295. Suppose Coca-Cola required anyone who wanted to distribute Coke products must to also purchase a new candy
product that Coca–Cola manufactures. This practice would be:
a. illegal per se as an exclusive dealing arrangement under the Clayton Act
b. illegal per se as a tying arrangement under the Clayton Act
c. illegal as a tying arrangement if Coca-Cola had monopoly power
d. legal as a method of product innovation allowed by the Clayton Act
e. legal only because the candy requirement protected the company‘s sugar suppliers
296. Suppose Coca-Cola required anyone who wanted to distribute Coke products must to also purchase a new candy
product that Coca-Cola manufactures. This practice would be:
a. illegal per se as an exclusive dealing arrangement under the Clayton Act
b. illegal per se as a tying arrangement under the Clayton Act
c. legal as a method of product innovation allowed by the Clayton Act
d. legal only because the candy requirement protected the company’s sugar suppliers
e. none of the other choices
297. To develop a network of dealers, Hummer vehicles are sold only at one dealership per city. Other dealers want the
vehicles to sell, but are refused. The existing dealers earn high profit margins due to the lack of local competition.
Under antitrust law, this arrangement is likely to be found:
a. legal because producers are free to sell their products any way they wish
b. legal because this will let Hummer, which has a small market share, become a better competitor
c. illegal because producers must make their products available at the same price to whoever wants to buy
d. illegal because producers may not exploit profit margins
e. illegal as a boycott of willing dealers
298. To develop a network of dealers, Hummer vehicles are sold only at one dealership per city. Other dealers want the
vehicles to sell, but are refused. The local dealers earn high profit margins due to the lack of local competition.
Under antitrust law, this arrangement is likely to be found:
a. legal because producers are free to sell their products any way they wish
b. illegal as a boycott of willing dealers
c. illegal because producers must make their products available at the same price to whoever wants to buy
d. illegal because producers may not exploit profit margins
e. none of the other choices
299. Jennie has the right to sell Lovely cosmetics. According to her contract with Lovely, Jennie may only sell cosmetics
in three counties in Delaware. No one else may sell Lovely cosmetics in this region. If another door–to–door
cosmetics seller sued Lovely, alleging that this agreement with Jennie was illegal, what would they base their suit
on?
a. on an illegal territorial restraint
b. on illegal price fixing
c. on illegal discriminatory behavior
d. on an illegal partition of services
e. on an illegal monopolization
Fact Pattern 20–1
MicroManage is the fastest growing home-software producer in the country. In 2000, it sold 6% of all home
software in the U.S., but in 2011, it sold 55% of all home software. A recent issue of Computer Universe said that
MicroManage was “the most dominant and aggressive of all home-software developers.” Home software is a small
part of the entire software industry.
In 2011, MicroManage proposed a merger with Game Master, its main rival. Game Master was responsible for
10% of all home-software sales in 2010. MicroManage’s president says that the combination of the firms will allow
MicroManage to lower costs and pass the savings on to its customers.
The Department of Justice filed suit to stop this merger, claiming the combination would give monopoly power to
the merged firm. Justice insists that consumers would lose in the end.
300. Refer to Fact Pattern 20-1. MicroManage executives decide that if they are not allowed to merge with Game
Master, MicroManage will propose to GameMaster and other home-software producers that they allocate
customers on a geographic basis. Such an agreement:
a. would be legal under the Parker doctrine
b. would be an illegal horizontal market sharing device
c. would be a legal horizontal marketing device because it does not control prices
d. would probably be unenforceable under the rule in Leegin Leather
e. none of the other choices
301. Refer to Fact Pattern 20-1. If the MicroManage-Game Master merger is challenged as a violation of the Sherman
Act, it will be challenged:
302. Refer to Fact Pattern 20-1. Which antitrust statute specifically allows challenges of mergers?
a. Clayton Act
b. Sherman Act
c. Federal Trade Commission Act
d. Interstate Commerce Act
e. no statute specifically addresses mergers
303. Refer to Fact Pattern 20-1. If MicroManage were to ignore the Justice challenge and go ahead and merge with
Game Master, what penalties could it face?
a. a cease and desist order
b. MicroManage could be enjoined from further operation
c. MicroManage could be forced to pay treble damages
d. MicroManage could be fined up to $1 million
e. all of the other choices
304. Refer to Fact Pattern 20-1. Assume that a merger does take place. Which legal standard will a court apply that
reviews the merger?
a. a rule of reason analysis
b. a per se analysis
c. an indirect damages analysis
d. a rule of reason analysis and an indirect damages analysis
e. none of the other choices
305. Refer to Fact Pattern 20-1. Which case might a court use as precedent to determine whether or not the
MicroManage merger is legal?
a. Standard Oil Co. of New Jersey v. U.S.
