Business Law, 8e (Cheeseman)
Chapter 46 Antitrust Law and Unfair Trade Practices
1) The antitrust laws were enacted to promote anticompetitive behavior in commerce and
industry.
2) Federal antitrust laws provide only for government lawsuits.
3) Antitrust laws are constant across changes in governmental administration.
4) The Clayton Act, enacted in 1914, regulates mergers and prohibits certain exclusive dealing
arrangements.
5) The Robinson-Patman Act is a federal statute that makes it mandatory to provide a
notification prior to a merger.
6) The Sherman Act is the only major antitrust act that includes criminal sanctions.
7) Treble damages cannot be sought for the violation of antitrust laws.
8) Private parties cannot intervene in public antitrust actions brought by the government.
9) The FTC Act can be used to recover treble damages.
10) Antitrust defendants often opt to settle government-brought antitrust actions by entering a
plea of nolo contendere.
11) The per se rule is applicable to restraints of trade that are considered inherently
anticompetitive.
12) Restraints that are not characterized as per se violations are not further examined using the
rule of reason.
13) Price fixing is a rule of reason violation of Section 1 of the Sherman Act.
14) Only price-fixing conducted by sellers is considered a violation of Section 1 of the Sherman
Act.
15) The fact that price fixing helps consumers or protects competitors from ruinous competition
can be used as a valid defense against the charge of price discrimination.
16) Competitors who agree that each will serve only a designated portion of the market are
deemed to be engaging in a group boycott.
17) Group boycotts can be either a per se violation or rule of reason violation.
18) Division of markets is considered to be a type of horizontal restraint of trade.
19) Setting of minimum resale prices is a rule of reason violation of Section 1 of the Sherman
Act.
20) The legality of nonprice vertical restraints of trade under Section 1 of the Sherman Act is
examined by using the rule of reason.
21) A unilateral refusal to deal is a violation of Section 1 of the Sherman Act because there is a
concerted action with others.
22) For conscious parallelism to be proven, each manufacturer should be found to have acted on
its own.
23) Noerr doctrine is indirectly protected and guaranteed by the Bill of Rights.
24) Section 2 of the Sherman Act prohibits the act of monopolization.
25) The relevant geographical market is always considered state-wide.
26) Predatory pricing has been held to violate Section 2 of the Sherman Act.
27) Natural monopolies are found to violate Section 2 of the Sherman Act.
28) The functional interchangeability test is used in defining the relevant product or service
market.
29) The merger of two grocery store chains that serve the same geographical market is an
example of a horizontal merger.
30) Vertical mergers create an increase in market share because the merging firms serve similar
markets.
31) The unfair advantage theory is intended to prevent wealthy companies from overwhelming
the competition in a given market.
32) According to the failing company doctrine, two or more smaller companies are allowed to
merge to compete with a larger company even if they are highly profitable as smaller companies.
33) Section 1 of the Sherman Act allows for intangible properties to be sold in tying
arrangements.
34) It is necessary to prove actual injury in order for a plaintiff to recover in a price
discrimination lawsuit.
35) The Federal Trade Commission and the Department of Justice share the power to enforce the
FTC Act.
36) Treble damages are allowed in an FTC Act violation.
37) The insurance business enjoys a statutory exemption from antitrust laws.
38) Airlines enjoy a state action exemption from antitrust laws.
39) States lack the power to enact antitrust statutes autonomously.
40) ________ are a series of laws enacted to specifically limit anticompetitive behavior and
monopolistic practices in almost all industries, businesses, and professions operating in the
United States.
A) Contract laws
B) Antitrust laws
C) Laissez-faire laws
D) Canon laws
41) Which of the following is true of antitrust laws?
A) Antitrust laws are fixed and unchangeable.
B) Each new administration adopts a different policy for enforcing antitrust laws.
C) Federal antitrust laws provide for government lawsuits and exclude private lawsuits from
their purview.
D) Treble damages cannot be sought in antitrust lawsuits.
42) The ________ is a federal statute, enacted in 1914, that regulates mergers and prohibits
certain exclusive dealing arrangements.
A) Sherman Act
B) Celler-Kefauver Act
C) Robinson-Patman Act
D) Clayton Act
43) The ________ is a federal statute, enacted in 1930, that prohibits price discrimination.
A) Sherman Act
B) Clayton Act
C) Robinson-Patman Act
D) Federal Trade Commission Act
44) The ________ is a federal statute, enacted in 1890, that makes certain restraints of trade and
monopolistic acts illegal.
A) Federal Trade Commission Act
B) Robinson-Patman Act
C) Clayton Act
D) Sherman Act
45) Which of the following is the only act that includes criminal sanctions for the usage of unfair
trade practices?
A) the Clayton Act
B) the Sherman Act
C) the Robinson-Patman Act
D) the Federal Trade Commission Act
46) Which of the following is considered an invalid antitrust injury?
A) lost profits
B) an increase in the cost of doing business
C) injury resulting from higher prices being “passed on”
D) a decrease in the value of tangible or intangible property caused by the antitrust violation
47) ________ damages are the only damages that may be recovered for violations of the FTC
Act.
A) Treble
B) Double
C) Potential
D) Actual
48) A private plaintiff has ________ years from the date on which an antitrust injury occurred to
bring a private civil treble-damages action because only damages incurred during this period are
recoverable.
A) three
B) two
C) five
D) four
49) A(n) ________ is a type of plea where the defendant pays a penalty without admission of
guilt.
A) nolo contendere
B) arraignment
C) indictment
D) plea bargain
50) The two tests the U.S. Supreme Court has developed for determining the lawfulness of a
restraint are the rule of reason and the ________.
A) Noerr doctrine
B) per se rule
C) nolo contendere rule
D) Colgate doctrine
51) Under the ________, the court must examine the pro- and anticompetitive effects of a
challenged restraint.
A) Noerr doctrine
B) rule of reason
C) per se rule
D) consent decree
52) The ________ is a rule that is applicable to restraints of trade considered inherently
anticompetitive.
A) consent decree
B) Noerr doctrine
C) per se rule
D) rule of reason
53) Which of the following is true of the per se rule in restraint of trade?
A) fails to permit any defenses and justifications to save the restraint of trade
B) applies only to restraints that are found to be unreasonable with certain evidentiary standards
being met
C) applies to restraints that are based primarily on the firm’s market share and power
D) requires a balancing of the positive and negative effects of the challenged restraint
54) The rule of reason is characterized by ________.
A) an automatic violation of Section 1 of the Sherman Act
B) an inherently anticompetitive nature
C) a lack of need for any evidence to deem the restraint unreasonable
D) an evaluation of the company’s market share, power, and other facets
55) Price fixing is a ________ violation of Section 1 of the Sherman Act.
A) reasonable
B) per se
C) justifiable
D) permissible
56) Three of the largest petroleum refineries in the country have come to an agreement about
what price they would pay to purchase crude oil from sellers. This is an example of ________.
A) sellers’ illegal per se price fixing
B) sellers’ illegal group boycott
C) buyers’ illegal per se price fixing
D) buyers’ illegal market sharing
57) Which of the following is true with regard to price fixing?
A) Price fixing is a reasonable violation of Section 1 of the Sherman Act.
B) Price fixing is a process seen exclusively among sellers of goods and services.
C) Price fixing is permissible as it helps consumers or protects competitors from ruinous
competition.
D) Price fixing also involves fixing the quantity of a product or service to be produced or
provided.
58) ________ is a restraint of trade in which competitors agree that each will serve only a
designated portion of the market.
A) Resale market price maintenance
B) Profit-sharing
C) Market sharing
D) Gainsharing
59) Which of the following horizontal restraints of trade has the element of monopoly in it?
A) conscious parallelism
B) market sharing
C) group boycott
D) exchange of nonprice information
60) A restraint of trade in which two or more competitors at one level of distribution agree not to
deal with others at another level of distribution is known as ________.
A) group boycott
B) resale price maintenance
C) price fixing
D) market sharing
61) Which of the following is an example of a horizontal restraint of trade?
A) resale price maintenance
B) division of markets
C) unilateral refusal to deal
D) conscious parallelism
62) Which of the following is an example of a vertical restraint of trade?
A) group boycott
B) price fixing
C) resale price maintenance
D) division of markets
63) A per se violation of Section 1 of the Sherman Act that occurs when a party at one level of
distribution enters into an agreement with a party at another level to adhere to a price schedule
that either sets or stabilizes prices is referred to as ________.
A) group boycotts
B) horizontal price fixing
C) resale price maintenance
D) nonprice vertical restraints
64) Restraints of trade that are unlawful under Section 1 of the Sherman Act if their
anticompetitive effects outweigh their procompetitive effects are known as ________.
A) nonprice vertical restraints
B) group boycotts
C) division of markets
D) resale price maintenance measures
65) The legality of nonprice vertical restraints of trade under Section 1 of the Sherman
Act is examined by applying the ________.
A) Colgate doctrine
B) Noerr doctrine
C) per se rule
D) rule of reason
66) ________ is seen when an independent choice is made by one party not to deal with another
party.
A) Nonprice vertical restraint
B) Monopoly to deal
C) Unilateral refusal to deal
D) Conscious parallelism
67) Which of the following is true of the Colgate doctrine?
A) It is not a violation of Section 1 of the Sherman Act.
B) It is an example of a horizontal restraint of trade.
C) It is a per se violation of Section 1 of the Sherman Act
D) It is a rule of reason violation of Section 1 of the Sherman Act.
68) Conscious parallelism is seen when ________.
A) parties at different levels enter into an agreement to adhere to a price schedule that stabilizes
prices
B) one party makes an independent choice not to deal with another
C) two or more firms act the same but no concerted action is shown
D) a party’s anticompetitive effects outweigh their procompetitive effects
69) ________ is an antitrust principle which says that two or more persons can petition the
executive, legislative, or judicial branch of the government or administrative agencies to enact
laws or take other action without violating antitrust laws.
A) Noerr doctrine
B) Colgate doctrine
C) Nolo contendere
D) Small company doctrine
70) Which of the following is an exception to the Noerr doctrine?
A) a petition that is filed unilaterally by one party
B) an identical petition filed independently by two parties without concerted action
C) a petition that is filed in good-faith
D) a petition that is unlikely to succeed on its merits
71) A relevant market is characterized by the presence of ________.
A) unique goods and services
B) reasonably interchangeable goods and services
C) highly differentiated goods and services
D) pure monopoly of the defendant’s goods and products
72) A monopoly power is characterized by ________.
A) a market share of below 20 percent
B) an inability to control prices in the market
C) an ability to exclude all competition from other sellers
D) a presence of multiple substitute goods at competing prices
73) Which of the following is a defense to a charge of monopoly?
A) the Noerr doctrine
B) natural monopoly
C) conscious parallelism
D) predatory pricing
74) A merger between two or more companies that compete in the same business and
geographical market is known as ________.
A) horizontal merger
B) vertical merger
C) market extension merger
D) conglomerate merger
75) What is a vertical merger?
A) a merger between firms in totally unrelated businesses
B) a merger that integrates the operations of a supplier and a customer
C) a merger between two companies in similar fields whose sales do not overlap
D) a merger between two or more companies that compete in the same business and
geographical market
76) What is a backward vertical merger?
A) a vertical merger between two or more companies that compete in the same business and
geographical market
B) a vertical merger between two companies in similar fields whose sales do not overlap
C) a vertical merger in which a supplier acquires a customer
D) a vertical merger in which a customer acquires a supplier
77) A merger between two regional fruit-sellers that do not sell fruit in the same geographical
area is an example of a ________.
A) market extension merger
B) conglomerate merger
C) horizontal merger
D) vertical merger
78) ________ are mergers between firms in totally unrelated businesses.
A) Market extension mergers
B) Conglomerate mergers
C) Horizontal mergers
D) Forward vertical mergers
79) Which of the following is considered to be a primary defense against Section 7 of the
Clayton Act?
A) Noerr doctrine
B) Colgate doctrine
C) the failing company doctrine
D) Conscious parallelism doctrine
80) ________ is an act that requires certain firms to notify the Federal Trade Commission and
the Justice Department in advance of a proposed merger and comply with a thirty-day waiting
period before the merger is approved.
A) Celler-Kefauver Act
B) Hart-Scott-Rodino Antitrust Improvement Act
C) Robinson-Patman Act
D) Sherman Act
81) ________ is a restraint of trade in which a seller refuses to sell one product to a customer
unless the customer agrees to purchase a second product from the seller.
A) Tying arrangement
B) Predatory pricing
C) Price fixing
D) Group boycott
82) ________ is a defense in a Section 2(a) action which provides that a seller’s price
discrimination is not unlawful if the price differential is due to “differences in the cost of
manufacture, sale, or delivery” of the product.
A) Natural monopoly defense
B) Meeting the competition defense
C) Changing conditions defense
D) Cost justification defense
83) Which of the following businesses and activities enjoys a statutory exemption from antitrust
laws?
A) airlines
B) professional baseball
C) agricultural cooperatives
D) all professional sports and games
84) Which of the following businesses and activities enjoys an implied exemption from antitrust
laws?
A) railroads
B) agricultural cooperatives
C) airlines
D) labor unions
85) Give an account of the Noerr doctrine.
86) How is a relevant market identified by Section 2 of the Sherman Act?
87) What is a premerger notification? Explain the process outlined by the Hart-Scott-Rodino
Antitrust Improvement Act to execute a merger.
88) What are the three statutory defenses under the Robinson-Patman Act for price
discrimination?
89) Give an account of state antitrust laws.