Quiz 33: Antitrust Law

Effective antitrust law existed as part of the common law in the early days of the United States.

Because the common law could not deal effectively with monopolies,the United States Congress enacted a comprehensive system of antitrust laws to limit anticompetitive behavior.

Although the federal government has enacted antitrust laws,most antitrust actions are brought under state law.

The federal antitrust statutes are narrowly defined to reflect the government's enforcement policy and to allow it to respond to economic,business,and technological changes.

Federal antitrust laws provide for both government and private lawsuits.

Private parties may not intervene in public antitrust actions brought by the government.

The aggressiveness with which antitrust laws are enforced varies considerably,based on the differing political ideologies of the administrations that occupy the Office of the President of the United States.

From the 1940s through the 1970s,antitrust enforcement was quite stringent.

From the 1980s through the first decade of the 2000s,government enforcement of antitrust laws was more relaxed.

The Jackson Act is a federal statute,enacted in 1890,that makes certain restraints of trade and monopolistic acts illegal.

The Clayton Act is a federal statute,enacted in 1914,that regulates mergers and prohibits certain exclusive dealing arrangements.

The Federal Trade Commission Act (FTC Act)is a federal statute,enacted in 1970,that prohibits unfair methods of competition.

The Robinson-Patman Act is a federal statute,enacted in 1930,that prohibits price discrimination.

The Federal Trade Commission is empowered to enforce federal antitrust laws.

Government enforcement of federal antitrust laws is divided between the Antitrust Division of the Department of Justice and the Bureau of Competition of the Federal Trade Commission (FTC).

The Sherman Act is the only major antitrust act that includes criminal sanctions.

Negligence is the prerequisite for criminal liability under the Sherman Act.

Most of the major antitrust statutes provide for criminal penalties.

The government may seek civil damages for violations of antitrust laws.

The government may seek quadruple damages for violations of antitrust laws.

Section 1 of the Robinson-Clayton Act permits any person who suffers antitrust injury in his or her "business or property" to bring a private civil action against the offenders.

Consumers who have to pay higher prices because of an antitrust violation have recourse under Section 4 of the Clayton Act.

A private plaintiff in an antitrust action must have dealt directly with the alleged violators in order to have standing to sue,and indirect injury resulting from higher prices being passed on is insufficient.

Actual damages or treble damages are recoverable for violations of the Federal Trade Commission Act.

A private antitrust civil treble-damage action,in which there is no suit by the government,must be brought within four years from the date that the plaintiff's injury occurred.

Because of the possibility of bias,a government judgment against a party in an antitrust action cannot be used as evidence against that party by a private party in a civil action.

A government judgment obtained against a defendant for an antitrust violation may be used as prima facie evidence of liability in a private civil treble-damages action.

Antitrust defendants often opt to settle government-brought antitrust actions by entering into a consent decree in a criminal action.

Antitrust defendants often opt to settle government-brought antitrust actions by entering into a plea of nolo contendere in a government civil action.

Section 16 of the Clayton Act permits the government or a private plaintiff to obtain an injunction against anticompetitive behavior that violates antitrust laws.

Only the Interstate Commerce Commission can obtain an injunction under the FTC Act.

The Sherman Act has been called the "Magna Carta of free enterprise."

Section 1 of the Sherman Act outlaws contracts,combinations,and conspiracies in restraint of trade.

The Sherman Act applies to unlawful conduct by one (1)or more parties.

The two (2)tests the United States Supreme Court has developed for determining the lawfulness of a restraint of trade are the rule of inquiry and the per diem rule.

If Section 1 of the Sherman Act were read literally,it would prohibit almost all contracts.

In the landmark case Exxon Mobil Corporation of Texas v.United States,the United States adopted the "rule of reason" standard for analyzing Section 1 of the Sherman Act cases.

The per se rule holds that only unreasonable restraints of trade violate Section 1 of the Sherman Act.

