The Clayton, Robinson Patman Act Test Bank Docx Ch.50 17e

Business Law, 17e (Langvardt)

Chapter 50 The Clayton Act, the Robinson—Patman Act, and Antitrust Exemptions and Immunities

1) The Justice Department and the Federal Trade Commission (FTC) share responsibility for enforcing the Clayton Act.

2) There are no criminal penalties for violating the Clayton Act.

3) Section 7 of the Clayton Act prohibits mergers of companies that would lessen competition in the market or create a monopoly.

4) In a Clayton Act Section 7-based challenge to a merger, the court's adoption of a broad relevant market definition will usually enhance the government's or private plaintiff's difficulty in demonstrating the challenged merger's probable anticompetitive effect.

5) If Acme Corp. and Bogus, Inc. both manufacture product X but no other products, the relevant product market for purposes of an antitrust challenge to a merger between Acme and Bogus will not be a crucial consideration.

6) The relevant geographic markets in the case of merger between competitors are the markets in which they actually compete.

7) Vertical mergers directly result in an increase in concentration.

8) In the European Union (EU), the European Commission has considerable authority to quash a merger through its own action.

9) The Robinson-Patman Act applies to discriminatory acts that occur in trade and commerce.

10) The Robinson-Patman Act applies if a Texas manufacturer discriminated as to the sales price to two Texas customers.

11) The Robinson-Patman Act outlawed secondary and tertiary price discrimination.

12) Ordinarily, a higher degree of proof of likely competitive injury is required in cases involving secondary level price discrimination.

13) There are three major defenses to price discrimination under the Robinson-Patman Act.

14) The Robinson-Patman Act prohibits sellers from making discriminatory payments to competing customers for such customer-performed services as advertising and promotional activities.

15) The McCarran-Ferguson Act does not exempt all actions by insurance companies from antitrust liability.

16) According to the Clayton Act, labor unions and their activities can be construed as illegal.

17) The Local Government Antitrust Act of 1984 eliminates damage actions against municipalities and their officers, agents, and employees for antitrust violations and makes injunctive relief the sole remedy in such cases.

18) Bob and Evan both own tanning salons in Ridgemont, California. They form the "Slow Growth Society of Ridgemont" as a lobbying group to persuade Ridgemont City Council to pass a zoning ordinance that would effectively prohibit new personal services businesses such as tanning salons in Ridgemont. This is prohibited under the Sherman Act.

19) The Noerr-Pennington doctrine provides an exception to the Clayton Act.

20) The Foreign Sovereign Immunities Act (FSIA) provides that all commercial activities of foreign sovereigns and their agents are exempt from antitrust liability.

21) In 1994, which Act did Congress envision as a vehicle for attacking practices that monopolists employed to acquire monopoly power?

A) Sherman Act

B) Clayton Act

C) Robinson-Patman Act

D) Smith-Lever Act

22) There is/are no ________ for violating the provisions of the Clayton Act.

A) injunctive relief

B) treble damages

C) cease-and-desist orders

D) criminal penalties

23) Reliable Corp. owns the nationwide chain of Reliable Auto Repair shops. Although Reliable has the single largest share in the nationwide auto repair market, the intensely competitive nature of this market means that Reliable's share is only 8 percent. In a lawsuit filed against Reliable, the plaintiff alleges that Reliable regularly agrees to provide automobile repairs only if the customer whose car needs repairs also agrees to purchase a certain paste wax manufactured by Reliable. The plaintiff asserts that this practice violates Section 3 of the Clayton Act. Which of the following is the strongest argument for Reliable to avoid liability?

A) That Reliable does not possess sufficient auto repair market power to appreciably restrain competition in the paste wax market.

B) That most of its customers need to buy paste wax anyway.

C) That auto repairs are not a commodity.

D) That Reliable's competitors in the sale of paste wax are doing quite well, regardless of how much paste wax Reliable may sell in this manner.

24) One of the elements that must be demonstrated before a challenged tying agreement will be held to violate Section 3 of the Clayton Act is that:

A) the tying product was available for purchase without the agreement.

B) the seller had substantial market power in the market for the tied product.

C) the seller's tying arrangements restrained a "not insubstantial" volume of commerce in the tied product.

D) the challenged agreement involved two integrated components of a larger product.

