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Chapter 41

Chapter 41 - Chapter 41 Antitrust BUL 3350 Chapter 41 1...

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Unformatted text preview: Chapter 41: Antitrust BUL 3350 - Chapter 41 1 Topics Covered in this Chapter A. Sherman Antitrust Act B. Clayton Act C. Robinson-Patman Act D. Federal Trade Commission Act BUL 3350 - Chapter 41 2 Sherman Antitrust Act Sherman Restraint of Trade - Section 1 prohibits contracts, combinations, and conspiracies that restrain trade. restrain Rule of Reason - standard that balances the Rule anticompetitive effects against the procompetitive effects of the restraint. procompetitive Per Se Violations - conclusively presumed Per unreasonable and therefore illegal. unreasonable Quick Look Standard - a modified or Quick abbreviated rule of reason standard. abbreviated BUL 3350 - Chapter 41 3 Restraint of Trade Horizontal Restraints - agreements Horizontal among competitors. among Vertical Restraints - agreements among Vertical parties at different levels in the chain of distribution. distribution. BUL 3350 - Chapter 41 4 Restraints of Trade Under the Sherman Act Type of Restraint Price fixing Market allocations Group boycotts or refusals to deal Tying arrangements Per Se Illegal Horizontal Horizontal Horizontal, Vertical (minority) If seller has economic power in tying product and affects a substantial amount of commerce in the tied product Rule of Reason Vertical Vertical Vertical (majority) If seller lacks economic power in tying product BUL 3350 - Chapter 41 5 Application of Section 1 Price Fixing - an agreement with the purpose Price or effect of inhibiting price competition; both horizontal and minimum vertical agreements are per se illegal, while maximum vertical price per fixing is judged by the rule of reason. fixing Market Allocation - division of markets by Market customer type, geography, or products; horizontal agreements are per se illegal, while per vertical agreements are judged by the rule of reason standard. reason BUL 3350 - Chapter 41 6 Application of Section 1 Boycott - agreement among competitors not to Boycott deal with a supplier or customer; per se illegal. per Tying Arrangement - conditioning a sale of a Tying desired product (tying product) on the buyer's purchasing a second product (tied product); per se illegal if the seller has considerable per power in the tying product or affects a notpower iinsubstantial amount of interstate commerce in nsubstantial the tied product. the BUL 3350 - Chapter 41 7 Section 2 Section Section 2 prohibits monopolization, attempts to Section monopolize, and conspiracies to monopolize. monopolize, Monopolization - requires market power Monopolization (ability to control price or exclude others from the marketplace) plus either unfair attainment of power or abuse of such power. of Attempt to Monopolize - specific intent to Attempt monopolize, plus a dangerous probability of success. success. Conspiracies to Monopolize BUL 3350 - Chapter 41 8 Sanctions Against Monopolies Against Treble Damages - three times actual Treble loss. loss. Criminal Penalties BUL 3350 - Chapter 41 9 Clayton Act Clayton Tying Arrangement - prohibited if it tends to create a monopoly or may substantially lessen competition. substantially Exclusive Dealing - arrangement by Exclusive which a party has sole right to a market; prohibited if it tends to create a monopoly or may substantially lessen competition. or BUL 3350 - Chapter 41 10 Merger Prohibited if it tends to create a monopoly or Prohibited may substantially lessen competition. may Horizontal Merger - one company's Horizontal acquisition of a competing company. acquisition Vertical Merger - a company's acquisition of Vertical one of its suppliers or customers. one Conglomerate Merger - the acquisition of a Conglomerate company that is not a competitor, customer, or supplier. supplier. Sanctions - treble damages. Sanctions treble BUL 3350 - Chapter 41 11 Robinson-Patman Act Robinson-Patman Prohibits buyers from inducing or sellers Prohibits from giving different prices to buyers of commodities of similar grade and quality. commodities Injury - plaintiff may prove injury to Injury competitors of the seller (primary-line injury), to competitors of other buyers (secondary-line injury), or to purchasers from other secondary-line sellers (tertiaryfrom line injury). BUL 3350 - Chapter 41 12 Robinson-Patman Act Robinson-Patman Defenses - (1)-cost justification, (2)Defenses (1)-cost meeting competition, and (3)-functional meeting discounts discounts Sanctions - civil (treble damages); criminal Sanctions in limited situations. in BUL 3350 - Chapter 41 13 Federal Trade Commission Act Federal Purpose - to prevent unfair methods of competition and unfair or deceptive practices. practices. Sanctions - actions may be brought by Sanctions the FTC, not by private individuals. the BUL 3350 - Chapter 41 14 Meeting Competition Defense Manufacturer Manufacturer Y 60¢ 65¢ A 65¢ B 65¢ C 65¢ D X Manufacturer X may lower its price to A to 60¢ without lowering its price to B, C, and D. Manufacturer Manufacturer 60¢ N Y 65¢ A 65¢ B 65¢ C 65¢ D X Manufacturer X may not lower its price to A to 60¢ without lowering its price to B, C, and D. BUL 3350 - Chapter 41 15 ...
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