The per se rule is applicable to restraints of trade that are considered inherently anticompetitive.

There are no defenses available to the accused if a "per se" restraint of trade occurs.

Under the "rule of reason" for violations under the Sherman Act,certain restraints of trade can be legal in some circumstances,and illegal in others.

With a "per se" antitrust violation under Section 1 of the Sherman Act,a balancing of those effects helping competition and those hurting competition is considered in determining if an action was illegal.

If a restraint of trade is inherently anticompetitive,it becomes a violation by applying the rule of reason.

All restraints of trade are unlawful.

Restraints of trade that are not characterized as per se violations are examined using the rule of reason.

A horizontal restraint of trade occurs when two (2)or more competitors at the same level of distribution enter into a contract,combination,or conspiracy to restrain trade.

Horizontal price fixing occurs when the competitors in the same line of business agree to set the price of goods or services they sell.

Illegal price fixing includes setting minimum or maximum prices of fixing the quantity of a product or service to be produced or provided.

Although most price fixing agreements occur between sellers,an agreement among buyers to set the price they will pay for goods or services is also price fixing.

Price fixing is a conditional violation of Section 1 of the Sherman Act.

If the three (3)largest automobile manufacturers agreed among themselves what prices to charge automobile dealers for this year's models,this would be seller's illegal per se price fixing.

If the three (3)largest automobile manufacturers agreed among themselves what price they would pay to purchase tires from tire manufacturers,this would be buyers' illegal per se price fixing.

Competitors who agree that each will serve only a designated portion of the market are engaging in market subordination.

A group boycott is also known as a refusal to deal.

A group boycott occurs when two (2)or more competitors at one level of distribution agree not to deal with others at a different level of distribution.

A vertical restraint of trade occurs when two (2)or more parties at different levels of distribution enter into a contract,combination,or conspiracy to restrain trade.

The United States Supreme Court has applied the per se rule,but not the rule of reason,in determining the legality of vertical restraints of trade under Section 1 of the Sherman Act.

Today,resale price maintenance is a per se violation for both price floors and price ceilings.

Resale price maintenance is also known as vertical price fixing.

The doctrine of conscious parallelism provides that,even if there is no concerted action,a violation of the Sherman Act occurs if two or more firms decide not to deal with a retailer.

Horizontal price fixing occurs when a manufacturer sets the retail price of the items they produce.

The Noerr Doctrine protects competitors in all circumstances where they jointly petition the government regarding the enactment or repeal of law,or to get the government to take some other action.

Under the Sherman Act,horizontal price-fixing arrangements are per se illegal.

All group boycotts are per se illegal.

If a firm unilaterally chooses not to deal with another firm,they are not in violation of the law.

The legality of non-price vertical restraints of trade under Section 1 of the Sherman Act is examined using the "rule of reason."

By definition,monopolies can impact the price of goods and services.

A firm can violate Section 2 of the Sherman Antitrust Act only by acting in collusion with another firm.

A company that bundles its products and requires the bundle be purchased such that competitors are excluded violates Section 2 of the Sherman Act.

In a Sherman Act Section 2 action,a court must define both the relevant geographic market and the relevant product or service market.

Fred owns a tractor business that has been in his family for fifty years,and it is the only tractor business in his small rural town.Others have tried to compete with him,but despite the fact that Fred did nothing out of the ordinary,the others failed and went out of business.Nevertheless,Fred's business is an illegal monopoly in violation of the Sherman Act.

Under Section 2 of the Sherman Act,monopolies are not outlawed,although acts of monopolizing are outlawed.

Proof of actual lessening of competition must be shown in order to prevent a merger in action based on Section 7 of the Clayton Act.

Under Section 7 of the Clayton Act,mergers can be prevented only if the companies proposing to merge are currently competitors.

"Line of commerce" refers to products,but not to services.

Determining the line of commerce that will be affected by the merger involves defining the relevant product or service market.

For purposes of Section 7 of the Clayton Act,the relevant geographical market is traditionally identified as the entire country.

Section 7 of the Clayton Act tries to prevent potentially anticompetitive mergers before they occur.

A horizontal merger is a merger between two or more companies that compete in the same business and geographical market.

A book publisher acquiring a retail bookstore chain would be a backward vertical merger.

A market extension merger is a merger between two companies in similar fields whose sales do not overlap.

Conglomerate mergers are mergers between companies who each have no greater than $500,000 in assets.

If Pepsi Cola were to merge with Michelin Tires,this would be a product market expansion merger.

Courts have permitted two or more small companies to merge without liability under Section 7,if the merger allows them to compete more effectively with a large company.

A "tying arrangement" is any advance agreement to commit to purchasing a fixed quantity of goods.

The object of a tying agreement must be a tangible product and not simply services or other intangibles.

Where quality control of products is an issue,tying arrangements can be legal.

Section 2 of the Clayton Act is commonly referred to as the Robinson-Patman Act.

Giving favorable shipping terms to one customer and not another is a form of direct price discrimination that violates the Robinson-Patman Act.

Price discrimination is not unlawful if it is done to meet a competitor's price.

Price discrimination is unlawful even if it is in response to changing conditions in the market for goods.

In order to be in violation of Section 5 of the Federal Trade Commission Act,the party must also be in violation of another provision of the antitrust laws.

The Federal Trade Commission Act is enforced by the Department of Justice.

Section 5 of the Federal Trade Commission Act covers conduct that violates the spirit of the Sherman Act or the Clayton Act.

Professional football has been found to be exempt from antitrust laws.

The Supreme Court leniently construes implied exemptions from antitrust law.

State antitrust laws are used to attack anticompetitive activity that occurs in intrastate commerce.

Since antitrust law exists and is enforced at the federal level,most states have not enacted their own antitrust statutes.

State antitrust statutes are usually patterned after the federal antitrust statutes.

The primary source of antitrust laws is/are: A) the United States Constitution. B) the Uniform Commercial Code. C) the Federal Trade Commission. D) federal statutes. E) common law.

Which of the following is not one of the antitrust statutes? A) the Sherman Act B) the Clayton Act C) the Federal Trade Commission Act D) the Competition Support Regulation Act E) the Robinson-Patman Act

Which two agencies are responsible for the enforcement of the antitrust laws? A) the Department of Justice and the Securities and Exchange Commission B) the Federal Trade Commission and the Securities and Exchange Commission C) the Federal Competition Commission and the Department of Justice D) the Federal Competition Commission and the Securities and Exchange Commission E) the Department of Justice and the Federal Trade Commission

Which of the following statements is false? A) Only the government can bring an action under antitrust law. B) Private parties, including injured consumers, may enforce antitrust laws. C) Antitrust laws provide for both criminal and civil sanctions. D) A government antitrust case judgment may be used as a prima facie case in a private action. E) Successful plaintiffs may recover three times their actual damages.

What is the usual effect of a defendant's nolo contendere plea in a government antitrust case? A) a penalty imposed on the defendant without an admission of guilt B) a penalty imposed on the defendant without an admission of guilt, and automatic liability to any private plaintiffs in related cases C) a requirement that a defendant cease business in the line of business or market where the violation occurred D) an admission of guilt, accompanied by a lighter penalty than if a verdict of guilty was issued following a trial E) no penalty in the current case, but an increased penalty for any similar future violation

The ________ rule is applicable to restraints of trade considered inherently anticompetitive.Once this determination is made about a restraint of trade,the court will not permit any defenses or justifications to save it. A) per se B) prima facie C) inherency D) per diem E) prima donna

What is the legal significance of the distinction between "rule of reason" violations and per se violations under the Sherman Act? A) Rule of reason violations must be proven beyond a reasonable doubt, while per se violations must be proven by a preponderance of the evidence. B) Rule of reason violations require an agreement with at least one other party, but per se violations can occur without an agreement with others. C) Rule of reason violations relate to horizontal restraints of trade, while per se violations relate to vertical restraints of trade. D) Rule of reason violations relate to actions brought by private parties, and per se violations relate to actions brought by the government. E) Rule of reason violations might be proven to be acceptable, but per se violations are not acceptable under any circumstances.

Horizontal price fixing occurs when: A) one or more companies charge the same prices for goods at all of their stores for an unreasonable length of time. B) a manufacturer requires its independent dealers to sell its products at a set price. C) a company with the entire market on a patented product sells the product at a fixed price. D) two or more competing companies agree on the prices to charge for their products. E) prices are determined with reference to an index, such as the average price of crude oil, which neither the seller nor the purchaser can control.

A ________ restraint of trade occurs when two (2)or more competitors at the same level of distribution enter into a contract,combination,or conspiracy to restrain trade. A) parallel B) fundamental C) vertical D) horizontal E) contiguous

Which of the following best describes horizontal division of markets? A) an agreement by competitors to each only serve part of the market for their products B) any action in which a company distributes some products in one geographic area, and other products in another geographic area C) any action in which a company charges different prices for a product, depending on the geographic market D) an agreement under which two companies agree to jointly market related products, such as sport utility vehicles and outdoor camping equipment E) the granting of exclusive geographic territory to salespersons

Which kind(s)of boycotts violate Section 1 of the Sherman Act? A) an agreement among competitors to boycott a particular supplier B) an agreement among competitors to not sell to a particular customer C) an agreement among competitors to boycott a particular supplier, and an agreement among competitors to not sell to a particular customer D) any refusal to sell to a particular customer or purchase from a particular supplier E) any refusal to sell to a particular customer

Resale price maintenance occurs when: A) a retailer refuses to lower its price, even though competitors have lowered their prices. B) a wholesaler refuses to offer volume discounts to its high-volume customers. C) a manufacturer sells its products only to those dealers who agree to charge a certain price for the product's resale. D) a manufacturer sells its products to its dealers for the same price in all states, even though the retail market is much more competitive in some states than in other states. E) competitors agree to sell their products for the same price.

What is the essential element of the "conscious parallelism" defense under Section 1 of the Sherman Act? A) independent action by the parties, without an agreement between the parties B) knowledge by independent parties of their conduct C) other parties undertaking actions similar to those agreed-upon by the defendants D) a pattern of similar violations E) an injury that cannot be directly traced to the violation

Which of the following best describes the activities allowable under the Noerr doctrine? A) Competitors can work together to lobby for passage of laws without being in violation of the antitrust laws, as long as their petition is not baseless. B) Competitors can agree on the prices at which they will sell their products, when the agreement results in lower prices for consumers. C) Mergers will be allowed under the antitrust laws when one of the companies would have failed in the absence of a merger. D) A company is free to compete or not compete with any other business, so long as the decision is made unilaterally. E) Competitors can agree on the prices at which they will sell their products, so long as the products are readily available.

Mere possession of monopoly power in a particular field: A) violates Section 1 of the Sherman Act. B) violates Section 2 of the Sherman Act. C) violates the Federal Trade Commission Act. D) violates the Clayton Act. E) is not an antitrust violation.

Which of the following is true about the Sherman Act? A) Liability under Section 1 for restraint of trade requires an agreement with another party, but liability under Section 2 for monopolization does not. B) Liability under Section 2 for monopolization requires an agreement with another party, but liability under Section 1 for restraint of trade does not. C) Liability under either Section 1 or Section 2 requires an agreement with another party. D) A business can be held liable under either Section 1 or Section 2 without an agreement with another party. E) A violation of Section 1 is "per se" proof of a violation of Section 2.

