.

Refusals to deal are a per se violation of the Sherman Act.

Vertical mergers are:

Conscious parallelism is a per se violation under the Sherman Act.

Four major insurance brokers agreed that when it came time for renewals of coverage with major customers that only one of them would submit a reasonable bid.The three others would submit a much higher price and thereby not be in the running for the renewal.The agreements of the insurance brokers:

Johnson & Johnson has required those who sell its soft contact lenses to sign an agreement that they will not offer discounts larger than 10% on Johnson & Johnson products that it sells.The agreement also provides that the discount is limited to a one-year supply.Which of the following statements is correct?​

Manufacturers who refuse to deal with retailers who do not charge a suggested retail price have committed a per se violation of the antitrust laws.

Exclusive distributorships are per se antitrust violations.

Blue Cross,a medical insurer,publishes lists of "usual,customary,and reasonable" rates for medical services.Blue Cross insureds can then shop for medical services to be certain they are fully covered.A physician who charges rates higher than Blue Cross alleges there is a combination in restraint of trade to force him out of business and a price-fixing conspiracy.Is he right?

Nike and Reebok,both leading manufacturers of athletic shoes,have proposed a joint venture to manufacture special orthopedic devices for handicapped children.The joint venture is:

Salads 'R' Us requires all its franchisees to sign an agreement that they will use napkins and dressings purchased from Salads 'R' Us.Unless the agreement is signed,no one is awarded a franchise.Salads 'R' Us maintains that the agreement is necessary to preserve uniformity and quality in all franchise outlets.The purchasing requirement is:

Anheuser-Busch,InBev NV,the maker of Bud Light,proposed a merger with Modelo,the maker of Corona.At the time of the proposed merger,AB InBev NV held 39% of the beer market,Miller/Coors held 26%,Modelo held 7%,and Heineken,the last of the big four held 6%.Other beer makers combined hold the remaining 22% of the U.S.beer market.The combination would give AB InBev NV 46% of the market.Modelo has been one of the market players that has resisted the parallel price increases in the industry.​ -Which of the following is correct?