Exam 20: Antitrust Law

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 Don's were to sue Vysion because Vysion will not allow Don's to carry Vysion products, what would be the most likely outcome of the lawsuit?

Jennie has the right to sell Lovely cosmetics. According to her contract with Lovely, Jennie may only sell cosmetics in three counties in Delaware. No one else may sell Lovely cosmetics in this region. If another door-to-door cosmetics seller sued Lovely, alleging that this agreement with Jennie was illegal, what would they base their suit on?

Suppose Coca-Cola required anyone who wanted to distribute Coke products must to also purchase a new candy product that Coca-Cola manufactures. This practice would be:

A horizontal market division occurs when businesses on different levels of industry agree to share a geographic market or market territory.

The cases concerning monopolization indicate:

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:

Which of the following is a possible remedy to an antitrust suit brought by the government:

A(n) ____ occurs when firms competing at the same level of business reach an agreement to divide the market on geographic or other terms.

A collection of rival producers that come together by some form of agreement in an attempt to restrain trade by restricting output and raising prices is called in antitrust a:

Illegal boycotts may involve manufacturers getting together to tell dealers what to do.

In FTC v. Proctor & Gamble, the Supreme Court blocked the merger of Clorox and Proctor & Gamble, even though the companies did not make the same products. The court based its decision on which legal theory?

The Clayton Act was passed to:

A firm's market share refers to:

When evaluating the relevant market in an antitrust case, both the product market and the geographic market may be considered.

Fact Pattern 20-1 MicroManage is the fastest growing home-software producer in the country. In 2000, it sold 6% of all home software in the U.S., but in 2011, it sold 55% of all home software. A recent issue of Computer Universe said that MicroManage was "the most dominant and aggressive of all home-software developers." Home software is a small part of the entire software industry. In 2011, MicroManage proposed a merger with Game Master, its main rival. Game Master was responsible for 10% of all home-software sales in 2010. MicroManage's president says that the combination of the firms will allow MicroManage to lower costs and pass the savings on to its customers. The Department of Justice filed suit to stop this merger, claiming the combination would give monopoly power to the merged firm. Justice insists that consumers would lose in the end. -Refer to Fact Pattern 20-1. If MicroManage were to ignore the Justice challenge and go ahead and merge with Game Master, what penalties could it face?

The requirement that if one product or service is purchased then another product or service must also be purchased, even if not desired by the customer, is called:

The Clayton Act holds illegal:

Vertical price fixing:

Vertical exclusionary practices do not include:

The Clayton Act prevents a corporation from acquiring another corporation if: