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Q:
Big Corp. (BC) operated in all 50 states. In all the states except Oregon, BC was the dominant firm in its industry. Small Corp. (SC) operated only in Oregon, but was the dominant firm in that state. BC decided it wanted to destroy SC so that it would become dominant in Oregon. BC cut its prices and sold below cost in Oregon, while maintaining regular prices everywhere else. This is an example of:
A. first-line price discrimination
B. secondary level price discrimination
C. tertiary level price discrimination
D. super-tertiary level price discrimination
Q:
Big Corp. (BC) is in the business of making and selling plastic products. Dominant and Micro both buy plastic products of similar grade and quality regularly from BC. Dominant is the biggest customer of BC while Micro usually buys very small quantities. Due to an unexpected shortfall of raw materials, BC anticipates significant reduction in plastic production at its plants. In order to maintain supply of plastic products to Dominant, BC quotes a 40 percent higher price for its products to Micro. Will this amount to a violation of Section 2(a) of the Robinson-Patman Act?
A. Yes, because BC is committing primary level price discrimination.
B. No, because Dominant deserves the preferential treatment.
C. Yes, because BC is adversely affecting competition at its customer's level.
D. No, because BC has not made any sales at higher prices to Micro.
Q:
Mel owns Melco, Inc., which manufactures toys. She provides a functional discount to Carol, a wholesaler of toys. Carol then passes on her discount to Nina, who owns Funland, a toy store. Nina is then able to offer lower prices to toy purchasers. Under the Robinson-Patman Act, this is:
A. tertiary level price discrimination.
B. secondary level price discrimination.
C. valid, if Nina is not in the same territory as Mel.
D. valid, as Nina and Carol are not competitors.
Q:
Bob is on the Board of Directors of both Acme Corporation and Beta Corporation. Acme recently acquired Teen Co., a retailer of teen girls' clothing. Beta Corporation had previously acquired Limitless Co., another retailer of teen girls' clothing. Except the teen girls' clothing business, Acme and Beta do not have any other competing businesses. Under the Antitrust Amendments of 1990:
A. Bob must resign from the Board of Directors of both Acme and Beta corporations.
B. Bob must resign from the Board of Directors of Acme Corporation.
C. Bob need not resign from either Board of Directors if the teen girls' clothing business contributes minimally to either organization's sales.
D. Bob need not resign until a competitor of Limitless and Teen Co. successfully challenges Acme's acquisition.
Q:
In reference to Section 8 of the Clayton Act, what does the term interlock mean?
A. When the same corporate officers serve in competing corporations
B. When the capital funding a corporation is from a foreign country
C. When a corporation is incorporated by federal government instead of the state
D. When competitors are using the same supplier in the same market
Q:
Which Section of The Clayton Act originally prohibited local and territorial price discrimination by sellers?
A. Section 2
B. Section 3
C. Section 7
D. Section 8
Q:
Predatory Co., a large company entering a new geographic market, decided to eliminate its smaller rivals in the new market by selling below cost in that market (but not elsewhere) until the rivals were forced out of business. This type of price discrimination is classified as:
A. super-tertiary level discrimination.
B. tertiary level discrimination.
C. primary level discrimination.
D. secondary level discrimination.
Q:
Odyssey Corp., a wholesaler of children's toys, sells retailers across the country the exceedingly popular Trojan Horse toy at a price of $14 per item. Odyssey has learned that one of its competitors, Iliad Co., is selling the Trojan Horse toy at a price of $12 per item to all retailers in the state of Utah. Odyssey would like to respond appropriately to Iliad's actions. Which of the following statements accurately sets forth how Odyssey may respond without risking a violation of the Robinson-Patman Act?
A. Odyssey may begin selling the Trojan Horse toy at a price of $12 per item to Utah retailers, while keeping the price at $14 per item for retailers elsewhere in the country.
B. Odyssey may begin selling the Trojan Horse toy at a price of $11.75 per item to Utah retailers, while keeping the price at $14 per item for retailers elsewhere in the country.
C. Odyssey may begin selling the Trojan Horse toy at a price of $12 per item to Utah retailers, but only if it lowers the price to $12 per item for retailers elsewhere in the country.
D. Odyssey may begin selling the Trojan Horse at price of $11.75 per item all over the country.
Q:
Humongous Corp., a conglomerate with interests in various industries, recently acquired Perfect Petrochemicals Co., a prominent producer of petroleum products that are used in manufacturing plastic. This acquisition was a complete surprise to Perfect's competitors, who never thought that Humongous had any desire to become involved in the petrochemical production business. Companies A and B owned by Humongous used plastic as a raw material. None of the companies under the Humongous umbrella made plastic, therefore A and B bought plastic from outside suppliers who used petrochemical products as raw material to make plastic. Which of the following theories is the most appropriate one for challenging the acquisition of Perfect by Humongous under Section 7 of the Clayton Act?
A. Elimination of actual potential competition
B. Potential reciprocity
C. Unfair advantage
D. Elimination of perceived potential competition
Q:
Gorgeous is a conglomerate and its major businesses include department store chains and grocery store chains. Gorgeous recently acquired Connect Corp., a mobile-network operator. Connect has the third-largest share of the mobile-network market. This is Gorgeous's first venture into the mobile-network business. Which of the following theories is the most appropriate one for challenging the acquisition of Connect by Gorgeous under Section 7 of the Clayton Act?
A. Elimination of actual potential competition
B. Potential reciprocity
C. Unfair advantage
D. Elimination of perceived potential competition
Q:
Initially, Section 8 of the Clayton Act prohibited any person from serving as a director of two or more competing corporations (other than banks or common carriers) if each corporation had capital, surplus, and undivided profits aggregating more than _____.
A. $1 million
B. $5 million
C. $10 million
D. $20 million
Q:
Section 8 of the Clayton Act requires a _____ analysis of behavior for determining liability.
A. quick-look
B. per se
C. secondary
D. rule of reason
Q:
Section 8 of the Clayton Act, as modified by the Antitrust Amendments Act of 1990, prohibits the same individuals from controlling competing corporations when those individuals are:
A. shareholders.
B. directors or senior officers.
C. mid-level officers.
D. managerial employees.
Q:
Which types of mergers have traditionally been subject to the greatest degree of scrutiny under the Clayton Act?
A. Horizontal mergers
B. Vertical mergers
C. Conglomerate mergers
D. Product-extension mergers
Q:
Zenith Co. is a company that manufactures cloth. It purchases the cotton required as raw material from Yell Mart. Zenith Co. acquires Yell Mart. Identify the type of merger.
A. Vertical merger
B. Horizontal merger
C. Conglomerate merger
D. Symmetrical merger
Q:
Which of the following is an accurate statement about vertical mergers?
A. Vertical mergers take place between formerly competing firms.
B. Vertical mergers do not directly result in an increase in concentration.
C. Vertical mergers constitute a per se violation of Clayton Act Section 7.
D. Vertical mergers have minimal effects on economic efficiencies.
Q:
Historically, courts seeking to determine the legality of vertical mergers have first tended to look at:
A. the increase in market entry barriers for new competitors.
B. the elimination of potential competition in the acquired firm's market.
C. the economic efficiency of such vertical integration.
D. the share of the relevant market foreclosed to competition.
Q:
Huge, Inc. owns an East coast grocery chain. It has recently acquired a West coast grocery chain. This is an example of a:
A. product extension merger.
B. horizontal merger.
C. market extension merger.
D. vertical merger.
Q:
Mini Corp. and Huge, Inc. are competitors. Mini holds the single largest market share in the markets they compete in. Huge is third in terms of market share. Mini plans to acquire Huge. Which of the following, if true, would help bolster a conclusion that the acquisition is lawful under Clayton Act Section 7?
A. That Mini has had a history of acquiring ownership over competitors in order to increase its market share.
B. That there are about 25 competitors other than Mini and Huge while there were only 10 competitors 10 years ago.
C. That Mini has a 25 percent market share now and would only be increasing its market share by another 10 percent by acquiring Huge.
D. That Huge is an aggressive firm and it has developed a plethora of patentable technologies in the last five years.
Q:
Strong Corp. and Marginal, Inc. are competitors. Strong plans to acquire ownership of Marginal. Which of the following, if true, would help bolster a conclusion that the acquisition is lawful under Clayton Act Section 7?
A. That the industry in which Strong and Marginal are competitors has become increasingly concentrated in recent years.
B. That Strong has had a history of acquiring ownership over competitors in order to increase its market share.
C. That Strong has a 35 percent market share now and would only be increasing its market share by another 10 percent by acquiring Marginal.
D. That Marginal is teetering on the brink of bankruptcy and only Strong is interested in purchasing Marginal.
Q:
Which of the following is a market share factor that federal regulators consider when determining the legality of horizontal mergers?