Under Section 2 of the Sherman Act,rather than making a presumption about whether monopoly power exists,the courts will examine all the facts and circumstances to determine whether monopoly power exists when the defendant holds between ________ percent and ________ percent of the relevant market. A) thirty; eighty B) twenty; seventy C) zero; fifty D) thirty-three; seventy E) fifty; seventy

________ pricing?that is,pricing below average or marginal cost?that is intended to drive our competitors has been held to violate Section 2 of the Sherman Act. A) Equilibrium B) Wholesale C) Predatory D) Conciliatory E) Monopoly

A small market that can support only one competitor,such as a small-town newspaper,is an example of a(n)________ monopoly. A) natural B) artificial C) inherent D) de facto E) unregulated

The "unfair advantage" theory is most often applied when analyzing: A) horizontal mergers. B) vertical mergers. C) market extension mergers. D) product market extension mergers. E) conglomerate mergers.

The ________ Act,which was enacted in 1950,widened Section 7 of the Clayton Act's scope to include asset acquisitions. A) Celler-Kefauver B) Robinson-Patman C) Anderson-McKeever D) Johnson-Robinson E) Keller-Widener

In an antitrust case where a plaintiff is challenging a proposed merger involving the defendant (who wants the merger to be approved,)which of the following is true about the likely arguments the parties will make regarding the relevant market? A) Any arguments are usually pointless, because relevant markets are usually clearly determined in advance. B) Both parties will likely argue for a narrowly-defined relevant market. C) The plaintiff will argue for a narrowly-defined relevant market, and the defendant will argue for a broadly-defined relevant market. D) The plaintiff will argue for a broadly-defined relevant market, and the defendant will argue for a narrowly-defined relevant market. E) Both parties will argue for a broadly-defined relevant market.

A market extension merger can exist: A) if the geographic market is extended. B) if the product market is extended. C) if either the product market or the geographic market is extended. D) only if both the geographic market and the product market are extended in the merger. E) only if the product market is extended into a different geographic area.

A merger that integrates a supplier and a customer would be categorized as a: A) horizontal merger. B) vertical merger. C) market extension merger. D) product market extension merger. E) conglomerate merger.

Which of the following theories is used to examine the legality of a conglomerate merger? A) the "market generation" theory B) the "unfair advantage" theory C) the "potential corruption" theory D) the "potential recidivism" theory E) None of the above is used to examine the legality of a conglomerate merger.

Which of the following actions could be acceptable if the purpose is to prevent a company from going bankrupt? A) price-fixing B) resale price maintenance C) price-fixing and setting a price floor D) a merger with another firm E) a merger with another firm, and resale price maintenance

The Hart-Scott-Rodino Antitrust Improvement Act led to rules requiring that: A) certain activities are classified as "per se" violations. B) failing companies be rescued through mergers, whenever possible. C) violators of antitrust laws be liable for treble damages. D) mergers be allowed if United States competitiveness in world markets is improved. E) the Federal Trade Commission and the Justice Department be notified in advance of any merger involving certain firms.

Which of the following best describes a tying arrangement? A) two companies jointly market their products of services B) a seller requires the purchase of one product or service in order to be able to purchase a second product or service C) a seller sets her price according to a market index D) a seller offers a volume discount for purchases of large quantities E) a seller refuses to deliver merchandise until payment has been received

Which of the following is true about "tying" arrangements? A) Tying arrangements are always illegal. B) Tying arrangements are always legal. C) Tying arrangements are legal for companies without monopoly power, and illegal for companies with monopoly power. D) Tying arrangements are illegal, unless there is a justifiable reason for the seller to have the tying arrangement. E) Tying arrangements are legal, so long as the purchaser is not harmed.

Which of the following is not a basis for an unfair competition claim under Section 5 of the Fair Trade Commission Act? A) the action violates a provision of the Sherman Act B) the action violates the "spirit" of the antitrust laws C) the action allows the party to earn excessive profits D) the action violates public policy E) the action is oppressive or unscrupulous

Which of the following is false regarding state antitrust laws? A) Most states have enacted antitrust statutes. B) State antitrust statutes are usually patterned after the federal antitrust statutes. C) State antitrust statutes rarely contain the same language as federal antitrust statutes. D) State antitrust laws are used to attack anticompetitive activity that occurs in intrastate commerce. E) When federal antitrust laws are only loosely applied, plaintiffs often bring lawsuits under state antitrust laws.

