Question 1

Courts tend to treat _____ similarly because they are similar in motivation and effect.

Accepted Answer

Reciprocal dealing agreements are similar in motivation and effect to tying agreements.Courts therefore tend to treat them similarly.

Question 2

Resale price maintenance is also known as:

Accepted Answer

Attempts by manufacturers to control the resale price of their products may also fall within the scope of Section 1 of the Sherman Act.This behavior is called vertical price-fixing or resale price maintenance.

Question 3

Which of the following has been recognized by the courts as a possible justification for tying agreements?

Accepted Answer

Some courts have recognized that tying agreements sometimes may be necessary to protect the reputation of the seller's product line.For example,the tying product of the seller functions properly only if used with the tied product.

Question 4

When is proof of joint action required for violation of Section 2 of Sherman Act?

Accepted Answer

The proof of joint action required for violations of Section 1 is required only when two or more firms are charged with a conspiracy to monopolize under Section 2 of the Sherman Act.

Question 5

Bony Corp.requires retailers and wholesalers that purchase Bony's $200 video cassette recorders to purchase $20-worth of blank Bony videotapes with each VCR.Under these circumstances,which of the following statements is accurate?

Accepted Answer

One of the elements that must be demonstrated before a challenged tying agreement is held to violate Section 1 of the Sherman Act is that the seller has sufficient economic power in the market for the tying product (such as a large market share)to appreciably restrain competition in the tied product market.Since Bony is the leader in the VCR market (the tying product),it follows that it will be able to restrain competition in the tied market product (blank videotapes).As such,this factor will be relevant insofar as the legality of Bony's tying requirement is concerned.

Question 6

Hem Sylvester Oil Company,owning a chain of wholly owned gas stations,refused to purchase the tires that Sans Corporation sells in some of its stations,unless the tire manufacturer agrees to purchase from the oil company,the petrochemicals used in the tire manufacturing process.This agreement is an example of a(n):

Accepted Answer

Hem Sylvester Oil Company is trying to get into a reciprocal dealing agreement with Sans Corporation by conditioning its purchase of tires from Sans Corp.on reciprocal purchase of petrochemicals for tire manufacturing offered for sale by Hem Sylvester.Through this agreement,Hem Sylvester is attempting to gain a competitive edge in the petrochemical market.

Question 7

After Khan (State Oil Co.v.Khan (1997))and Leegin (Leegin Creative Leather Products v.PSKS,Inc.(2007)),all forms of vertical price-fixing now receive _____ analysis.

Accepted Answer

After Khan (State Oil Co.v.Khan (1997))and Leegin (Leegin Creative Leather Products v.PSKS,Inc.(2007)),all forms of vertical price-fixing now receive rule of reason analysis.

Question 8

One of the elements that must be demonstrated before a challenged tying agreement will be held to violate Section 1 of the Sherman Act is that:

Accepted Answer

One of the elements that must be demonstrated before a challenged tying agreement will be held to violate Section 1 of the Sherman Act is that the seller has sufficient economic power in the market for the tying product (such as a large market share)to appreciably restrain competition in the tied product market.If a seller is a market leader in the tying product category,then this element is satisfied.

Question 9

Tying agreements may be challenged under both:

Accepted Answer

Tying agreements may be challenged under both Section 1 of the Sherman Act and Section 3 of the Clayton Act.

Question 10

Market shares in excess of _____ have historically justified an inference of monopoly power.

Accepted Answer

Although the exact percentage share necessary to support an inference of monopoly power remains unclear and courts often look at other economic factors (such as the existence in the industry of barriers to the entry of new competitors),market shares in excess of 70 percent have historically justified an inference of monopoly power.

Question 11

Which of the following has been recognized by the courts as a possible justification for tying agreements?

Accepted Answer

If the seller is a new business,then tying arrangements may be held lawful by the courts.The rationale for this "new business" exception is that if a tying agreement enables a fledgling firm to become a viable competitor,the agreement's net effect on competition is positive.

Question 12

Which of the following situations is most likely a case of Sherman Act Section 1 violation?

Accepted Answer

A manufacturer has always had the power to unilaterally assign exclusive territories to its dealers or to limit the dealerships it grants in a particular geographic area.However,manufacturers may run afoul of Section 1 of the Sherman Act by causing dealers to agree not to sell outside their dealership territories or by placing other restrictions on their dealers' right to resell their products.