A. The probability of increasing concentration in the relevant market.
B. The prior conduct of the acquiring firm and the acquired firm.
C. The existence of barriers to the entry of new competitors into the relevant market.
D. The probable future competitive strength of the acquired firm.
Q:
Which of the following is an accurate statement about exclusive dealing agreements?
A. The qualitative substantiality test for gauging the legality of exclusive dealing agreements has prompted much criticism.
B. Exclusive dealing agreements are unlawful even when they have minimal effect on competition or monopolization.
C. The preventive nature of the Clayton Act does not allow it to cover exclusive dealing agreements.
D. Historically, exclusive dealing agreements involving a "not insubstantial" amount of commerce have been declared illegal.
Q:
Mr. Blue and Mr. Yellow own all the casinos in Delta City. Mr. Green wants to open but finds it too difficult to break into the market. Mr. Green sues Mr. Blue and Mr. Yellow for antitrust violation under the Clayton Act. What is the likely reason for the case being dismissed?
A. The Clayton Act does not deal with antitrust issues associated with real estate and services.
B. The Clayton Act does not permit a plaintiff to sue two defendants.
C. Gambling is a vice and as such cannot be litigated in the court system.
D. The common law is that businesses cannot sue after failing to establish themselves in the commercial market.
Q:
Section 7 of the Clayton Act prohibits mergers where evidence indicates that the merger:
A. is between companies who are solely engaged in intrastate commerce.
B. may have the effect of substantially lessening competition in any line of commerce.
C. involves companies that manufacture functionally uninterchangeable products.
D. involves companies that might fail if they were not allowed to merge.
Q:
_____ attempts to bar mergers that may have an anticompetitive effect.
A. Section 7 of the Clayton Act
B. Section 2 of the Sherman Act
C. Section 3 of the Clayton Act
D. Section 1 of the Sherman Act
Q:
Which of the following requires parties to the merger agreement for planned mergers involving dollar values of stock or assets exceeding certain amounts to provide advance notice to the FTC and the Justice Department?
A. Section 7 of the Clayton Act
B. The Robinson-Patman Act
C. Section 2 of the Sherman Act
D. The Hart-Scott-Rodino Antitrust Improvement Act
Q:
The courts in determining if a merger is anticompetitive will look at the area that will have effects that are direct and immediate. What is the term for this analysis?
A. Relevant Geographic Market
B. International Risks Test
C. Irrelevant Geographic Means
D. Domestic Risk Analysis
Q:
Reliable Corp. owns the nationwide chain of Reliable Auto Repair shops. Although Reliable has the single largest share in the nationwide auto repair market, the intensely competitive nature of this market means that Reliable's share is only 8 percent. In a lawsuit filed against Reliable, the plaintiff alleges that Reliable regularly agrees to provide automobile repairs only if the customer whose car needs repairs also agrees to purchase a certain paste wax manufactured by Reliable. The plaintiff asserts that this practice by Reliable violated Clayton Act Section 3. Which of the following is the strongest argument for Reliable to make in an effort to avoid liability?
A. That Reliable does not possess sufficient auto repair market power to appreciably restrain competition in the paste wax market.
B. That most of its customers need to buy paste wax anyway.
C. That auto repairs are not a commodity.
D. That Reliable's competitors in the sale of paste wax are doing quite well, regardless of how much paste wax Reliable may sell in this manner.
Q:
One of the elements that must be demonstrated before a challenged tying agreement will be held to violate Section 3 of the Clayton Act is that:
A. the tying product was available for purchase without the agreement.
B. the seller had substantial market power in the market for the tied product.
C. the seller's tying arrangements restrained a "not insubstantial" volume of commerce in the tied product.
D. the challenged agreement involved two integrated components of a larger product.
Q:
Technoco, Inc., a manufacturer of computers and related equipment, has been requiring wholesalers and retailers who purchase computers from it to also purchase printers as a condition of buying computers. One of Technoco's customers has challenged the legality of this practice. Which of the following factors would weigh against the illegality of this practice?
A. Evidence that Technoco's computers are generally considered to be inferior to those of its competitors.
B. Evidence that many other computer manufacturers will sell computers without requiring purchases of printers.
C. Evidence that Technoco is a small company whose total printer sales in the period in question amounted to $19,000.
D. Evidence that Technoco's computers are generally considered to be superior to those of its competitors.
Q:
The qualitative substantiality test was employed by the Supreme Court in the landmark case of:
A. Tampa Electric Co. v. Nashville Coal Co.
B. Standard Oil Co. v. United States.
C. Olin Corporation v. Federal Trade Commission.
D. Federal Trade Commission v. Staples, Inc.
Q:
The Foreign Sovereign Immunities Act (FSIA) provides that all commercial activities of foreign sovereigns and their agents are exempt from antitrust liability.
