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Flashcards in Chapter 46 Deck (42):
1

Antitrust Laws

A series of laws enacted to limit anti competitive behavior in almost all industries, businesses, and professions operating in the United States.

2

Section 1 of the Sherman Act

A section that prohibits contracts, combinations, and conspiracies in restraint of trade.

3

Rule of Reason

A rule which holds that only unreasonable restraints of trade violate Section 1 of the Sherman Act. The court must examine the pro- and anticompetitive effects of a challenged restraint.

4

Per Se Rule

A rule that is applicable to restraints of trade considered inherently anticompetitive. Once this determination is made about a restraint of trade, the court will not permit any defenses or justifications to save it.

5

Horizontal Restraint of Trade

A restraint of trade that occurs when two or more competitors at the same level of distribution enter into a contract, combination, or conspiracy to restrain trade.

6

Price-Fixing

A restraint of trade that occurs when competitors in the same line of business agree to set the price of the goods or services they sell, raising, depressing, fixing, pegging, or stabilizing the price of a commodity or service.

7

Division of Markets

A restraint of trade in which competitors agree that each will serve only a designated portion of the market.

8

Group Boycott

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. Also known as refusal to deal.

9

Vertical Restraint of Trade

A restraint of trade that occurs when two or more parties on different levels of distribution enter into a contract, combination, or conspiracy to restrain trade.

10

Resale Price Maintenance

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. Also called vertical price-fixing.

11

Non-Price Vertical Restraints

Restraints of trade that are unlawful under Section 1 of the Sherman Act if their anticompetitive effects outweigh their precompetitive effects.

12

Unilateral Refusal to Deal

A unilateral choice by one party not to deal with another party. This does not violate Section 1 of the Sherman Act because there is not concerted action.

13

Conscious Parallelism

A doctrine which states that if two or more firms act the same but no concerted action is shown, there is no violation of Section 1 of the Sherman Act.

14

Noerr Doctrine

A doctrine 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.

15

Section 2 of the Sherman Act

A section that prohibits monopolization and attempts or conspiracies to monopolize trade.

16

Relevant Product or Service Market

A relevant market that includes substitute products or services that are reasonably interchangeable with the defendant's products or services.

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Relevant Geographical Market

A relevant market that is defined as the area in which the defendant and its competitors sell the product or service.

18

Monopoly Power

The power to control prices or exclude competition, measured by the market share the defendant possesses in the relevant market.

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Act of Monopolizing

An act that is required for there to be a violation of Section 2 of the Sherman Act. Possession of the Sherman Act. Possession of monopoly power without such act does not violate Section 2.

20

Section 7 of the Clayton Act

A section which provides that it is unlawful for a person or business to acquire the stocks or assets of another "where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may by substantially to lessen competition, or to tend to create a monopoly."

21

Line of Commerce

The products or services that will be affected by a merger, including those that consumers use as substitutes. If an increase in the price of one product or service leads consumers to purchase another product or service, the two products are substitutes for each other.

22

Section of the Country

A division of the country that is based on the relevant geographical market; the geographical area that will feel the direct and immediate effects of a merger.

23

Probability of a Substantial Lessening of Competition

The probability that a merger will substantially lessen competition or create a monopoly, in which case the court may prevent the merger under Section 7 of the Clayton Act.

24

Horizontal Merger

A merger between two or more companies that compete in the same business and geographical market.

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Vertical Merger

A merger that integrates the operations of a supplier and a customer.

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Backward Vertical Merger

A vertical merger in which the customer acquires the supplier.

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Forward Vertical Merger

A vertical merger in which the supplier acquires the customer.

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Market Extension Merger

A merger between two companies in similar fields whose sales do not overlap.

29

Conglomerate Merger

A merger that does not fit into any other category; a merger between firms in totally unrelated businesses.

30

Hart-Scott-Rodino Antitrust Improvement Act

An act that requires certain firms to notify the FTC and the Justice Department in advance of a proposed merger. Unless the government challenges a proposed merger within 30 days, the merger may proceed.

31

Section 3 of the Clayton Act

An act that prohibits trying arrangements involving sales and leases of goods.

32

Tying Arrangement

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.

33

Section 2(a) of the Robinson Patman Act

A section that prohibits direct and indirect price discrimination by sellers of a commodity of a like grade and quality, where the effect of such discrimination may be to substantially lessen competition or to tend to create a monopoly in any line of commerce.

34

Direct Price Discrimination

Price discrimination in which (1) the defendant sold commodities of like grade and quality, (2) to two or more purchasers at different prices at approximately the same time, and (3) the plaintiff suffered injury because of the price discrimination.

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Indirect Price Discrimination

A form of price discrimination (e.g., favorable credit terms) that is less readily apparent than direct forms of price discrimination.

36

Cost Justification Defense

A defense in section 2(a) action which provides that a seller's price discrimination is not unlawful if the price differentials is due to "difference in the cost of manufactur, sale, or delivery" of the product.

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Changing Conditions Defense

A price discrimination defense that claims prices are lowered in response to changing conditions in the market for or the marketability of the goods.

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Meeting the Competition Defense

A defense provided in Section 2(b) that says a seller may lawfully engage in price discrimination to meet a competitor's price.

39

Section 5 of the Federal Trade Commission Act

A section that prohibits unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce.

40

Statutory Exemptions

Exemptions from antitrust laws that are expressed provided in statutes enacted by Congress.

41

Implied Exemptions

Exemptions from antitrust laws that are implied by the federal courts.

42

State Action Exemptions

Business activities that are mandated by state law and are therefore exempt from federal antitrust laws.