Two car dealers,one a Honda dealer and the other a Toyota dealer,are located across the street from each other in a large city.There are several other Toyota dealers and several other Honda dealers in the same city.These two dealers have become fiercely competitive,and the competition has resulted in severe price-cutting.In fact,neither dealer can survive over the long term by selling cars at the current prices.The dealers meet and decide to stop this brutal competition.They agree on the prices to be charged for each of their models.The prices agreed to are based on many factors.As a result,there are no competing models for which the Toyota dealer and Honda dealer are charging the same price.For example,the agreed price to sell the most basic Honda Accord is different than the agreed price for the most basic Toyota Camry.Have the dealers engaged in illegal price-fixing? A) no, because the prices agreed to are different for competing products B) no, because the price-fixing was necessary for the competitors to survive C) no, because there are additional dealers in the relevant geographic market selling the same brand products who are not part of this agreement D) no, because the agreement includes dealers selling cars from only two manufacturers E) yes, this is illegal price-fixing

A clothing maker requires the retailers it transacts business with to sell all of its clothing at a fixed minimum price.In examining a retailer's challenge to this practice,a court would: A) examine this arrangement on a "rule of reason" basis. B) invalidate the arrangement in its entirety. C) apply the per se rule, and find a violation of the Sherman Act. D) allow the arrangement, but only if neither party has monopoly power. E) apply the per se rule, and refuse to find a violation of the Sherman Act.

If the board of Sony and the board of Samsung agreed to stop providing discounts to the retailers of their televisions,what crime have they committed? A) resale price maintenance B) vertical price-fixing C) horizontal price-fixing D) conscious parallelism E) creating a tying agreement

Spokes Folks is one of four bicycle shops in a college town.Spokes Folks is the only retailer in town that carries the line of bicycles made by Silver Streak.Spokes Folks carries several other bicycle lines,some of which are also sold by at least one of the other retailers.Spokes Folks has been having difficulties lately dealing with Silver Streak.Following a recent disagreement,Spoke Folks sent a letter to Silver Streak stating that Spoke Folks "refuses to purchase any further products from Silver Streak,and will terminate all business dealings as soon as its current unpaid invoices are paid." Is this an illegal boycott under the Sherman Act? A) yes, because any refusal to deal with Silver Streak is a violation B) yes, because Spoke Folks is Silver Streak's only access to the retail market in this town C) no, because Spoke Folks carries other lines of bicycles D) The action is legal if the dispute with Silver Streak is bona fide; otherwise, it is illegal. E) no, because there was no agreement by Spoke Folks with a competitor

Robin developed a great soft drink marketed in the East Tennessee area.The major soft drink companies lost their market share and sued Robin for violation of the Sherman Act.She can prove,however,that her drink is enormously successful only because of her skill and foresight in recognizing the market need.Assume that Robin has seventy-five percent of the market share in the relevant market.How is a court likely to rule? A) Robin will be in violation of Section 2 of the Sherman Act, because a monopoly exists regardless of whether she attempted to monopolize. B) Robin has not violated Section 2 of the Sherman Act, but she has violated Section 1 of the Act under the "rule of reason" analysis, since the other soft drink companies have been effectively shut out of the market. C) Robin has not violated Section 2 of the Sherman Act, but she has violated Section 1 of the Act, because under a "per se" rule of illegality, Robin has cornered the market. D) Robin is not in violation of the Sherman Act, because she innocently acquired the monopoly. E) Robin is not in violation of the Sherman Act, because no monopoly exists.

Real Wood Company,a furniture manufacturer,acquires a chain of retail furniture stores.What type of a merger is involved? A) a backward vertical merger B) a forward vertical merger C) a horizontal merger D) a conglomerate merger E) a market extension merger

Mike owns eight bars in Delaware,Maryland and Pennsylvania.He has decided to grow the business by having a presence in the Midwest.If he acquired a chain of bars in Kansas and Missouri,what type of merger has occurred? A) a conglomerate merger B) a vertical merger C) a product extension market merger D) a geographic market extension merger E) a regional expansion merger

Zach's small bicycle manufacturing company,Peddle Away,is in dire straits.Zach wishes to merge with the very successful and large bicycle manufacturing company,Bikes Unlimited.There is concern that the merger will violate Section 7 of the Clayton Act.What defense would result in the merger being approved,even if it would otherwise violate Section 7? A) the "failing company" doctrine B) the "troubled company" doctrine C) the "small company" doctrine D) the "fair advantage" doctrine E) the "economic advantage" doctrine

"Your Buzz On-the-Go" is a franchisor of a drive-through fast food chain of stores where all drinks and food contain caffeine.For example,even their breakfast burritos contain chocolate.The franchisor requires its franchisees to purchase all of the food items and paper supplies (paper bags,napkins,packaging,etc.)from a supplier that is owned by the franchisor.Mike,a franchisee,would prefer purchasing these items from less expensive sources.Most likely,what is legality of the requirement to purchase these items from the franchisor? A) The arrangement is illegal for both the food products and the paper items. B) The arrangement is legal for the food products, but illegal for the paper items. C) The arrangement is illegal for the food products, but legal for the paper items. D) The arrangement is legal for both the food products and the paper items. E) The arrangement is legal for the food products if it can be shown that they are not unique, but illegal for the paper items.

Marvin,a sole proprietor,sells Perk-Up cereal to grocery stores.Some stores only buy a few boxes,but others buy large quantities.Marvin finds that it is cheaper to bulk ship large amounts to stores that buy a large quantity of the cereal.Is it permissible under the Robinson-Patman Act for Marvin to charge the purchasers of larger quantities less per box for the cereal? A) yes, but only to the extent that the reduced price is supported by cost savings B) yes, and there is no requirement that the reduced price be supported by cost savings C) yes, but only because a food product is involved, and the reduced price must be supported by cost savings D) yes, but only because a sole proprietor is involved, and the reduced price must be supported by cost savings E) no, Marvin may not reduce the price to purchasers of large quantities

Marvin Airlines is an established airline that is suddenly experiencing competition from a new airline,Cheapflites,in some of its markets.Cheapflites is a "no-frills" airline with a marketing policy that all of its tickets are fully-refundable.Marvin Airlines has rescheduled many of its flights to leave fifteen minutes later than the Cheapflites flight for the same route.Before the departure of each Cheapflites flight,a Marvin employee goes to the Cheapflites waiting area with a megaphone and announces that Marvin will allow Cheapflites passengers to fly on Marvin for $10 less than the cost of their Cheapflites ticket,and get full service as a bonus.Because the Cheapflites tickets are fully-refundable,most Cheapflites passengers accept the offer.Under the antitrust and unfair competition laws,which of the following is most likely true? A) Marvin is not in violation of any laws, unless it has monopoly power. B) Marvin is not in violation of any laws, unless it has agreed with at least one other airline to engage in this activity. C) This is an illegal "tying" arrangement, because Marvin makes its offer only to those people who also have a Cheapflites ticket. D) Marvin is likely in violation of Section 5 of the Federal Trade Commission Act, even if it is not in violation of the specific provisions of the antitrust laws. E) Marvin is not in violation of any laws, because seats on a "no-frills" airline would not be considered a substitute for seats on a "full-service" airline.

Why do we need federal antitrust laws? Would it be better if companies were allowed to simply engage in free-market competition?

Are there any special antitrust concerns that arise when one product becomes standardized and a basis for other products,such as a computer operating system that becomes the basis for software applications?

With the lowering of international trade barriers and a corresponding increase in the globalization of business,should the determination of the "relevant market" be modified? For products or services provided by foreign firms competing in the United States market,are United States antitrust laws obsolete?

Many laws require a determination of actual injury before liability or guilt is determined.Is it fair that under the Clayton Act,a merger may be prevented merely because the merger is "likely" to substantially lessen competition or create a monopoly? Even if you do not agree with this regulation,why do you think it was enacted?

Under Section 5 of the Federal Trade Commission Act,a party can be found guilty of an antitrust violation even when none of the antitrust acts is actually being violated.Is this fair? What is the purpose of this law?

Assume the three largest automobile manufacturers get together and agree to set certain prices for their automobiles based upon features.Is there any problem with this agreement under the Sherman Act,and if so,what is the problem,and under what rule would the agreement be analyzed?

A computer manufacturer decides to require that any businesses that purchase its computers for resale not charge over a set price.How would this arrangement be analyzed by a court in order to determine whether there was a violation of the Sherman Act?

Robin has developed an exclusive line of book bags that are in high demand.Robin feels that she has been treated unfairly by Book Supply Company in the past,and as a result,she refuses to sell her popular book bags to them.Has Robin violated Section 1 of the Sherman Act?

Assume that in Colorado ski resorts can be classified as "large" and "small," and that there are twelve large and fifteen small resorts.Some owners own more than one resort.Assume that there are two owners,each of whom owns two large resorts,who plan to merge.Currently,each owner's two resorts have approximately fifteen to twenty percent of the Colorado ski market.Each owner's two resorts have about thirty to thirty-five percent of the Colorado Front Range "day-skier" market (people from the Colorado Springs,Denver and Fort Collins areas who drive to a resort,ski,and drive home all in one day).Assume that Colorado resorts combined have about forty percent of the Rocky Mountain ski market,and about fifteen percent of the national ski market.Will the merger be allowed,and what are the legal principles involved?

A car and truck manufacturer has noticed increasing sales of aftermarket sports racks by companies such as Yakima and Thule.Along with this,it has noticed that fewer customers order sport utility vehicles,minivans and station wagons with the optional,factory-installed luggage racks.Marketing surveys show that many customers want the flexibility that these aftermarket racks provide.For example,they are removable,and they can be fitted with attachments for various kinds of equipment such as skis and kayaks.The manufacturer has introduced its own line of similar removable racks,but they have not sold well.One reason is a perception of lower quality that is only partially accurate.The car and truck manufacturer has decided to include one of these racks as standard equipment with all of its sport utility vehicles,minivans and stations wagons.It will include the basic rack,but no special attachments.The price of these vehicles will increase to cover the cost of the rack.Because the rack is removable,there is no problem with a customer being forced to drive a vehicle with a rack on it that the customer does not want.Discuss the antitrust implications of this action.

"OJ Everyday" is one of several national distributors of orange juice to retail grocery stores.OJ Everyday wants to help the Megafood retail stores by selling the orange juice to them at a lower price than it sells to other retailers.Because OJ Everyday knows that this would be illegal price discrimination,it provides marketing assistance to Megafood,but to no one else.For example,OJ Everyday runs national advertisements that include statements that state that Megafood has a special system to ensure that OJ Everyday juice is always fresh.These advertisements imply,but do not state,that other stores might sell outdated items.Discuss this situation.

Belinda markets a popular jacket that she sells to retailers for $80 per jacket.She markets the jackets on a nationwide basis.A competitor introduces to the market in Virginia and North Carolina a similar jacket that is sold to retailers for $70 per jacket.Belinda wants to reduce the price of her jacket in Virginia and North Carolina to only $60 per jacket.She asks your opinion as to whether she can do this,and whether she would have to reduce the price of the jacket in other states as well.Discuss the legal principles involved,and whether Belinda can reduce the price of the jackets to $60 in Virginia and North Carolina.