Question 1

In Dr. Miles Medical Co. v. John D. Park & Sons, the Supreme Court said that when a producer sells to wholesalers and retailers, and requires them to resell the products at prices set by the producer, under the Sherman Act it was an:

Accepted Answer

A)  illegal restraint of trade 
B)  illegal under a rule of reason analysis because competition was injured 
C)  legal under a rule of reason analysis because the medicines were patented 
D)  legal under a rule of reason analysis because the policy kept prices lower for consumers 
E)  none of the other choices

Question 2

Horizontal market division allows competing firms to:

Accepted Answer

A)  be more efficient 
B)  diversify into more markets 
C)  hire fewer workers 
D)  give better worker benefits 
E)  none of the other choices are correct

Question 3

When a merger increases concentration, a defense that shows that the firms' customers are sophisticated, large buyers that will not be taken advantage of by a bigger merged firm is:

Accepted Answer

A)  the failing firm defense 
B)  potential competitor defense 
C)  power-buyer defense 
D)  directorate defense 
E)  no such defense is recognized

Question 4

Customer restrictions, a vertical non-price restraint, are reviewed by the courts under a rule of reason analysis.

Accepted Answer

A) True 
 B)False

Question 5

Most cases brought under the Robinson-Patman Act are by private parties.

Accepted Answer

A) True 
 B)False

Question 6

The Supreme Court has rarely used the rule of reason analysis in antitrust cases.

Accepted Answer

A) True 
 B)False

Question 7

A horizontal restraint of trade occurs when the businesses involved are on the same level of operation and work together to limit competition.

Accepted Answer

A) True 
 B)False

Question 8

A merger occurs when:

Accepted Answer

A)  two or more firms agree to charge standard prices for their goods 
B)  sales and manufacturing departments are combined 
C)  common stock is converted to preferred stock 
D)  sole proprietors decide to incorporate 
E)  two or more firms join together to form a new entity

Question 9

In Eastman Kodak v. Image Technical Services, Kodak was charged with tying the sale of service of their copiers and other equipment to the sale of parts. The Supreme Court ruled:

Accepted Answer

A)  no tying arrangement existed because the markets for service and sale of parts overlapped 
B)  a tying arrangement existed and Kodak had potential monopoly power 
C)  a tying arrangement existed, but Kodak held a small share of the market for service and parts, so rule of reason analysis allowed the arrangement to stand 
D)  no tying arrangement existed because independent service organizations could purchase Kodak parts from Kodak whenever they so desired 
E)  no tying arrangement was proved to have existed, so there could be no antitrust illegality

Question 10

The Clayton Act, the Sherman Act and the Federal Trade Commission Act are all examples of:

Accepted Answer

A)  state antitrust legislation 
B)  federal antitrust legislation 
C)  federal employment legislation 
D)  state employment legislation 
E)  federal antidiscrimination legislation

Question 11

Alpha, an expensive brand of watch that sell for $5,000 (suggested retail price), sells to fine jewelry stores for $2,500. Irritated that Amer's Jewelry is selling the watches to the public for $4,000, while competitors are selling for $5,000, stops selling the watches to Amer's. Amer's sues Alpha for antitrust violation. It is likely that Amer's will:

Accepted Answer

A)  win for price fixing violation of the Sherman Act 
B)  win for Robinson-Patman Act violation 
C)  win for Section 5 FTC Act violation 
D)  lose because it violates the Robinson-Patman Act 
E)  lose because Alpha has the right to decide who to sell to

Question 12

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. Which antitrust statute specifically allows challenges of mergers?

Accepted Answer

A)  Clayton Act 
B)  Sherman Act 
C)  Federal Trade Commission Act 
D)  Interstate Commerce Act 
E)  no statute specifically addresses mergers

Question 13

A firm that violates the antitrust laws could be required to break up into several independent companies.

