Chapter 40. Antitrust
1. The main goal of antitrust regulation is to prevent competitive behavior among firms.
a. True
b. False
2. A corporation may be guilty of a criminal felony violation of the Sherman Act.
a. True
b. False
3. The language of Section 1 of the Sherman Act prohibits every contract that restrains trade, and the courts have
interpreted this prohibition literally so as to invalidate all such contracts.
a. True
b. False
4. The “rule of reason” requires the courts to balance the anticompetitive effects of behavior in restraint of trade with
its positive effects on competition.
a. True
b. False
5. Antitrust law, as currently applied, focuses on the resulting entity’s absolute size.
a. True
b. False
6. It is per se illegal under the Sherman Act to set a maximum price, but not a minimum price.
a. True
b. False
7. All tying arrangements are per se illegal.
a. True
b. False
8. The court interpretation of the Sherman Act results in the prohibition of monopolies only if a firm possesses market
power that it attained unfairly or it abused the monopoly power once attained.
a. True
b. False
9. Determining how big the corporation is in terms of total assets is the prevalent test of monopoly power.
a. True
b. False
10. The distinction between horizontal and vertical restraints often determines whether a restraint is illegal per se or
should be judged by the rule of reason test.
a. True
b. False
11. If one major U.S. car manufacturer acquired another, the Clayton Act would require close scrutiny of the
transaction.
a. True
b. False
12. Tying arrangements have been labeled by the Supreme Court as serving “hardly any purpose beyond the suppression
of competition.”
a. True
b. False
13. The Robinson-Patman Act adds to the Clayton Act merger provisions.
a. True
b. False
14. All price discrimination is illegal under the Robinson-Patman Act.
a. True
b. False
15. If United Widgets lowers its price to all buyers of 10 or more widgets, it is not a violation of the Robinson-Patman
Act.
a. True
b. False
16. The Federal Trade Commission can act like a judicial body in conducting hearings and issuing orders to cease and
desist.
a. True
b. False
17. The Clayton Act weakened the Sherman Act by eliminating illegal acts that had previously been prohibited.
a. True
b. False
18. The principal objective of antitrust law governing mergers is to maintain competition.
a. True
b. False
19. Section 1 of the Sherman Act prohibits unilateral conduct.
a. True
b. False
20. Group boycotts are illegal per se.
a. True
b. False
21. The Clayton Act deals with interlocking directorates.
a. True
b. False
22. The more narrowly that a product market is defined as being, the more likely that the firm will be found to possess
monopoly power.
a. True
b. False
23. The Sherman Act contains both civil and criminal penalties.
a. True
b. False
24. A wholesale manufacturer gets a retail outlet for its goods through a merger. This is a horizontal merger.
a. True
b. False
25. Conscious parallelism is sufficient in itself to suggest a conspiracy in violation of Section 1 of the Sherman Act.
a. True
b. False
26. Price fixing is the primary example of a per se violation of the Sherman Act.
a. True
b. False
27. Meeting competition is a defense to a charge of price discrimination under the Robinson-Patman Act.
a. True
b. False
28. Under the Antitrust Criminal Penalty Enhancement and Reform Act of 2004, individuals who violate the Sherman
Antitrust Act may be imprisoned for ten years and fined up to $1,000,000.
a. True
b. False
29. Under the Antitrust Criminal Penalty Enhancement and Reform Act of 2004, corporate offenders who violate
Sections 1 or 2 of the Sherman Act face fines of up to $100 million per violation.
a. True
b. False
30. The Justice Department has issued a “market structure screen,” under which the department will not challenge
restraints by a firm having less than 25 percent of the relevant market.
a. True
b. False
31. The National Cooperative Research Act is designed to inhibit formation of joint ventures.
a. True
b. False
32. In expanding its policy of enforcement regarding the Sherman Act to cover conduct by foreign companies that harms
exports, the Justice Department has indicated that it will focus primarily on boycotts and cartels that injure the export
of U.S. products and services.
a. True
b. False
33. Because the language of Section 1 of the Sherman Act is so narrow, there is little room for judicial interpretation in
establishing what constitutes a violation.
a. True
b. False
34. The common law traditionally favored competition.
a. True
b. False
35. The Federal Trade Commission has only three commissioners.
a. True
b. False
36. Prices can be controlled through direct price fixing or by market allocation.
a. True
b. False
37. A monopolistic market will produce more goods than a competitive market; however, the problem the Sherman Act
tries to address is the fact that a monopolistic market will sell those goods at a higher price than a competitive
market.
a. True
b. False
38. A restraint of trade may be classified as either horizontal or vertical.
a. True
b. False
39. Resulting from a Supreme Court decision, vertical territorial and customer restrictions are now illegal per se rather
than being judged by the rule of reason.
a. True
b. False
40. In 2007, the Supreme Court held that vertical price restraints are per se violations of Section 1 of the Sherman Act.
a. True
b. False
41. Boycotts that are in violation of the Sherman Act include:
a. a seller’s refusal to deal with any particular buyer.
b. a manufacturer who refuses to sell to a retailer who persists in selling below the manufacturer’s suggested
retail price.
c. when two or more firms that have market power agree not to deal with a third party, thereby eliminating
competition.
d. cooperative agreements designed to increase economic efficiency and render markets more competitive.
42. The Justice Department’s policy toward conduct by foreign companies is to:
a. focus on boycotts and cartels that harm U.S. exports.
b. examine conduct to determine whether it would violate the law if it occurred within the borders of the U.S.
c. expand the enforcement of the Sherman Act to include conduct by foreign companies that harms U.S.
exports.
d. All of these.
43. The definition of price-fixing includes agreements that:
a. may, among other things, depress prices.
b. stabilize prices.
c. raise prices.
d. All of these.
44. The 1936 Act prohibiting price discrimination in interstate commerce involving commodities of like grade and quality
is the:
a. Sherman Act.
b. Clayton Act.
c. Robinson-Patman Act.
d. Federal Trade Commission Act.
45. A merger involving firms that are not competitors, customers, or suppliers is termed a:
a. tying arrangement.
b. vertical merger.
c. conglomerate merger.
d. horizontal merger.
46. The Clayton Act:
a. was intended to stop certain trade practices before they become restraints of trade.
b. added criminal sanctions to the Sherman Act.
c. repealed the Robinson-Patman Act.
d. included labor organizations in its coverage.
47. Enforcement proceedings under the Sherman Act may not be brought by the:
a. U.S. Commerce Department.
b. U.S. Justice Department.
c. Federal Trade Commission.
d. state Attorneys General.