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Exam 27: Antitrust Law

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Question 1

True/False

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The rule of reason represents a more flexible economic analysis of agreements among competitors than the rigid application of a per se standard.

A) True
B) False

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Question 2

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Because commerce operates more efficiently when competitors cooperate, Section 1 of the Sherman Act permits rivals to consolidate market power.

A) True
B) False

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Question 3

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Online Media Inc. bundles its products so that consumers are forced to pay for access to some sites that they do not want in order to obtain access to sites that they do want. A court will likely rule that the bundling does not violate the rule of reason if it

Say It Inc. and Text Talk Inc. are social media companies. They compete for employees, users, and advertisers. The two firms work together on security threats, however. With respect to antitrust law, this cooperation is most likely

Linking Cogs Corporation and Meshed Gears Inc. are competitors selling certain machine parts that are otherwise generally unattainable in their geographic market. This market includes the states of Minnesota, North Dakota, and South Dakota. Linking Cogs and Meshed Gears agree that Linking Cogs will no longer sell in Minnesota and that Meshed Gears will no longer sell in North and South Dakota. Have Linking Cogs and Meshed Gears violated any antitrust law? If so, which one? Explain. If they had divided their market by type of customer rather than geographic are, would the result be the same? Why or why not?

Competition is not necessarily diminished solely as a result of market concentration.

An antitrust action is brought against Carrier Freight Company, alleging that a certain act constitutes the offense of attempted monopolization. To qualify, the act must

When applying the rule of reason to an activity that allegedly violates the antitrust laws, a court will not consider

Any agreement among competitors to artificially fix prices or restrict output is a per se violation of Section 1 of the Sherman Act.

If the legitimate benefits outweigh the anticompetitive effects of a resale price maintenance agreement, the agreement may be held lawful.

Any conspiracy that has a substantial effect on U.S. commerce is within the scope of the Sherman Act, unless it occurs outside the United States.

Dairy Cream Inc. makes and sells ice cream. Dairy Cream wants to merge with EZ Freeze Inc., its main competitor and a maker of ice cream and other frozen desserts. In a challenge to the deal on a charge of monopolization, the relevant product market includes ice cream and

The federal agencies that enforce the antitrust laws include

American Oil Company joins a cartel that includes foreign participants to set the price of oil. The cartel has a substantial effect on U.S. commerce. With respect to the foreign participants, under U.S. antitrust laws, this is most likely

A price-fixing agreement or other anticompetitive agreement to control a portion of U.S. markets cannot be held to be a per se violation of the antitrust laws if the agreement involves a foreign firm.

Requiring users of a social media site to agree to certain terms and conditions to use the site is most likely an antitrust violation.

Antitrust legislation is based on a belief that competition leads to lower prices, better products, a wider selection of goods, and more product information.

Mountain Crest Inc. makes and distributes its branded products to authorized dealers. To prevent price-cutting by dealers in direct competition, the firm imposes limits on where each dealer can sell the products. This is

Predatory pricing is not an antitrust violation because the tactic can eliminate a firm's competitors, enabling it to increase prices and earn higher profits to benefit its owners and employees.

Establishing the relevant product market is a key issue in monopolization cases because the way a market is defined can determine whether a firm has monopoly power.