Accepted Answer

A) True 
 B)False

Question 14

In U.S. Steel v. Fortner Enterprises, involving the tying of the sale of mobile homes to credit for those homes, the Supreme Court renewed its view that tie-in sales are per se illegal under the antitrust statutes.

Accepted Answer

A) True 
 B)False

Question 15

Mass retailers oppose resale price maintenance because it hinders their strategy of:

Accepted Answer

A)  selling a few high quality products 
B)  selling name brand goods at high prices 
C)  selling large volumes of goods at low prices 
D)  selling large volumes of goods at high prices 
E)  selling cheap knockoffs

Question 16

In Standard Oil v. U.S., the federal government wanted to break up a trust of companies that controlled up to 90 percent of the petroleum products market at the turn of the century. The government relied on which law to force this breakup?

Accepted Answer

A)  the Federal Trade Commission Act 
B)  the Clayton Act 
C)  the Lanham Act 
D)  the Sherman Act 
E)  the Noerr-Pennington Act

Question 17

The government would most likely try to stop a merger between:

Accepted Answer

A)  McDonald's and R.C. Cola 
B)  Toyota and General Motors 
C)  U.S. Steel and American Airline 
D)  Nike Shoes and Pepsi Cola 
E)  all of the other choices would be equally likely to be prevented because they all involve major corporations

Question 18

The Supreme Court has held the sharing of price information to be a per se violation of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 19

In Todd v. Exxon Corp., where Exxon other oil companies hired a consultant to gather information about the salaries they paid professionals at the companies, and the information was used to help set salaries, the appeals court noted that:

Accepted Answer

A)  if the companies shared the data equally among themselves, there was nothing illegal about the data exchange 
B)  if the companies made the data in a data exchange public, they could face criminal charges 
C)  if the companies refused to make the data in a data exchange public, they could face criminal charges 
D)  a court is less likely to approve a data exchange when the information is made public 
E)  none of the other choices are correct

Question 20

The rule of reason approach to mergers was established in the landmark case Standard Oil Company v. U.S.

Accepted Answer

A) True 
 B)False

Exam 20: Antitrust Law

In Dr. Miles Medical Co. v. John D. Park & Sons, the Supreme Court said that when a producer sells to wholesalers and retailers, and requires them to resell the products at prices set by the producer, under the Sherman Act it was an:

Horizontal market division allows competing firms to:

When a merger increases concentration, a defense that shows that the firms' customers are sophisticated, large buyers that will not be taken advantage of by a bigger merged firm is:

Customer restrictions, a vertical non-price restraint, are reviewed by the courts under a rule of reason analysis.

Most cases brought under the Robinson-Patman Act are by private parties.

The Supreme Court has rarely used the rule of reason analysis in antitrust cases.

A horizontal restraint of trade occurs when the businesses involved are on the same level of operation and work together to limit competition.

A merger occurs when:

In Eastman Kodak v. Image Technical Services, Kodak was charged with tying the sale of service of their copiers and other equipment to the sale of parts. The Supreme Court ruled:

The Clayton Act, the Sherman Act and the Federal Trade Commission Act are all examples of:

A firm that violates the antitrust laws could be required to break up into several independent companies.

In U.S. Steel v. Fortner Enterprises, involving the tying of the sale of mobile homes to credit for those homes, the Supreme Court renewed its view that tie-in sales are per se illegal under the antitrust statutes.

Mass retailers oppose resale price maintenance because it hinders their strategy of:

In Standard Oil v. U.S., the federal government wanted to break up a trust of companies that controlled up to 90 percent of the petroleum products market at the turn of the century. The government relied on which law to force this breakup?

The government would most likely try to stop a merger between:

The Supreme Court has held the sharing of price information to be a per se violation of the Sherman Act.

In Todd v. Exxon Corp., where Exxon other oil companies hired a consultant to gather information about the salaries they paid professionals at the companies, and the information was used to help set salaries, the appeals court noted that:

The rule of reason approach to mergers was established in the landmark case Standard Oil Company v. U.S.