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Exam 33: Antitrust Law

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Question 41

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Resale price maintenance is also known as vertical price fixing.

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Question 42

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"Your Buzz On-the-Go" is a franchisor of a drive-through fast food chain of stores where all drinks and food contain caffeine.For example,even their breakfast burritos contain chocolate.The franchisor requires its franchisees to purchase all of the food items and paper supplies (paper bags,napkins,packaging,etc.) from a supplier that is owned by the franchisor.Mike,a franchisee,would prefer purchasing these items from less expensive sources.Most likely,what is legality of the requirement to purchase these items from the franchisor?

A) The arrangement is illegal for both the food products and the paper items.
B) The arrangement is legal for the food products, but illegal for the paper items.
C) The arrangement is illegal for the food products, but legal for the paper items.
D) The arrangement is legal for both the food products and the paper items.
E) The arrangement is legal for the food products if it can be shown that they are not unique, but illegal for the paper items.

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Question 43

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A government judgment obtained against a defendant for an antitrust violation may be used as prima facie evidence of liability in a private civil treble-damages action.

Mike owns eight bars in Delaware,Maryland and Pennsylvania.He has decided to grow the business by having a presence in the Midwest.If he acquired a chain of bars in Kansas and Missouri,what type of merger has occurred?

In order to be in violation of Section 5 of the Federal Trade Commission Act,the party must also be in violation of another provision of the antitrust laws.

"Line of commerce" refers to products,but not to services.

The government may seek civil damages for violations of antitrust laws.

The doctrine of conscious parallelism provides that,even if there is no concerted action,a violation of the Sherman Act occurs if two or more firms decide not to deal with a retailer.

Which of the following is false regarding state antitrust laws?

Marvin Airlines is an established airline that is suddenly experiencing competition from a new airline,Cheapflites,in some of its markets.Cheapflites is a "no-frills" airline with a marketing policy that all of its tickets are fully-refundable.Marvin Airlines has rescheduled many of its flights to leave fifteen minutes later than the Cheapflites flight for the same route.Before the departure of each Cheapflites flight,a Marvin employee goes to the Cheapflites waiting area with a megaphone and announces that Marvin will allow Cheapflites passengers to fly on Marvin for $10 less than the cost of their Cheapflites ticket,and get full service as a bonus.Because the Cheapflites tickets are fully-refundable,most Cheapflites passengers accept the offer.Under the antitrust and unfair competition laws,which of the following is most likely true?

In an antitrust case where a plaintiff is challenging a proposed merger involving the defendant (who wants the merger to be approved,) which of the following is true about the likely arguments the parties will make regarding the relevant market?

Effective antitrust law existed as part of the common law in the early days of the United States.

Government enforcement of federal antitrust laws is divided between the Antitrust Division of the Department of Justice and the Bureau of Competition of the Federal Trade Commission (FTC).

Mere possession of monopoly power in a particular field:

Which of the following actions could be acceptable if the purpose is to prevent a company from going bankrupt?

The primary source of antitrust laws is/are:

Which of the following is not one of the antitrust statutes?

A "tying arrangement" is any advance agreement to commit to purchasing a fixed quantity of goods.

A firm can violate Section 2 of the Sherman Antitrust Act only by acting in collusion with another firm.

A car and truck manufacturer has noticed increasing sales of aftermarket sports racks by companies such as Yakima and Thule.Along with this,it has noticed that fewer customers order sport utility vehicles,minivans and station wagons with the optional,factory-installed luggage racks.Marketing surveys show that many customers want the flexibility that these aftermarket racks provide.For example,they are removable,and they can be fitted with attachments for various kinds of equipment such as skis and kayaks.The manufacturer has introduced its own line of similar removable racks,but they have not sold well.One reason is a perception of lower quality that is only partially accurate.The car and truck manufacturer has decided to include one of these racks as standard equipment with all of its sport utility vehicles,minivans and stations wagons.It will include the basic rack,but no special attachments.The price of these vehicles will increase to cover the cost of the rack.Because the rack is removable,there is no problem with a customer being forced to drive a vehicle with a rack on it that the customer does not want.Discuss the antitrust implications of this action.