Exam 31: Antitrust Law and Promoting Competition

The Clayton Act prohibits price discrimination.

Frictionless Lubricant Corporation and Grease Inc. are the principal suppliers of their product in their market. They agree that Frictionless will sell exclusively to retailers and Grease will sell exclusively to wholesalers. Under antitrust law, this market division is most likely​

A trade association practice or agreement that restrains trade is analyzed under the rule of reason.

Under what circumstances would Small's Market, a little store in Rustic, an isolated town, be considered a monopoly? If Small's Market is a monopoly, is it in violation of antitrust law?​

Size alone determines whether a firm is a monopoly.

Market power is the ability of a firm to enter a given market.

When a small number of companies share a large part of a market, the market is concentrated.

The Sherman Act is an example of legislation designed to curb anticompetitive business practices.

Monopoly power may be proved by evidence that a firm used its power to control prices.

Any action challenged as an attempt to monopolize must have been specifically intended to exclude competitors and garner monopoly power.

Frozen Confections Corporation makes and sells ice cream under a variety of brand names. Frozen wants to merge with Grocers Products Company, its main competitor. In considering a challenge to the deal, a court looks at the relevant product market. This most likely includes ice cream and​

An agreement that is deemed a per se violation will be examined by a court to determine whether the agreement actually constitutes a reasonable restraint of trade.

Predatory pricing involves selling a product at prices substantially above the fair market value.

Fact Pattern 31-1 ​Bodycare Corporation makes and sells ChemMed, the most prescribed name-brand blood pressure-lowering medication. Deja Vu Drugs, Inc., has the potential to make a generic version of the same drug. -Refer to Fact Pattern 31-1. A court would most likely rule that the agreement between Bodycare and Deja Vu is​

Grip-All Tires, Inc., conditions the sale of one of its products on Harvey's Service Stores agreeing to buy another of Grip-All's products. This deal is legal​

Spa Selectiva Company makes and sells beauty salon supplies. By selling its product at prices substantially below the normal cost of production, Spa Selectiva hopes to drive its competitors from the market. This is​

Soft Drink Corporation is charged with violating the Sherman Act through conduct subject to the rule of reason. When applying the rule of reason in this situation, a court will not consider​

Gearbox, Inc., a manufacturer of vehicle parts, refuses to sell to Motor Repair & Replace, Inc., a national vehicle service firm. Gearbox convinces Cam & Cylinder Company, a competitor, to do the same. This is​

Any agreement among competitors to fix prices is subject to evaluation under the rule of reason.

For products that are sold nationwide, the relevant geographic market is the entire globe.