25) Technoco, Inc., a manufacturer of computers and related equipment, has been requiring wholesalers and retailers who purchase computers from it to also purchase printers as a condition of buying computers. One of Technoco's customers has challenged the legality of this practice. Which of the following factors would weigh against the illegality of this practice?

A) Evidence that Technoco's computers are generally considered to be inferior to those of its competitors

B) Evidence that many other computer manufacturers will sell computers without requiring purchases of printers

C) Evidence that Technoco is a small company whose total printer sales in the period in question amounted to $19,000

D) Evidence that Technoco's computers are generally considered to be superior to those of its competitors

26) The qualitative substantiality test was employed by the Supreme Court in the landmark case of:

A) Tampa Electric Co. v. Nashville Coal Co.

B) Standard Oil Co. v. United States

C) Olin Corporation v. Federal Trade Commission

D) Federal Trade Commission v. Staples, Inc.

27) Which of the following is an accurate statement about exclusive dealing agreements?

A) The qualitative substantiality test for gauging the legality of exclusive dealing agreements has prompted much criticism.

B) Exclusive dealing agreements are unlawful even when they have minimal effect on competition or monopolization.

C) The preventive nature of the Clayton Act does not allow it to cover exclusive dealing agreements.

D) Historically, exclusive dealing agreements involving a "not insubstantial" amount of commerce have been declared illegal.

28) Mr. Blue and Mr. Yellow own all of the casinos in Delta City. Mr. Green wants to open a casino in Delta City but finds it too difficult to break into the market. Mr. Green sues Mr. Blue and Mr. Yellow for antitrust violation under the Clayton Act. What is the likely reason for the case being dismissed?

A) The Clayton Act does not deal with antitrust issues associated with real estate, services, or intangibles.

B) The Clayton Act does not permit a plaintiff to sue two defendants.

C) Gambling is a vice and as such cannot be litigated in the court system.

D) The common law dictates that businesses cannot sue after failing to establish themselves in the commercial market.

29) Section 7 of the Clayton Act prohibits mergers where evidence indicates that the merger:

A) is between companies who are solely engaged in intrastate commerce.

B) may have the effect of substantially lessening competition in any line of commerce.

C) involves companies that manufacture functionally uninterchangeable products.

D) involves companies that might fail if they were not allowed to merge.

30) ________ attempts to bar mergers that may have an anticompetitive effect.

A) Section 7 of the Clayton Act

B) Section 2 of the Sherman Act

C) Section 3 of the Clayton Act

D) Section 1 of the Sherman Act

31) Which of the following requires parties to a planned merger (that involves dollar values of stock or assets exceeding certain amounts) to provide advance notice to the FTC and the Justice Department?

A) Section 7 of the Clayton Act

B) The Robinson-Patman Act

C) Section 2 of the Sherman Act

D) The Hart-Scott-Rodino Antitrust Improvement Act

32) In determining if a merger is anticompetitive, courts will look at the area that will have effects that are direct and immediate. What is the term for this analysis?

A) Relevant geographic market

B) International risks test

C) Irrelevant geographic means

D) Domestic risk analysis

33) Mini Corp. and Huge, Inc. are competitors. Mini holds the single largest market share in the markets they compete in. Huge is third in terms of market share. Mini plans to acquire Huge. Which of the following, if true, would help bolster a conclusion that the acquisition is lawful under Section 7 of the Clayton Act?

A) That Mini has a history of acquiring ownership over competitors to increase its market share.

B) That there are about 25 competitors other than Mini and Huge while there were only 10 competitors 10 years ago.

C) That Mini has a 25 percent market share now and would only be increasing its market share by another 10 percent by acquiring Huge.

D) That Huge is an aggressive firm and it has developed a plethora of patentable technologies in the last five years.

34) Strong Corp. and Marginal, Inc. are competitors. Strong plans to acquire ownership of Marginal. Which of the following, if true, would help bolster a conclusion that the acquisition is lawful under Section 7 of the Clayton Act?

A) That the industry in which Strong and Marginal are competitors has become increasingly concentrated in recent years.

B) That Strong has a history of acquiring ownership over competitors to increase its market share.

C) That Strong has a 35 percent market share now and would only be increasing its market share by another 10 percent by acquiring Marginal.

D) That Marginal is teetering on the brink of bankruptcy and only Strong is interested in purchasing Marginal.

35) Which of the following is a market share factor that federal regulators consider when determining the legality of horizontal mergers?

A) The probability of increasing concentration in the relevant market.

B) The prior conduct of both the acquiring firm and the acquired firm.

C) The existence of barriers to the entry of new competitors into the relevant market.

D) The probable future competitive strength of the acquired firm.

36) Which types of mergers have traditionally been subject to the greatest degree of scrutiny under the Clayton Act?

A) Horizontal mergers

B) Vertical mergers

C) Conglomerate mergers

D) Product-extension mergers

37) Zenith Co. is a company that manufactures cloth. It purchases the cotton required as raw material from Yell Mart. Zenith Co. acquires Yell Mart. Identify the type of merger.

A) Vertical merger

B) Horizontal merger

C) Conglomerate merger

D) Symmetrical merger

38) Which of the following is an accurate statement about vertical mergers?

A) Vertical mergers take place between formerly competing firms.

B) Vertical mergers do not directly result in an increase in concentration.

C) Vertical mergers constitute a per se violation of Section 7 of the Clayton Act.

D) Vertical mergers have minimal effects on economic efficiencies.

39) Historically, courts seeking to determine the legality of vertical mergers have first tended to look at:

A) the increase in market entry barriers for new competitors.

B) the elimination of potential competition in the acquired firm's market.

C) the economic efficiency of such vertical integration.

D) the share of the relevant market foreclosed to competition.

40) Huge, Inc. owns an east coast grocery chain. It has recently acquired a west coast grocery chain. This is an example of a:

A) product extension merger.

B) horizontal merger.

C) market extension merger.

D) vertical merger.

41) Humongous Corp., a conglomerate with interests in various industries, recently acquired Perfect Petrochemicals Co., a prominent producer of petroleum products that are used in manufacturing plastic. This acquisition was a complete surprise to Perfect's competitors, who never thought that Humongous had any desire to become involved in the petrochemical production business. Companies A and B, owned by Humongous, used plastic as a raw material. None of the companies under the Humongous umbrella made plastic, therefore A and B bought plastic from outside suppliers who used petrochemical products as raw material to make plastic. Which of the following theories is the most appropriate one for challenging the acquisition of Perfect by Humongous under Section 7 of the Clayton Act?

A) Elimination of actual potential competition

B) Potential reciprocity

C) Unfair advantage

D) Elimination of perceived potential competition

42) Gorgeous is a conglomerate and its major businesses include department store chains and grocery store chains. Gorgeous recently acquired Connect Corp., a mobile-network operator. Connect has the third-largest share of the mobile-network market. This is Gorgeous's first venture into the mobile-network business. Which of the following theories is the most appropriate one for challenging Gorgeous's acquisition of Connect under Section 7 of the Clayton Act?

A) Elimination of actual potential competition

B) Potential reciprocity

C) Unfair advantage

D) Elimination of perceived potential competition

43) Initially, Section 8 of the Clayton Act prohibited any person from serving as a director of two or more competing corporations (other than banks or common carriers) if each corporation had capital, surplus, and undivided profits aggregating more than ________.

A) $1 million

B) $5 million

C) $10 million

D) $20 million

44) Section 8 of the Clayton Act requires a ________ standard of liability.

A) quick-look

B) per se

C) secondary

D) rule of reason

45) Section 8 of the Clayton Act, as modified by the Antitrust Amendments Act of 1990, prohibits the same individuals from controlling competing corporations when those individuals are:

A) shareholders.

B) directors or senior officers.

C) mid-level officers.

D) managerial employees.

46) Bob is on the board of directors of both Acme Corporation and Beta Corporation. Acme recently acquired Teen Co., a retailer of teen girls' clothing. Beta Corporation previously acquired Limitless Co., another retailer of teen girls' clothing. Except the teen girls' clothing business, Acme and Beta do not have any other competing businesses. Under the Antitrust Amendments of 1990:

A) Bob must resign from the board of directors of both Acme and Beta.

B) Bob must resign from the board of directors of Acme.

C) Bob need not resign from either board of directors if the teen girls' clothing business contributes minimally to either organization's sales.

D) Bob need not resign until a competitor of Limitless and Teen Co. successfully challenges Acme's acquisition.

47) In reference to Section 8 of the Clayton Act, what does the term interlock mean?

A) When the same corporate officers serve in competing corporations

B) When the capital funding of a corporation is from a foreign country

C) When a corporation is incorporated by the federal government instead of the state

D) When competitors are using the same supplier in the same market

48) Which Section of The Clayton Act originally prohibited local and territorial price discrimination by sellers?

A) Section 2

B) Section 3

C) Section 7

D) Section 8

49) Predatory Co., a large company entering a new geographic market, decided to eliminate its smaller rivals in the new market by selling below cost in that market (but not elsewhere) until the rivals were forced out of business. This type of price discrimination is classified as:

A) super-tertiary level discrimination.

B) tertiary level discrimination.

C) primary level discrimination.

D) secondary level discrimination.

50) Odyssey Corp., a wholesaler of children's toys, sells retailers across the country the exceedingly popular Trojan Horse toy at a price of $14 per item. Odyssey has learned that one of its competitors, Iliad Co., is selling the Trojan Horse toy at a price of $12 per item to all retailers in the State of Utah. Odyssey would like to respond appropriately to Iliad's actions. Which of the following statements accurately sets forth how Odyssey may respond without risking a violation of the Robinson-Patman Act?

A) Odyssey may begin selling the Trojan Horse toy at a price of $12 per item to Utah retailers, while keeping the price at $14 per item for retailers elsewhere in the country.

B) Odyssey may begin selling the Trojan Horse toy at a price of $11.75 per item to Utah retailers, while keeping the price at $14 per item for retailers elsewhere in the country.

C) Odyssey may begin selling the Trojan Horse toy at a price of $12 per item to Utah retailers, but only if it lowers the price to $12 per item for retailers elsewhere in the country.

D) Odyssey may begin selling the Trojan Horse at a price of $11.75 per item all over the country.

51) Mel owns Melco, Inc., which manufactures toys. She provides a functional discount to Carol, a wholesaler of toys. Carol then passes on her discount to Nina, who owns Funland, a toy store. Nina is then able to offer lower prices to toy purchasers. Under the Robinson-Patman Act, this is:

A) tertiary level price discrimination.

B) secondary level price discrimination.

C) valid, if Nina is not in the same territory as Mel.

D) valid, as Nina and Carol are not competitors.

52) A large drug company has recently started a promotional deal. This deal involves discounts to pharmacies for buying its drugs. The discounts are linked to the total dollar amount purchased. This deal also provides for restaurant vouchers for representatives of the pharmacies who are among the top ten buyers of the company's drugs. Which of the following laws is this deal most likely to violate?

A) Section 7 of the Clayton Act

B) The Robinson-Patman Act

C) Section 2 of the Sherman Act

D) The Hart-Scott-Rodino Antitrust Improvement Act

53) Big Corp. (BC) operated in all 50 states. In all of the states except Oregon, BC was the dominant firm in its industry. Small Corp. (SC) operated only in Oregon, but was the dominant firm in that state. BC decided it wanted to destroy SC so that it would become dominant in Oregon. BC cut its prices and sold below cost in Oregon, while maintaining regular prices everywhere else. This is an example of:

A) first-line price discrimination.

B) secondary level price discrimination.

C) tertiary level price discrimination.

D) super-tertiary level price discrimination.

54) Big Corp. (BC) is in the business of making and selling plastic products. Dominant and Micro both buy plastic products of similar grade and quality regularly from BC. Dominant is the biggest customer of BC while Micro usually buys very small quantities. Due to an unexpected shortfall of raw materials, BC anticipates significant reduction in plastic production at its plants. To maintain supply of plastic products to Dominant, BC quotes a 40 percent higher price for its products to Micro. Will this amount to a violation of Section 2(a) of the Robinson-Patman Act?

A) Yes, because BC is committing primary level price discrimination.

B) No, because Dominant deserves the preferential treatment.

C) Yes, because BC is adversely affecting competition at its customer's level.

D) No, because BC has not made any sales at higher prices to Micro.

55) Which of the following is most likely to violate Section 2(a) of the Robinson-Patman Act?

