Quiz 33: Antitrust Law and Unfair Trade Practices


Section 1 of Sherman Act: The first provision of the Sherman Act states that all the contracts, formed with an intention of restraining the trade and commerce with other state or foreign countries, are illegal. In other words, Section 1 of the act outlaws the combinations, contracts and conspiracies that are in restraint of trade. Division of market : It is a way in which competitors decide their area to serve. Also, they take a designated portion of a market. It is a per se violation of Section 1 of Sherman Act. Facts : Company HBJ began offering a bar review course in State of G. The main provider of the course in that area was Company BRG. Both the companies were in competition and so they decided to enter into a contract. The contract stated that BRG will market HBJ's materials and give them $100 for each student that enrolls for the course. HBJ in exchange would not enter G and BRG will also stay away from the area of work of HBJ. The fees of the course increased to $400 from $150. The students filed a suit against both the company for violation Section 1 of Sherman Act. Division of markets is simply a way to reduce competition in a territory by not entering into each other's area of work and thereby allocate geographical locations for them. It is a way of anti-competition outlawed under U.S antitrust laws. The agreement made to attain monopoly and to control the competition, which as a result affects the interstate commerce will also be considered illegal. The parties in the contract entered into a contract to avoid the competition. Thus, it can be concluded that HBJ and BRG violated the first provision of Sherman Act.

Facts of the Case: In the country Maricopa, the various degree holding physicians run into agreement on maximum fees to be charged to the patients for providing medical facilities. The doctors were the members of a non-profit medical foundation. They did this arrangement with relation to insurance firm by agreement that they may claim in full payment for health services provided to policy holders of insurance plans. Issue of the case: The non-profit Maricopa medical society with an insurance organization were promoting various policies for providing health services for which they can claim maximum fee return to doctors from policyholders. As it has been in direct relation to doctors of Maricopa medical foundation and insurance companies, it is claimed for providing high degree competition to existing products from various other insurance firms. By agreement between member doctors and insurance company, the doctors may claim in full payment for health services provided to policyholders of specified insurance plan. Arizona filed a complaint against respondents in Federal District Court, alleging that they were engaged in an illegal price-fixing conspiracy in violation of Section 1 of the Sherman Act. The Federal district court denied the petition motion by saying that no judgment should be taken against the corporation without going into purpose of their adjustments made in the products. According to Section 1 of Sherman Act it is illegal to fix prices but can be taken in consideration prior to judgment if the intention of price fixing can substantiate itself over the mirror of policy followed under Sherman act per se. The per se rule is violated here because of providing the same advantage irrespective of circumstances, skills and expertise to all doctors. Horizontal pricing is when the businesses in the same line fix the price of service or product thus rendering competition and egging prices of products. Pre-fixing is illegal under Section 1 of Sherman act which says "Every person, corporation or company shall be penalized if it is found to be involved in any conspiracy there by creating a monopoly in the profound market". It protects per se rule to become applicable when desirously it shows anti-competition. Language of court: The petition filed contemporary on the behavior of per se and violation of Section 1 of Sherman Act is tend to be valid on all proves submitted and under section 1 (a) respondent is liable to pay a penalty of $10000 for violating the section 1 of Sherman Act. Section 2 of Sherman act is also violated defining the monopolistic move in the market and thus the respondent is liable to pay an additional penalty of $5000 negotiated on the basis of total penalty due to violation of both section 1 and 2 of Sherman Act enacted in the year 1930. Decision of Court: The Federal District Court declared the act as unlawful under per se rule and section 1 of Sherman Act.

Facts of the Case: MBNA is the exclusive franchisor of Mercedes Benz parts and material in the United States. It is responsible for selling the automobile parts and service to Mercedes Benz customer care departments but it has been noticed that it is selling Mercedes Benz automobile parts to local garage repair shops too. In the petition, MW Inc claimed that MBNA established a tying agreement that constituted violation of Section 1 of Sherman's Act. The respondent, MBNA counterclaimed the petitioner that it has suffered losses as a result of MW Inc's incentive program where it use to pay prices and gifts to personnel at Mercedes-Benz dealerships to induce them to purchase replacement parts from it. Issue of the Case: Under the agreement, MBNA had almost full control over the allocation of automobile parts and new cars to dealers. The agreement requires establishing a customer care department for the repair and service of Mercedes Benz automobiles. MBNA has also been responsible for the wholesale distribution of parts to dealers. MW Inc which is one of the competitors in the market of Mercedes Benz tried making some arrangements to sell the parts to local garages and to dealers through incentive mechanism at lower cost which under Sherman's act is prohibited. This tying agreement is sued under district court by MBNA under Sherman's Act. The winning of the case established so many fortunate lessons to deliver its point on competitive advantages and disadvantages which has been given in the language of the court below. Language Decision of the Court: The Court admitted that MBNA proportionate profit got distributed and divides because of the activities upheld by MW Inc. and it has suffered from some terrible damages. The court also admitted that such activities are prohibited under trading activities. The district court maintained the jury's liability decree on the Sherman Act claim, though the damages to MW Inc were cancelled giving the justification of "contrary to the weight of evidence." The court also granted judgment notwithstanding the verdict to MBNA on its Robinson-Patman Act counterclaim. It concluded that on the basis of the evidence presented "the jury could not reasonably return a finding of no [antitrust] injury" on the counterclaim. Both parties' petitions for which the District Court certified questions of law were granted and fused for interlocutory review. The Court upheld the district court's judgment for MBNA's Sherman Act Liability and the new trial granted on MW Inc's damages. Bit it annulled the District Court's judgment on MBNA's counterclaim.

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