Exam 20: Antitrust Law

The Vertical Restraint Guidelines by the Justice Department hold that tying sales are not likely to be opposed if the party using the tactic has less than a 30 percent market share for the tying product.

Market power is defined as:

A rule of reason analysis means that courts look at the facts surrounding an antitrust claim before determining whether competition has been helped or hurt.

The 1936 legislation known as the Robinson-Patman Act, amended which law?

When a seller will sell a product only on the condition that the buyer also purchases a different product, there is a(n):

Vertical restraints of trade concern contracts among buyers and sellers at the same level of business.

In U.S. Steel Corp. v. Fortner Enterprises, U.S. Steel loaned Fortner money to buy mobile homes from the company to put in his mobile home park, the Supreme Court held that it was:

You own a hair salon in a college town. Because there is competition for customers, the salons have been in a price war. You invite all salon owners to your home. They decide that the price war is hurting everyone and agree to charge standard rates for hairstyling. This arrangement is:

The case of U.S. v. El Paso Natural Gas, where El Paso wanted to merge with another natural gas pipeline company, is an example of a case where a merger was blocked due to:

If two firms that were previously in competition with each other merge, the merger is called a(n):

In U.S. Steel v. Fortner Enterprises, where the purchase of mobile homes was tied to financing for them, the Supreme Court held that this tie-in sale was legal under a rule of reason analysis.

Retailers in a city discovered that some products they bought for retail sale were being sold by distributors directly to the public, thereby reducing sales that could have gone to the retailers. The retailers got together and agreed not to buy any goods from distributors who sold directly to the public. This agreement is:

In 1911, with regard to resale price maintenance, the Supreme Court pronounced a basic rule that:

The Sherman Act expressly holds illegal:

Fact Pattern 20-2 Vysion produces TVs it sells nationwide. Vysion contracted with Karol's Appliances to make it the exclusive distributor of Vysion TVs in the San Diego area. Karol's received a promise that Vysion would not sell its TVs to any other retailer within 20 miles of Karol's. In its San Diego stores, Karol's has a unique pricing policy. A higher price is charged to customers wearing suits than to customers not wearing suits. Karol's salespeople give non-suit-wearing customers 10% discounts off of the list price, and refuse any discounts to suit-wearing customers. Don's, a rival of Karol's, asked Vysion to allow it to sell its products in San Diego. Vysion refused, pointing to its contract with Karol's. Vysion's distribution policy differs in New York from what it is in California. In New York, Vysion allows every distributor who asks to sell Vysion TVs. However, Vysion requires that New York retailers sign contracts stating that they agree not to sell Vysion products below prices in a monthly "price list" sent by Vysion. In contracts with its distributors nationwide, Vysion insists that sales of its TVs be tied to sales of its VCRs. No consumer is allowed to purchase a Vysion TV without also buying a Vysion VCR. -Refer to Fact Pattern 20-2. If, instead of requiring its New York retailers to follow its price list, Vysion required its retailers to not charge a price higher than those on a price list, this would be:

Under the Robinson-Patman Act, a producer may not be able to charge one retailer a lower price than it charges another retailer just because the first retailer buys more merchandise. Volume discounts can be a violation of the Robinson-Patman because, according to the law:

A company injured by an act that violates the Sherman Act may sue for only:

If a grocery store has a sale that offers a can of peaches at half price⎯if you buy a can of soup at full price. That is likely to be an illegal tie-in sale.

An example of a horizontal restraint of trade is a cartel, such as OPEC.

A practice of engaging in price discrimination in different markets in an attempt to undercut competitors is known as: