Question 1

The 2010 guidelines regarding horizontal mergers:
A) use a single methodology for merger analysis.
B) are intended to identify harmful mergers while avoiding unnecessary interference with mergers that will not be likely to affect competition.
C) explain that market definition is a necessary starting point of merger analysis.
D) reject use of the Herfindahl-Hirschman Index in quantifying market concentration.

Accepted Answer

The 2010 guidelines are intended to identify harmful mergers while avoiding unnecessary interference with mergers that will not be likely to affect competition. They do not use a single methodology for merger analysis, but rather emphasize the importance of considering a range of factors in assessing the competitive effects of a merger. The guidelines also recognize the importance of market definition in merger analysis, but do not reject the use of the Herfindahl-Hirschman Index or any other tool for quantifying market concentration.

Question 2

The National Cooperative Research Act:
A) prohibits using the rule of reason test in judging joint ventures in research and development of new technology.
B) is designed to clear up uncertainty about the legality of joint ventures.
C) now requires treble damages if joint ventures are formed in violation of Section 1 of the Sherman Act.
D) All of these.

Accepted Answer

The National Cooperative Research Act is designed to clear up uncertainty about the legality of joint ventures, particularly in the area of research and development of new technology. It does not prohibit the use of the rule of reason test or require treble damages for violations of Section 1 of the Sherman Act.

Question 3

For purposes of the concerted action requirement under Section 1 of the Sherman Act:
A) a corporation is viewed separately from its wholly owned subsidiaries.
B) a firm and its employees are viewed as one entity.
C) concerted action must be established by an express agreement.
D) All of these are correct.

Accepted Answer

A firm and its employees are considered a single entity for the purposes of the concerted action requirement under Section 1 of the Sherman Act, meaning their actions are not subject to scrutiny under this provision as they cannot legally conspire with themselves.

Question 4

Conglomerate mergers have been challenged only where:
A) one of the merging firms would be highly likely to enter the market of the other firm.
B) the merged company would be disproportionately large compared with the largest competitors in its industry.
C) Both of these.
D) None of these.

Accepted Answer

Conglomerate mergers have been challenged only where one of the merging firms would be highly likely to enter the market of the other firm and where the merged company would be disproportionately large compared with the largest competitors in its industry.

Question 5

Failure to comply with Sections 1 or 2 of the Sherman Act:
A) is a felony and can result in imprisonment.
B) may subject an individual to a fine of up to $1 million under the 2004 amendments.
C) may subject a corporation to a fine of $100 million per violation.
D) All of these.

Accepted Answer

Failure to comply with Sections 1 or 2 of the Sherman Act may result in imprisonment, fines of up to $1 million for individuals under the 2004 amendments, and fines of $100 million per violation for corporations. Therefore, option D is the correct answer because it includes all of these possibilities.

Question 6

The Sherman Act:
A) prohibits contracts and combinations in restraint of trade.
B) prohibits conspiracies in restraint of trade.
C) proscribes monopolization and any attempts to monopolize.
D) All of these.

Accepted Answer

The Sherman Act prohibits contracts and combinations in restraint of trade, conspiracies in restraint of trade, and proscribes monopolization and any attempts to monopolize. Therefore, all of the choices (A, B, and C) are correct.

Question 7

Discuss the validity and effect of each of the following: _a_.Two manufacturers of the same product decide to allocate territories, with one taking the southern States. _b_.A labor union encourages its members and all consumers to boycott a product manufactured by a company that refuses to honor a union contract. _Carrin'_s_Departmen_t_Stor_e_sell_s_it_s_product_s_fo_r₁₀_%_unde_r_th_e_suggeste_d_retai_l_price_._One c. manufacturer tells the store it will not supply wholesale goods to it unless it charges at least the suggested retail price.

Accepted Answer

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Question 8

Sareno Cheese Co. supplies mozzarella cheese to pizza restaurants at $1.50 per pound. In order to snare the business from a pizzeria, Sareno offers to sell them cheese at $1.25 per pound. This will violate the Robinson- Patman Act unless:
A) the pizzeria can already get the cheese for $1.15 elsewhere.
B) Sareno can show it is cost justified because of quantity.
C) Sareno lowers the price to all its customers.
D) Any of these.

Accepted Answer

The Robinson-Patman Act prohibits price discrimination among customers, unless the seller can prove it is cost justified due to differences in quantity or production. Option A mentions that the pizzeria can already get the cheese for a lower price from elsewhere, which would make Sareno's offer not discriminatory. Option B mentions cost justification due to quantity, which is a valid defense under the Robinson-Patman Act. Option C suggests that Sareno lower the price to all customers, which would also be a way to avoid price discrimination. Therefore, any of these options would make the offer legal under the Robinson-Patman Act.

Question 9

Market share greater than what percentage generally indicates monopoly power?
A) 25%.
B) 30%.
C) 50%.
D) 75%.

Accepted Answer

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Question 10

What are the major functions of the Federal Trade Commission (FTC)?

Accepted Answer

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Question 11

A restraint involving collaboration among competitors at the same level in the chain of distribution is:
A) a vertical restraint.
B) a horizontal restraint.
C) price fixing.
D) a trust.

Accepted Answer

A restraint involving collaboration among competitors at the same level in the distribution chain is known as a horizontal restraint. Examples of this include agreements among competing retailers or manufacturers to fix prices or divide territories, both of which can harm competition and ultimately harm consumers.

