Chapter 28 - Government Regulation of Corporate Entity
2. It also prohibits monopolization, attempts to monopolize, and combinations or
conspiracies to monopolize any part of interstate or foreign commerce.
3. Three standards are used to judge antitrust offenses: the per se violation standard, the
rule-of-reason standard, and the quick-look standard.
4. Per se violations are practices that are so contrary to antitrust policy that harm is
presumed, and the practice is prohibited.
a. Price fixing is considered a per se violation.
b. Agreements to divide territories and agreements among competitors to stop
competing are per se violations.
5. If an alleged antitrust practice is not considered a per se violation, then the courts will
judge the legality of that practice with the rule-of-reason approach.
a. The rule-of-reason standard will stop certain practices only if they are an
unreasonable restriction of competition.
b. To determine if an anticompetitive practice is legal, the court considers such facts
as the history of the restraint, the harm that results, the reason for the practice, and
the purpose to be attained.
6. In the area between the per se violations and the rule-of-reason standard, courts use
the quick-look standard under which the court determines whether an objective
observer with an elementary knowledge of the financial world would see that the
arrangement under scrutiny could damage competition by hurting the consumer and
impairing the marketplace itself.
7. Sometimes the distinction between the original per se standard and the rule-of-reason
standard is not distinct.
a. An example involves illegal resale price maintenance agreements in which a
retailer and a manufacturer decide that the retailer will sell goods at a price set by
the manufacturer and legal quasi resale price maintenance agreements in which
manufacturers will not sell to sellers who fail to charge what the manufacturers
b. The quick-look standard, the newest weapon, may be of assistance in situations
that were once unclear.
C. Post-Sherman Antitrust Legislation
1. The Clayton Act
a. Congress passed the Clayton Act to police specific business practices that could
be used to create a monopoly.
b. One practice outlawed by the act is the tying agreement.
c. A tying agreement occurs when one party refuses to sell a product unless the
buyer also purchases another product tied to the first product.
d. With some exceptions, interlocking directorates, which occur when individuals
serve as directors of two competing corporations, are outlawed by the Clayton
2. The Robinson-Patman Act
a. The Robinson-Patman Act deals with product pricing, advertising, and
b. It prohibits a seller from charging different prices to different customers for the
same product when such differences might injure competition; but nothing in the
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