A) Refusing to sell except at a discriminatory price

B) Price discrimination for sales to different purchasers made at the same time

C) Discriminating between customers when quoting prices

D) Price discrimination in consignment transactions

56) Section 2(a) of the Robinson-Patman Act does not directly address the legality of:

A) functional discounts.

B) partial payment discounts.

C) quantity discounts.

D) accumulation discounts.

57) Stitchwell is an apparel manufacturer. Huge Mart, a wholesale dealer, is its largest customer. Huge Mart also owns Gorgeous, a department store chain that deals in apparels, shoes, and accessories. Stitchwell routinely offers "wholesaler special" discounts to Huge Mart and other wholesalers. Are these discounts illegal?

A) Yes, these discounts are per se illegal under Section 2(a) of the Robinson-Patman Act.

B) No, these discounts are not illegal because Stitchwell can legally set resale prices.

C) Yes, these discounts will be deemed illegal if Huge Mart passes them on to Gorgeous customers.

D) No, these discounts are not illegal considering they are provided only for wholesalers.

58) Proof of ________ is often offered as evidence of a seller's anticompetitive intent when proving a primary level violation of the Robinson-Patman Act.

A) functional discounts

B) predatory pricing

C) quantity discounts

D) accumulation pricing

59) For ________, cost justification is the primary statutory defense to liability under Section 2(a) of the Robinson-Patman Act.

A) functional discounts

B) accumulation pricing

C) quantity discounts

D) predatory pricing

60) Filene's Basement filed for bankruptcy in May 2009. In November 2009, Filene's Basement started its "going-out-of-business" sale. Is this price discrimination legal?

A) No, such discounts are per se illegal under Section 7 of the Clayton Act.

B) Yes, such discounts are legal because Filene's Basement can legally set resale prices.

C) Yes, such discounts are legal under the statutory defense of changing conditions.

D) No, such discounts are illegal considering they are provided only for a limited time.

61) Section 2(b) of the Robinson-Patman Act allows a seller to price discriminate in certain geographic areas if the competition has a lower price. According to Section 2(b), what can the seller lower the price to?

A) To the same price as the competitor

B) To any price that beats the competitor

C) 10% discount off the list price of the seller

D) 50% discount off the list price of the seller

62) ________ of the Robinson-Patman Act prevents large buyers, either directly or through subsidiary brokerage agents, from receiving phony commissions or brokerage payments from their suppliers.

A) Section 2(f)

B) Section 2(c)

C) Section 2(a)

D) Section 2(e)

63) ________ of the Robinson-Patman Act makes it illegal for a buyer knowingly to induce or receive a discriminatory price in violation of Section 2(a) of the Robinson-Patman Act.

A) Section 2(f)

B) Section 2(c)

C) Section 2(d)

D) Section 2(e)

64) The Clayton Act exempts the formation and collective marketing activities of ________ from antitrust liability.

A) funeral homes and services

B) roofers and shingle manufactures

C) agricultural cooperatives

D) wireless phone services

65) Minisculea, a small nation that exists on a Pacific Ocean island, is a major producer and seller of a substance known as XYZ. Minisculea is also the leader of a cartel of other XYZ producers. The cartel has raised XYZ prices, a fact of significant concern to the United States, given the many strategic uses to which XYZ can be put. U.S. officials have engaged in ongoing discussions with Minisculea about this subject. If Minisculea and the other cartel members are sued in a U.S. court for allegedly violating the U.S. antitrust acts by fixing the price at which they sold XYZ to U.S. customers, their best defense would be:

A) the state action doctrine.

B) the sovereign compulsion doctrine.

C) the doctrine of sovereign immunity.

D) the act of state doctrine.

66) The Federal Trade Commission (FTC) has the power to enforce the Clayton Act through:

A) restraining orders.

B) cease and desist orders.

C) preliminary investigation orders.

D) suspension orders.

67) What needs to be shown for most Clayton Act violations?

A) Only a probability of any anticompetitive effect

B) A strong probability of a significant anticompetitive effect

C) A strong probability of any anticompetitive effect

D) Only a probability of a significant anticompetitive effect

68) Under the Clayton Act, private parties may sue for ________ if they are injured or threatened with injury by another party's violation of the statute.

A) negligence

B) criminal penalties

C) interference with a business relationship

D) treble damages

69) Which of the following requires a buyer to purchase one product from a seller as a condition of purchasing another product from the same seller, therefore preventing the buyer from purchasing the latter product from the seller's competitors?

A) Tying agreement

B) Price fixing agreement

C) Exclusive dealing agreements

D) Market sharing agreement

70) When does a tying agreement violate Section 3 of the Clayton Act?

A) Only when it creates a monopoly

B) Only when it substantially lessens competition

C) When it substantially lessens competition or tends to create a monopoly

D) When it restrains a substantial volume of commerce in the tied product

71) Contracts where buyers agree to purchase all of their requirements for a commodity from one seller are examples of which type of agreement?

A) Price fixing agreement

B) Tying agreement

C) Exclusive dealing agreement

D) Market sharing agreement

72) The quantitative substantiality test was employed by the Supreme Court in the landmark case of:

A) Standard Oil Co. v. United States

B) Tampa Electric Co. v. Nashville Coal Co.

C) Olin Corporation v. Federal Trade Commission

D) Federal Trade Commission v. Staples, Inc.

73) Which of the following is used to describe the acquisition of one company by another?

A) Monopoly

B) Merger

C) Dissolution

D) Tying

74) ________ determinations under the Clayton Act have traditionally employed functional interchangeability tests similar to those employed in relevant product market determinations under the Sherman Act.

A) Line of commerce

B) International risk

C) Irrelevant geographic means

D) Domestic risk analysis

75) In the case in the text, ProMedica Health System, Inc. v. Federal Trade Commission, the court held that:

A) the Commission erred when it ordered divestiture as the remedy.

B) the merger would not be substantially anticompetitive.

C) the Commission could not put significant weight on the market-concentration data alone.

D) the merger would reduce competition in violation of the Clayton Act.

76) In Federal Trade Commission v. Staples, Inc., the case in the text, the court found that:

A) the products between Staples and Office Depot were not interchangeable.

B) prices would not fall when another non-superstore competitor retainer entered the geographic market.

C) the evidence demonstrated that where Staples and Office Depot charged higher prices, certain customers go elsewhere for their supplies.

D) the sale of consumable office supplies through office supply superstores was the appropriate relevant product market in determining a possible anticompetitive effect.

77) Which type of merger occurs between two firms that neither compete with each other nor have a supplier-consumer relationship with each other?

A) Conglomerate merger

B) Vertical merger

C) Horizontal merger

D) Product-extension merger

78) Which of the following is a discount sometimes granted to buyers at various levels in a product's chain of distribution because of differences in the operations those buyers perform in the distribution system?

A) Partial payment discount

B) Functional discount

C) Quantity discount

D) Accumulation discount

79) In the case in the text, Brooke Group Ltd. V. Brown Williamson Tobacco Corp., the U.S. Supreme Court held that:

A) interdependent pricing of an oligopoly can form the basis of a primary-line injury claim.

B) Brown had a reasonable prospect of recovering its losses from below-cost pricing through slowing the growth of generics.

C) Brown had a reasonable prospect of recouping its predatory losses and could inflict the injury to competition the antitrust laws prohibit.

D) Brown's alleged scheme was not likely to result in oligopolistic price coordination and sustained supracompetitive pricing in the generic segment of the national cigarette market.

80) When large chain stores use their buying power to induce manufacturers to sell to them at prices lower than those offered to their smaller, independent competitors, this type of price discrimination is classified as:

A) super-tertiary level discrimination.

B) tertiary level discrimination.

C) secondary level discrimination.

D) primary level discrimination.

81) The ________ exempts the joint export activities of American companies, so long as those activities do not "artificially or intentionally enhance or depress prices within the United States."

A) McCarran-Ferguson Act

B) Norris-LaGuardia Act

C) Webb-Pomerene Act

D) Capper-Volstead Act

82) Which of the following statements about agricultural cooperatives exemption under the Clayton Act and the Capper-Volstead Act is true?

A) Courts have broadly construed the agricultural cooperative exemption.

B) The agricultural cooperative exemption extends to all collective marketing activities.

C) The agricultural cooperative exemption does not legitimize coercive practices that are unnecessary to accomplish lawful cooperative goals.

D) Agricultural cooperatives that include members not engaged in the production of agricultural commodities have been granted exempt status.

83) As stated in the text and mentioned in North Carolina State Board of Dental Examiners v. Federal Trade Commission, the state action exemption was developed in:

A) Parker v. Brown

B) Standard Oil Co. v. United States

C) Union Labor Life Insurance Co. v. Pireno

D) Federal Trade Commission v. Staples, Inc.

84) Which of the following statements about patent licensing is false?

A) Firms that seek to monopolize by acquiring most or all of the patents related to an area of commerce will not face liability for violating the Sherman and Clayton Acts.

B) Patent holders cannot lawfully control the price at which patented items are resold by distributors purchasing them from the patent holder.

C) Patent holders cannot use their patents to impose tying agreements that would be unlawful under the Sherman and Clayton Acts.

D) The Supreme Court has recognized that an important part of holding a patent is the right to license others to manufacture the patented item.

85) The ________ provides that an American court cannot adjudicate a politically sensitive dispute whose resolution would require the court to judge the legality of a foreign government's sovereign act.

A) state action doctrine

B) sovereign compulsion doctrine

C) doctrine of sovereign immunity

D) act of state doctrine

86) Acme Co., a widget manufacturer, is acquiring Basic, Inc., another widget manufacturer. In view of the nature of the widget industry, a manufacturer's sales territories tend to correspond closely to the states in which it has manufacturing plants. Both Acme and Basic have plants in North Carolina, South Carolina, Tennessee, and Kentucky. In addition, Acme has plants in Illinois and Indiana, and Basic has a plant in Ohio. The post-merger market share of the two firms is likely to be 5 percent in the combined North Carolina, South Carolina, Tennessee, Kentucky, Illinois, Indiana, and Ohio markets, 10 percent in the combined North Carolina, South Carolina, Tennessee, and Kentucky markets, and 32 percent in the combined North Carolina-South Carolina market, where Acme and Basic have been historically strong competitors. Which of the above markets is likely to be treated as the relevant geographic market for purposes of determining the legality of the acquisition? Why that market?

87) Bigcorp, Inc., a huge conglomerate with interests in various industries, is acquiring Odorific Co., the nation's leading manufacturer of men's socks. None of Bigcorp's current "family" of companies purchases socks, nor do any of Bigcorp's suppliers. Bigcorp purchased Odorific after a study conducted by Bigcorp concluded that startup costs in the sock industry made a new entry impractical, and that none of the existing men's sock manufacturers other than Odorific could be acquired for a reasonable price. Odorific's competitors were stunned by the acquisition. They wish to challenge the acquisition. Which theory of attack best suits this case? Explain your reasoning.

88) Soundco, Inc., a leading manufacturer of stereo equipment, sells equipment to both wholesalers and retailers. Soundco regularly charges wholesalers less than it charges retailers for the same equipment. Contending that this pricing practice violated the Robinson-Patman Act, various retailers have sued Soundco. What should Soundco argue in an effort to avoid liability?

89) Okeydokey, Inc. sells its canned beets to its wholly owned subsidiary, Buylow Co., which then sells the beets in the nationwide chain of Buylow grocery stores. In addition, Okeydokey sells canned beets to various other grocery store chains. The beets sold by Okeydokey to Buylow are packaged by Okeydokey under the Buylow label. The beets sold by Okeydokey to the other grocery store chains are packaged under the Okeydokey label. Despite the different names, however, the beets sold by Okeydokey under the two labels are the same in quality. The price at which Okeydokey sells the beets to Buylow is significantly lower than the price at which it sells the beets to the other chains. One of the other chains has brought a lawsuit under the Robinson-Patman Act against Okeydokey on the theory that Okeydokey engaged in price discrimination. Has Okeydokey violated the Robinson-Patman Act? Explain your reasoning.

90) Bunyan Corp. has patented a revolutionary chainsaw. To maximize the revenues from its patent and recover its research and development expenses, Bunyan requires other manufacturers that make the chainsaw under license from Bunyan to adhere to a minimum price schedule. Bunyan also requires its retail dealers to adhere to a minimum resale price schedule. The Justice Department has challenged Bunyan's marketing practices as unlawful. Is the challenge valid? Explain your reasoning.