Question 12

The Clayton Act regulates all but which of the following?
A) Price discrimination
B) Tying contracts and mergers
C) Exclusive dealing by labor organizations
D) Interlocking directorates

Accepted Answer

The Clayton Act regulates price discrimination, tying contracts and mergers, and interlocking directorates. However, it does not address exclusive dealing by labor organizations, which is covered by the Norris-LaGuardia Act.

Question 13

Explain how price differentials may be justified so that the Robinson-Patman Act is not violated.

Accepted Answer

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Question 14

Elko Inc. and Fulda Inc. closely monitor each other's actions regarding the sale of consumer electronic products.

Accepted Answer

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Question 15

Major, Inc. has 68% of the market share in a particular geographic region for one of its products. Does Major have a monopoly? Explain.

Accepted Answer

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Question 16

Widget Maker, Inc. manufactures and sells widgets. It sells widgets to Marklin of Marklin's Department Store and gives him a preference in pricing that discriminates against other retailers. Does Marklin have liability for price discrimination? Does Widget Maker, Inc. have liability for price discrimination? Explain.

Accepted Answer

The answer of Widget Maker, Inc. manufactures and sells widgets....

Question 17

If Hyvac Vacuum Cleaners requires that Hyvac bags be used for the warranty to be valid, under the Sherman Act, this is:
A) illegal per se.
B) a tying arrangement, which is always judged by rule of reason.
C) either illegal per se or judged by the rule of reason depending on the economic power of the seller and the amount of interstate commerce in cleaner bags affected.
D) no violation.

Accepted Answer

This scenario would fall under the "rule of reason" test under the Sherman Act. It would depend on the economic power of the seller and the amount of interstate commerce affected. If Hyvac has significant economic power and the bag market is affected by interstate commerce, requiring the use of Hyvac bags for warranty validity could be considered anti-competitive and potentially illegal. However, if Hyvac does not have significant economic power and the bag market is not affected by interstate commerce, it may be considered a valid and legal warranty requirement.

Question 18

In tying arrangements, the courts may establish a seller's economic power by showing that:
A) the seller occupied a dominant position in the tying market.
B) the seller's product enjoys an advantage not shared by its competitors in the tying market.
C) a substantial number of customers have accepted the tying arrangement and the sole explanation for their willingness to comply is the seller's economic power in the tying market.
D) All of these.

Accepted Answer

All three options are factors that can establish a seller's economic power in tying arrangements. A dominant position in the market, product advantages, and customer acceptance due to lack of alternatives are all indicative of the seller's ability to leverage their position to impose tying arrangements.

Question 19

The 1992 Horizontal Merger Guidelines, as revised in 1997 and 2010:
A) were issued by the Justice Department to be additional to the FTC's separate guidelines.
B) require a mechanical application; in order to reduce the previously used analytical framework, which was far too subjective and uncertain.
C) rejects use of the Herfindahl-Hirschman Index.
D) deals with mergers of powerful buyers and mergers between competing buyers.

Accepted Answer

The 1992 Horizontal Merger Guidelines, as revised in 1997 and 2010, address mergers between competing buyers, including scenarios involving powerful buyers, to assess their potential impact on competition.

Question 20

The National Tax Accountants Professional Association (TAPA) has recommended that its members charge a minimum of $25 per hour for completing tax forms. This recommendation is probably:
A) a per se price-fixing violation of the Sherman Act.
B) not a violation of the Sherman Act, because it has been made by a professional association.
C) not a violation of the Sherman Act, because a fee is different from a price.
D) subject to the rule of reason.

Accepted Answer

The recommendation by TAPA to charge a minimum of $25 per hour for completing tax forms amounts to price-fixing, which is a per se violation of the Sherman Act. Professional associations are not exempted from antitrust laws and cannot engage in such activities.

Quiz 40: Antitrust

The 2010 guidelines regarding horizontal mergers:

The National Cooperative Research Act:

For purposes of the concerted action requirement under Section 1 of the Sherman Act:

Conglomerate mergers have been challenged only where:

Failure to comply with Sections 1 or 2 of the Sherman Act:

The Sherman Act:

Sareno Cheese Co. supplies mozzarella cheese to pizza restaurants at $1.50 per pound. In order to snare the business from a pizzeria, Sareno offers to sell them cheese at $1.25 per pound. This will violate the Robinson- Patman Act unless:

Market share greater than what percentage generally indicates monopoly power?

What are the major functions of the Federal Trade Commission (FTC)?

A restraint involving collaboration among competitors at the same level in the chain of distribution is:

The Clayton Act regulates all but which of the following?

Explain how price differentials may be justified so that the Robinson-Patman Act is not violated.

Elko Inc. and Fulda Inc. closely monitor each other's actions regarding the sale of consumer electronic products.

Major, Inc. has 68% of the market share in a particular geographic region for one of its products. Does Major have a monopoly? Explain.

If Hyvac Vacuum Cleaners requires that Hyvac bags be used for the warranty to be valid, under the Sherman Act, this is:

In tying arrangements, the courts may establish a seller's economic power by showing that:

The 1992 Horizontal Merger Guidelines, as revised in 1997 and 2010:

The National Tax Accountants Professional Association (TAPA) has recommended that its members charge a minimum of $25 per hour for completing tax forms. This recommendation is probably: