121. Coca-Cola, Inc. and PepsiCo, Inc. have only one distributor each in the Phoenix area. The Phoenix market is an
intensely competitive soft drink market with prices being among the lowest in the nation. A local restaurateur has
requested a dealership from PepsiCo and has been denied. He claims an antitrust violation. Which of the following
statements is true?
a. The denial of the distributorship to someone who can afford it is anticompetitive and is a per se violation.
b. The denial is justifiable given the level of interbrand competition.
c. The denial is an example of resale price maintenance.
d. none of the above
122. Homer, Inc. is the western regional distributor for Plato Ice Cream. Homer charges grocers in California $3.00 per
half gallon but charges Utah grocers only $2.00 per half gallon. Homer says the Utah ice cream market is much
more competitive and he has to meet the market. Utah competitors charge between $2.50 and $2.75 per half gallon.
Homer:
a. has engaged in price discrimination.
b. is simply meeting the competition.
c. is exempt from Robinson-Patman because of interstate sales.
d. none of the above
123. Termination of a TV retailer’s sales contract with a TV manufacturer by that manufacturer for selling the
manufacturer’s TVs at too–low prices is:
a. a per se violation of the Sherman Act.
b. resale price maintenance subject to a rule of reason review.
c. price fixing.
d. none of the above
124. Salads ‘R‘ Us requires all its franchisees to sign an agreement that they will use napkins and dressings purchased
from Salads ‘R‘ Us. Unless the agreement is signed, no one is awarded a franchise. Salads ‘R‘ Us maintains that
the agreement is necessary to preserve uniformity and quality in all franchise outlets. The purchasing requirement
is:
a. an illegal tying arrangement.
b. valid as a quality control mechanism for protection of goodwill.
c. coercion and is invalid.
d. none of the above
125. Delivery costs based on set points throughout the country are:
a. invalid as a form of price discrimination.
b. valid as a general way of recovering costs.
c. unlawful tying arrangements.
d. none of the above
126. Competition among Colgate, Crest, and Aim toothpastes is:
a. intrabrand competition.
b. interbrand competition.
c. controllable through resale price maintenance.
d. none of the above
127. Christie’s and Sotheby’s:
a. faced criminal charges of price fixing.
b. faced civil charges of price fixing.
c. faced both criminal and civil charges of price fixing.
d. faced neither criminal nor civil charges of price fixing.
128. Sedres, Inc. is the manufacturer of the current best-selling TV video game system. Sedres will not sell parts for
repair of the systems to anyone other than its authorized dealers. All Sedres authorized dealers are required to send
used parts back to Sedres. Sedres will terminate an authorized dealer if it uses non-Sedres parts for repairs. Sedres’
policies on dealers:
a. constitute violations of the Sherman Act.
b. are simply valid quality control mechanisms.
c. are valid since no one is barred from entry.
d. would be violations only if there were no other TV video game manufacturers.
129. Toys R Us is an international toy retailer. The Justice Department has just filed a complaint against the giant
retailer alleging that Toys R Us refuses to carry toy lines or toys if the manufacturers sell their products to discount
warehouse stores such as Sam’s Club or Costco. Toys R Us maintains that when manufacturers sell toys to these
warehouses, they sell only the hot toy items for the Christmas season at large discounts. Their pricing undercuts
Toys R Us and Toys R Us must carry a full line of toys, even those they do not share the same demand levels.
Toys R Us:
a. has not violated any antitrust laws.
b. may have engaged in a refusal to deal.
c. may have engaged in a price-fixing conspiracy.
d. both b and c
130. The eventual result in the U.S. v. Microsoft case was:
a. Bill Gates was sentenced to one year in prison for violations of the Sherman Act.
b. The court concluded there were no violations of the Sherman Act.
c. The court concluded that Microsoft violated the Sherman Act.
d. The court concluded that Microsoft did not possess monopoly power.
e. none of the above
131. In the Christie’s and Sotheby’s case, the alleged violation was:
a. tying.
b. price discrimination.
c. FTC Act violations.
d. price fixing.
e. none of the above
132. What is it called when officers of competing companies serve on each others’ boards of directors?
a. Intralocking directorates
b. Interlocking directorates
c. Cross-locking directorates
d. Diagonal directorates
133. Conscious parallelism generally raises questions about:
a. tying.
b. price discrimination.
c. price fixing.
d. Clayton Act violations.
134. If clients of a brokerage house feel that there are anticompetitive activities being used among and between the
various brokerage houses that result in price impacts for them, then:
a. their remedy is under the Sherman Act for price fixing or monopolization.
b. their remedy is under the Clayton Act for vertical price discrimination.
c. their remedy is under the federal securities laws and regulations.
d. none of the above
135. Action Outfitters is a national manufacturer and retailer of outdoor gear. When it agrees to sell its merchandise to a
retailer, the retailer must also agree to purchase Action’s outfits for clerks, its displays, its shopping bags, and its gift
boxes. Action says that these items are part of its brand identification. A retail outlet has brought suit because it
only wants the Action merchandise and does not want the outfits, displays, bags, or boxes.
a. The suit is one for tying.
b. There is no cause of action here because manufacturers can dictate all the terms of sale and whether they
will sell to a retailer.
c. The suit is one for monopolization.
d. none of the above
136. Four major insurance brokers agreed that when it came time for renewals of coverage with major customers that
only one of them would submit a reasonable bid. The three others would submit a much higher price and thereby
not be in the running for the renewal. The agreements of the insurance brokers:
a. save time and money and are not anticompetitive.
b. are an example of vertical trade restraint.
c. are an example of horizontal trade restraint.
d. are an example of tying.
137. Cicily Bridgeport and Collin Wilson own Northeastern Galleries and Upper West Galleries, respectively. For artists
displaying paintings in their galleries, Cicily and Collin charge a 22% commission for any sales made. Cicily and
Collin have always charged 22%, but there is a slump in sales. When Cicily meets Collin at a Met event, she
suggests, “Collin, let’s both go to 25%. What can they do if we both charge 25% and we can earn enough to make
up for the market downturn.” Cicily:
a. has committed a per se violation of the Sherman Act.
b. has committed a per se violation of the Clayton Act.
c. has agreed to a group boycott.
d. none of the above
138. Universal Syndication has told television stations and networks that they cannot have the rights to play The Cosby
Show reruns unless they also agree to take packages of Charlie Chan movies, Tony Orlando and Dawn, and Rin
Tin Tin reruns. The stations and networks complain that Chan movies, Tony, and Rin Tin Tin reruns do not draw
viewers and that they have trouble selling the ad time on such shows. Universal Syndication’s requirement:
a. is a tying arrangement that is a per se violation of federal antitrust law.
b. is a tying arrangement that may be a violation of federal antitrust law.
c. is one that it is free to impose so long as other syndicators are selling shows.
d. none of the above
139. Blue Cross, a medical insurer, publishes lists of “usual, customary, and reasonable” rates for medical services. Blue
Cross insureds can then shop for medical services to be certain they are fully covered. A physician who charges
rates higher than Blue Cross alleges there is a combination in restraint of trade to force him out of business and a
price-fixing conspiracy. Is he right?
140. Zenith Radio and other American TV manufacturers brought suit against Japanese TV manufacturers for charging
artificially low prices in the United States. Can the Japanese manufacturers be sued in the United States?
141. Several art distributors have met and agreed to limit the number of Hummel figurines being imported into the United
States. Is there any anticompetitive behavior involved in doing this?
142. Sales representatives of several college-book publishers have met together and decided that calling on all schools in
their territories is often fruitless, since only one of each of their books can be adopted. They have agreed to split the
colleges and only make sales calls on their designated schools. Are there any anticompetitive problems?
143. Several gypsum manufacturers have agreed (for union purposes) to limit the number of deliveries per day. They
can meet the union demands by doing so. Are there any problems with the agreement?
144. Colleges and universities around the country keep a common pool of information among them about National Merit
Scholars and disclose in their pool information about tuition, scholarship packages, and financial aid. Is such a pool
of information appropriate under federal antitrust laws?
145. Georges Marciano Guess Company sells its clothes with tags on them with a price indicating “suggested retail
price.” Are there any antitrust violations with this practice?
146. Greg Rafft, president of the Tricounty Brokerage Association, addressed the members at a luncheon meeting. He
suggested that the association purchase two of the area’s top three title insurance firms. Are there any antitrust
problems with such an acquisition?
147. X-ron Perfume is sold only in one major department store for each city. X-ron will deal only with one department
store and will not sell to other stores. Are there any antitrust violations with this arrangement?
148. Pat’s Bicycle Shop is a Schwinn dealer. In order to be such a dealer, Pat’s has to agree not to carry other brands of
bicycles. Is this agreement illegal?
149. Guernzey Milk produces canned milk under its label and several grocery-store labels. The content is the same but
the grocery-store labels are sold for less. Guernzey says the packaging for the grocery store brands is cheaper.
Any antitrust problems?
150. 324 Liquor Corporation is a retail liquor and wine dealer. In New York, the wholesalers establish the prices for retail
sales and the State Liquor Authority enforces those prices. 324 was cited for violations when it sold a State Liquor
Authority investigator a bottle of Chatham Gin for $9.45 (the price was to be $9.65) and a bottle of Smirnoff for
$11.59 (the price was to be $11.89). At the hearing, 324 contends that the statutory scheme for regulating
prices violates the antitrust laws. Is 324 correct?
151. Gardner-Denver is the United States’ largest manufacturer of ratchet wrenches. Rogers, a former Gardner-Denver
employee, formed D.E. Rogers and began selling ratchet wrench parts. From 1964 to 1971, the two competed with
Rogers charging prices 30 percent below Gardner-Denver‘s. In August 1971, Gardner-Denver began a dual price
system: Blue list – discounts for quantities of five or more (blue list parts were largely Rogers’ parts); white list –
non-Rogers’ parts. The blue list was given only to Gardner-Denver sales reps. A price war followed with Rogers
filing an antitrust suit. Are there any antitrust violations?
152. The price for a Super-Heater X50, a residential water heater, is $372.00 at every store in the greater Atlanta area.
The water heater never goes on sale at any of the stores. Super-Heater sells other models of water heaters: the
X30 for $301.00 and the X60 for $408.00. There is no store selling the heaters for a different price either. Other
companies’ water heaters sell at the retail levels at prices ranging from $299–$603. During sales, those prices drop.
Is the Super-Heater pricing mechanism a violation of antitrust laws?
153. Hospitals in Arizona, New Mexico and Colorado are regulated on their emergency room fee schedules by a state
hospital emergency room board. The board consists of representatives from all of the hospitals in the state. The
board meets twice each year and establishes the prices for emergency room care. The states have assumed a
regulatory oversight rule because of the need for universal access for emergency care. The prices charged for
emergency room care in these 3 states exceed the average charges in California, Utah, Nevada, Idaho, Oregon and
Washington. Patients who experience the higher charges in Arizona, New Mexico and Colorado are concerned
about the higher rates. Discuss any legal rights and remedies they may have.
154. Explain why the U.S. Supreme Court now applies a rule of reason standard to manufacturers who will no longer
sell to retailers who offer deep discounts on the manufacturers’ products.
155. The American Kennel Club (AKC), an independent organization that establishes standards for breeding and for
certification of purebred dogs issued standards for all purebred dog breeds and recommended standards for
Labradors. The result was that an English strain of Labradors did not meet the minimum height standards that the
AKC recommended, and U.S. breeders of a taller American strain were able to monopolize the market for
championship dogs. Which of the following statements is correct?
a. The AKC has violated the Sherman Act.
b. The AKC, however well intentioned, cannot impose standards on an industry.
c. The AKC has not violated the Sherman Act.
d. The AKC has violated the Sherman Act if U.S. breeders did benefit from the standards.
156. Cal-Maine Foods was the defendant in an antitrust suit brought by the purchasers of eggs. Cal-Maine is an egg
distributor and the suit accused Cal-Maine of manipulating the egg supply in order to increase prices. Egg prices
jumped 28% in 2007 and 14% in 2008 as egg supplies dwindled. Cal-Maine said that following industry-wide
animal-welfare guidelines resulted in fewer chickens per farm and, as a result, fewer eggs. Which of the following
statements is correct?
a. Reducing supplies that affect prices is not covered under the antitrust laws.
b. Cal-Maine would have had to conspire with a competitor for the antitrust laws to apply.
c. Cal-Maine is not liable to the purchasers of eggs, only the stores that bought the eggs.
d. none of the above
157. Which of the following statements is correct?
a. The merger would raise questions at the Justice Department about market power.
b. The merger would be approved because there are so many other competitors.
c. The merger would be approved because there are so many different beers and the relevant market is
defined by individual types of beers.
d. The Sherman Act does not apply to alcohol companies.
158. Which of the following is correct?
a. The merger proposed is a vertical one.
b. The merger proposed is a horizontal one.
c. The merger is simply an asset acquisition.
d. The merger is exempt under the failing company doctrine.
159. Yazaki, an auto parts manufacturer, made agreements with three competitors to decide in advance who would bid
on contracts with auto manufacturers and what the price would be. The auto parts manufacturers then took turns
winning various contracts. Which of the following statements is correct?
a. The companies engaged in resale price maintenance.
b. The companies created a monopsony.
c. The companies were involved in a tying arrangement.
d. The companies were involved in divvying up the market and price-fixing.