b. Broadcast Music, Inc. v. CBS
c. NCAA v. Board of Regents
d. Rylands v. Fletcher
e. Palsgraf v. Long Island Railroad
306. Refer to Fact Pattern 20-1. The proposed merger has a greater chance of being approved if MicroManage can
show that:
a. Game Master also produces frozen foods
b. no foreign firms produce home software
c. it is difficult for other software producers to enter the home-software business
d. Game Master’s share of the home-software market was not growing
e. Game Master is on the verge of bankruptcy with no other viable purchasers
307. Refer to Fact Pattern 20-1. Under the rule established in Standard Oil Co. of New Jersey v. U.S., a merger
between MicroManage and Game Master is likely to result in a:
a. determination that the merger will help consumers and so, should stand
b. request by the government that the newly merged company be broken up
c. request by Game Master that the merged company be dissolved
d. finding that the computer industry, generally, is exempted from the antitrust laws
e. finding that an illegal vertical restraint of trade has occurred
Fact Pattern 20–2
Vysion produces TVs it sells nationwide. Vysion contracted with Karol’s Appliances to make it the exclusive
distributor of Vysion TVs in the San Diego area. Karol’s received a promise that Vysion would not sell its TVs to
any other retailer within 20 miles of Karol’s.
In its San Diego stores, Karol’s has a unique pricing policy. A higher price is charged to customers wearing suits
than to customers not wearing suits. Karol’s salespeople give non-suit-wearing customers 10% discounts off of the
list price, and refuse any discounts to suit-wearing customers.
Don’s, a rival of Karol’s, asked Vysion to allow it to sell its products in San Diego. Vysion refused, pointing to its
contract with Karol’s. Vysion‘s distribution policy differs in New York from what it is in California. In New York,
Vysion allows every distributor who asks to sell Vysion TVs. However, Vysion requires that New York retailers
sign contracts stating that they agree not to sell Vysion products below prices in a monthly “price list” sent by
Vysion.
In contracts with its distributors nationwide, Vysion insists that sales of its TVs be tied to sales of its VCRs. No
consumer is allowed to purchase a Vysion TV without also buying a Vysion VCR.
308. Refer to Fact Pattern 20-2. The relationship between Vysion and Karol’s Appliances could be characterized as a:
a. horizontal business relationship
b. diagonal business relationship
c. vertical business relationship
d. horizontal restraint of trade
e. none of the other choices
309. Refer to Fact Pattern 20-2. The agreement between Vysion and its New York retailers to charge customers
according to a “price list” is:
a. a resale price maintenance agreement
b. a tax incentive agreement
c. a tax shelter agreement
d. a horizontal sales agreement
e. a securities exchange agreement
310. Refer to Fact Pattern 20-2. If the decision in Leegin Leather were applied to the agreement between Vysion and
its New York retailers, the agreement would be:
a. a legal means of product distribution to enhance interbrand competition
b. a legal means of product distribution to enhance intrabrand competition
c. a legal horizontal restraint of trade
d. an illegal vertical restraint of trade
e. an illegal horizontal restraint of trade
311. Refer to Fact Pattern 20-2. If Sam’s Club and Costco wished to carry Vysion TVs, these stores would be likely to:
a. approve of and support the price agreement between Vysion and its New York retailers
b. disapprove of the price agreement between Vysion and its New York retailers
c. file a Robinson-Patman Act complaint against Vysion
d. have no reason to care about the price agreement between Vysion and its New York retailers
e. support the price agreement between Vysion and its New York retailers because of the Dr. Miles Medical
case
312. Refer to Fact Pattern 20–2. If, instead of requiring its New York retailers to follow its price list, Vysion required its
retailers to not charge a price higher than those on a price list, this would be:
a. legal because consumers would be protected from high prices charged by retailers
b. legal because consumers could always shop at different retailers if they were unhappy with Vysion’s
retailers
c. illegal because it is a horizontal restraint of trade
d. illegal because it is a territorial restraint of trade
e. legal under State Oil Co. v. Khan
313. Refer to Fact Pattern 20-2. The contract signed by Vysion with Karol’s Appliances that guarantees Karol will be
the sole distributor of Vysion products in the San Diego area is:
a. a customer restriction
b. a vertical price restraint
c. a retail price restraint
d. a territorial restraint
e. a horizontal price restraint
314. Refer to Fact Pattern 20-2. If Don’s were to sue Vysion because Vysion will not allow Don’s to carry Vysion
products, what would be the most likely outcome of the lawsuit?
a. Don’s would win because Vysion’s contract with Karol’s is an illegal horizontal restraint of trade
b. Don‘s would lose because under Leegin Creative Leather, this is a pro-competitive arrangement
c. Don‘s would win because under Leegin Creative Leather this violates the Clayton Act
d. Don’s would lose because Vysion’s contract with Karol’s is an illegal customer restriction
e. Don‘s would lose because Vysion‘s contract with Karol’s is per se illegal