Q:
Which Act did the Congress envision as a vehicle in 1914 for attacking practices that monopolists employed to acquire monopoly power?
A. Sherman Act
B. Clayton Act
C. Robinson-Patman Act
D. Smith-Lever Act
Q:
There is/are no _____ for violating the provisions of the Clayton Act.
A. injunctive relief
B. treble damages
C. cease-and-desist orders
D. criminal penalties
Q:
Bob and Evan both own tanning salons in Ridgemont, California. They form the "Slow Growth Society of Ridgemont" as a lobbying group to persuade Ridgemont City Council to pass a zoning ordinance that would effectively prohibit new personal services businesses such as tanning salons in Ridgemont. This is prohibited under the Sherman Act.
Q:
The Noerr-Pennington doctrine provides an exception to the Clayton Act.
Q:
The Robinson-Patman Act prohibits sellers from making discriminatory payments to competing customers for such customer-performed services as advertising and promotional activities.
Q:
The McCarran-Ferguson Act does not exempt all actions by insurance companies from antitrust liability.
Q:
According to the Clayton Act, trade unions and their activities can be construed as illegal.
FALSE
The Clayton Act provides that labor unions are not conspiracies in restraint of trade and their behavior is not considered illegal.
Q:
The Local Government Antitrust Act of 1984 eliminates damage actions against municipalities and their officers, agents, and employees for antitrust violations and makes injunctive relief the sole remedy in such cases.
Q:
Ordinarily, higher degree of proof of likely competitive injury is required in cases involving secondary level price discrimination.
Q:
There are three major defenses to price discrimination under the Robinson-Patman Act.
Q:
Vertical mergers directly result in an increase in concentration.
Q:
In the EU, the Commission has considerable authority to quash a merger through its own action.
Q:
The Robinson-Patman Act applies to discriminatory acts that occur in trade and commerce.
Q:
The Robinson-Patman Act applies if a Texas manufacturer discriminated in price in sales to two Texas customers.
Q:
The Robinson-Patman act outlawed secondary and tertiary price discrimination.
Q:
In a Clayton Act Section 7-based challenge to a merger, the court's adoption of a broad relevant market definition will usually enhance the government's or private plaintiff's difficulty in demonstrating the challenged merger's probable anticompetitive effect.
Q:
If Acme Corp. and Bogus, Inc. both manufacture product X but no other products, the relevant product market for purposes of an antitrust challenge to a merger between Acme and Bogus will not be a crucial consideration.
Q:
The relevant geographic market in the case of merger between competitors are the markets in which they actually compete.
Q:
There are no criminal penalties for violating the Clayton Act.
Q:
Section 7 of the Clayton Act prohibits mergers of companies that would lessen competition in the market or create a monopoly.
Q:
Under Section 1 of the Sherman Act, a corporation's employees can be guilty of a conspiracy provided they conspire with:
A. either the board of directors or the senior management of the corporation.
B. the employees of a wholly owned subsidiary firm.
C. the employees of an independent, competitor firm.
D. the employees of a subsidiary in which the parent has a controlling interest.
Q:
Which of the following situations will justify the inference that a price-fixing conspiracy exists?
A. The defendant's parallel pricing behavior stemmed from an implied agreement.
B. Independent business decisions by the defendant led to price parallelism.
C. The defendant was unwilling to relinquish market share by engaging in price competition.
D. The evidence only indicates pure conscious price parallelism by the defendant.
Q:
_____ analysis of behavior challenged under Section 1 of the Sherman Act is thought to provide reliable guidance to business.
A. Quick-look
B. Rule of reason
C. Secondary
D. Per se
Q:
Although the Sherman Act indicates that every'' restraint on trade is illegal, courts have held that the Sherman Act is applied only when a competitor acts in what way?
A. Unreasonably
B. When the competitor is profiting
C. When the competitor has obtained a monopoly
D. When the corporation has 6000 or more employees
Q:
The Justice Department and the Federal Trade Commission (FTC) share responsibility for enforcing the Clayton Act.
Q:
LMNOP Corp. has been convicted under the Sherman Act for two distinct and separate violations. LMNOP may be fined as much as _____ for these two violations.
A. $50 million
B. $100 million
C. $200 million
D. $150 million
Q:
If a plaintiff proves that it has suffered a direct injury by another company in violation of the Sherman Act, it is entitled to recover:
A. twice the amount of loss it suffered as a result of the violation, plus court costs and attorney's fees.
B. twice the amount of loss it suffered as a result of the violation.
C. only the amount of loss it suffered as a result of the violation, plus court costs and attorney's fees.
D. three times the amount of loss it suffered as a result of the violation, plus court costs and attorney's fees.
Q:
Which of the following is true about indirect purchasers?
A. Indirect purchasers' recovery from defendants precludes recovery by direct purchasers.
B. The Supreme Court has held that indirect purchasers lack standing to sue for antitrust violations.
C. The Supreme Court has held that indirect purchasers can recover only their actual losses.
D. Indirect purchasers do not have the standing to sue under any of the state antitrust statutes.
Q:
In order to have standing in a federal antitrust case what must a potential plaintiff have?
A. Direct injury resulting from the antitrust violation
B. Indirect injury resulting from the antitrust violation
C. An injury that crosses international boundaries
D. An injury that has caused a plaintiff to file for bankruptcy protection
Q:
The Sherman Act provides that individuals criminally convicted of violating it may be:
A. fined up to $1 million per violation and may be imprisoned for as long as 5 years.
B. fined up to $500,000 per violation and may be imprisoned for as long as 10 years.
C. fined up to $500,000 per violation and may be imprisoned for as long as 5 years.
D. fined up to $1 million per violation and may be imprisoned for as long as 10 years.
Q:
The Sherman Act states that corporations convicted of violating it may be fined as much as:
A. $50 million per violation
B. $100 million per violation
C. $200 million per violation
D. $150 million per violation
Q:
Chicago School theorists argue that antitrust policy's primary thrust should feature:
A. prointraindustry competition efforts.
B. proregulation efforts.
C. anticoncentration efforts.
D. anticonspiracy efforts.
Q:
Which of the following antitrust activities can be challenged only under the state law?
A. Interstate agreements in restraint of trade.
B. Intrastate agreements in restraint of trade.
C. Interstate deceptive and unfair practices.
D. Intrastate deceptive and unfair practices.
Q:
A nolo plea or a consent decree is often attractive to antitrust defendants because:
A. the government must prove criminal intent on the defendant's part.
B. it results in an imposition of a penalty without requiring a defendant to remedy his actions.
C. it is not admissible as proof of a violation of the Sherman Act in a private plaintiff's later civil suit.
D. it does not attract the same penalty as a guilty plea or a conviction at trial.
Q:
Traditional antitrust thinkers argue that:
A. concentrated economic power may lead to antidemocratic concentrations of political power.
B. antitrust regulations should protect competition instead of competitors.
C. concentration within a particular industry does not preclude interindustry competition.
D. domestic concentration might be necessary for effective international market competition.
Q:
Intent to monopolize is necessary to create violation under the Sherman Act.
Q:
Once firms have attained monopoly power, only then can they be held for violation of Section 2 of the Sherman Act.
Q:
When two or more business entities conspire to monopolize a relevant market, Section 2 of the Sherman Act may be violated.
Q:
Chicago School advocates view _____ as the primary, if not sole, goal of antitrust enforcement.
A. intraindustry competition
B. anticoncentration of economic power
C. economic efficiency
D. anticoncentration of political power
Q:
A domestic corporation attempting to monopolize outside the United States with foreign nations is guilty of a crime under the Sherman Act.
Q:
Section 2 of the Sherman Act outlaws monopolies because monopolists have the power to fix prices unilaterally.
Q:
The proof of joint action required for violations of 1 is applicable when a single firm is guilty of monopolizing or attempting to monopolize a part of trade or commerce.
Q:
The relevant product market is composed of those products meeting the functional interchangeability test.
Q:
United States-based firms that engage in international business activities must remember that they could be subject to antitrust complaints in other nations.
Q:
As per the Colgate doctrine, a manufacturer cannot unilaterally refuse to deal with those who fail to follow the manufacturer's suggested resale prices.
Q:
Supreme Court decisions in recent years indicate that some group boycotts receive per se treatment, whereas other group boycotts receive rule of reason treatment.
Q:
The potential anticompetitive effect of a tying agreement is that the seller's competitors in the sale of the tied product may be foreclosed from competing with the seller for sales to customers that have entered into tying agreements with the seller.
Q:
Some courts have recognized that tying agreements sometimes may be necessary to protect the reputation of the seller's product line.