Question 13

The following statements pertain to alleged violations of Section 1 of the Sherman Act.Which statement is accurate?

Accepted Answer

Because a tying agreement must meet certain criteria before it is subjected to per se analysis,and because evidence of certain justifications is sometimes considered in tying cases,the rule against tying agreements is at best a "soft" per se rule.

Question 14

The National Cooperative Research Act (NCRA)that applies to joint research and development ventures (JRDVs):

Accepted Answer

The National Cooperative Research Act (NCRA)that applies to joint research and development ventures (JRDVs)requires firms contemplating a JRDV to provide the Department of Justice and the Federal Trade Commission with advance notice of their intent to do so.

Question 15

Which of the following situations is most likely to trigger liability for a vertical boycott under Section 1 of the Sherman Act?

Accepted Answer

In Business Electronics Corp.v.Sharp Electronics Corp.(U.S.Sup.Ct.1988),the Court held that even proof of a conspiracy between a manufacturer and nonterminated distributors to terminate a price-cutter would not trigger liability unless it was accompanied by proof that the manufacturer and nonterminated dealers were also engaged in an unlawful vertical price-fixing conspiracy.

Question 16

Assume that the Oklahoma Wholesale Lumber Suppliers' Association,a trade association formed by all lumber wholesalers in the state,adopts a "fair competition" plan that divides the state into exclusive territories for member wholesalers.Each member wholesaler is forbidden by the plan to sell to retailers in another wholesaler's territory.Under these circumstances,which of the following is true?

Accepted Answer

The "fair competition" plan of the Oklahoma Wholesale Lumber Suppliers' Association is essentially a horizontal division of market agreement.Moreover,since this agreement has no other purpose or effect except restraining competition,it will be classified as a "naked" horizontal restraint and the courts would apply the per se rule to determine whether it is lawful.

Question 17

A common variation of a(n)_____ agreement is the requirements contract.

Accepted Answer

A common variation of an exclusive dealing agreement is the requirements contract,under which the buyer of a particular product agrees to purchase all of its requirements for that product from a particular supplier.

Question 18

To be liable for monopolization,a defendant must:

Accepted Answer

Although the exact percentage share necessary to support an inference of monopoly power remains unclear and courts often look at other economic factors (such as the existence in the industry of barriers to the entry of new competitors),market shares in excess of 70 percent have historically justified an inference of monopoly power.

Question 19

_____ agreements reduce a manufacturer's sales costs and provide dealers with a secure source of supply.

Accepted Answer

Exclusive dealing agreements reduce a manufacturer's sales costs and provide dealers with a secure source of supply.

Question 20

In analyzing vertical restraints on distribution,courts today will apply what analysis?

Accepted Answer

Since 1977 the Supreme Court has abandoned the per se standard in analyzing vertical restraint cases and now employs the Rule of Reason for those cases.

Quiz 49: Antitrust: the Sherman Act

Courts tend to treat _____ similarly because they are similar in motivation and effect.

Resale price maintenance is also known as:

Which of the following has been recognized by the courts as a possible justification for tying agreements?

When is proof of joint action required for violation of Section 2 of Sherman Act?

Bony Corp.requires retailers and wholesalers that purchase Bony's $200 video cassette recorders to purchase $20-worth of blank Bony videotapes with each VCR.Under these circumstances,which of the following statements is accurate?

After Khan (State Oil Co.v.Khan (1997) ) and Leegin (Leegin Creative Leather Products v.PSKS,Inc.(2007) ) ,all forms of vertical price-fixing now receive _____ analysis.

One of the elements that must be demonstrated before a challenged tying agreement will be held to violate Section 1 of the Sherman Act is that:

Tying agreements may be challenged under both:

Market shares in excess of _____ have historically justified an inference of monopoly power.

Which of the following has been recognized by the courts as a possible justification for tying agreements?

Which of the following situations is most likely a case of Sherman Act Section 1 violation?

The following statements pertain to alleged violations of Section 1 of the Sherman Act.Which statement is accurate?

The National Cooperative Research Act (NCRA) that applies to joint research and development ventures (JRDVs) :

Which of the following situations is most likely to trigger liability for a vertical boycott under Section 1 of the Sherman Act?

A common variation of a(n) _____ agreement is the requirements contract.

To be liable for monopolization,a defendant must:

_____ agreements reduce a manufacturer's sales costs and provide dealers with a secure source of supply.

In analyzing vertical restraints on distribution,courts today will apply what analysis?