Card Set Information
UNT BLAW3430 ch43 BLAW
Review questions for Business Law and the Regulation of Business, 10th edition, Mann&Roberts, chapter 43, part 2
What does the Clayton Act deal with?
Who can enforce the Clayton Act?
private parties -- civil suit
DoJ and FTC -- civil suit
The Clayton Act only applies to practices involving what?
(NOT services etc)
What is an exclusive dealing contract?
seller prohibits buyer from purchasing products from seller's competition
allows seller the sole right to sell the product
to be considered illegal, it has to be proven to hurt competition
Which standard is used to dertermine the legality of an exclusive dealing contract?
rule of reason
What are the 3 kinds of mergers?
horizontal -- between firms that compete in the same market
vertical -- company acquires one of its sellers
conglomerate -- between unrelated firms (eg. foil + tv)
How is the legality of a merger determined?
rule of reason -- how big is resulting firm's market share?
horizontal mergers: assumed illegal, but "quick look" rule of reason is applied
What do the FTC and DoJ use to determine the market concentration of an acquiring company?
How is the Herfindahl-Hirschman Index (HHI) used?
if a merger increases the acquiring firm's HHI by 50 to 100 points, the merger should be investigated
if a merger increases the acquiring firm's HHI by more than 100 points, the merger is presumed to enhance market power
Which factors are considered when using the rule of reason test to investigate a merger?
market share of each firm
degree of market concentration
number of firms in the industry
entry barriers to the industry
strength of other competitors
character and history of merging firms
market trends and demand
What are defenses for the legality of a merger?
"failing company" merger
"small company" merger
How do vertical and conglomerate mergers increase economic efficiency?
transferring assets to most productive use
extending retail product lines
reducing overhead costs
and are they legal?
illegal under Clayton Act
when a director of a public company, that has at least 10 million in capital, is also a director of another public company that has at least 10 million in capital
What is the Robinson-Patman Act?
amendment to Clayton Act
prohibits buyers from inducing and sellers from granting price discrimination in
price discrimination must substantially lessen competition or tend to create a monopoly to violate the act
What is price discrimination?
seller charges different buyers different prices for the same goods (includes other costs like warranties, insurance, credit terms, delivery charges etc.)
What are the 3 lines of injury in regards to price discrimination?
primary line injury (competitor of seller)
secondary line injury (non-favored buyers)
tertiary line injury (customers of non-favored buyers)
What are the 3 defenses for price discrimination?
cost justification -- seller shows cost reduction
meeting competition -- "price match"
functional discounts -- non-favored buyer did not take advantage of available discount
What is the Federal Trade Commission Act?
5-member FTC is empowered to conduct appropriate investigations and hearings
supplement to Sherman and Clayton Act
FTC to stop practices before harm to competition becomes too great
cease and desist order is primary sanction
"catch all" statute
What is the first step to take in antitrust action?
file complaint with FTC
Which areas are
from anti-trust laws?
agricultural associations and fisheries
most foreign trade
cooperative research and production (if temporary)
joint efforts to obtain legislative or executive action (lobbying)
What aspects of foreign trade are subject to US antitrust laws?
foreign persons may sue US companies in US courts even if violation occurs outside of the US
any conspiracy with substantial effect on US commerce, even if violation occurs outside of the US and a foreign government or person commits it