Details Title: Exam 3 (ch 7-9, part of 6) Description: (ch 7-9, part of 6) Total Flash Cards: 64 Created: 03/24/2008 16:18:49		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Management Flashcards
Cards in this set: Term Executive Agency Definition Part of the executive branch usually created by Executive Order Department: president can hire and fire head   ex: Dept of Labor; head is Secretary of Labor; OSHA is an exec. agency within the Dept. of Labor  Term Independent Agency Definition Created by Congress Boards and Commissions: Members appointed by President with advice and consent of Congress Appointed for terms Can only be removed with cause Supposed to be non-political: usually cannot be overly dominated by one political party (bare majority only) Congress controls money (and thus agency)  Term Powers of Administrative Agencies Definition Source: Power comes from Congress - delegated Enabling statute creates agency and defines its purpose and gives power to agency Administrative Procedures Act (APA) 1947: defines procedural rules and formalities for all federal agencies; rule book for administrative agencies  Term Types of powers of Admin. Agencies Definition Legislative (Rule Making) Power: Promulgation of rules and regulations; have force of congressional statutes; formal or informal Term Informal Legislative Rule of Admin Agency Definition Agency promulgates rule Gives notice to public by printing in the Fed. Register Public can send written comments for usually 30 days Usually no hearing; agency can almost totally ignore public    Informal procedure ok for procedural rules or interpretive rules  Term Formal Rules of Admin. Agency Definition Proposed rules are promulgated Propposed rule notice is published in the fed. register (hearing dates included; 30+ days notice) Formal trial-like hearing (oral evidence/testimony, introduce exhibits, long and drawn out 10+yrs) Final draft published    FOrmal procedures required for substantive rules  Term Enforcement power of Agencies Definition Main job of most agencies Able to investigate and gather info There are constitutional limits  Term Types of Investigatory Power Definition Requiring busn to self report and monitor (must report on regular basis and if certain events occur) No 4th or 5th Amendment protection    Agencies can't share info between one another   Administrative warrant only (not probable cause) Open Field observation--no warrant    subpoena power: orders person to appear, present testimony, or produce documents  Term Types of enforcement power Definition tests and inspections processing applications and permits negotiations settlements advisory opinions threat to go public fines  Term Adjudicatory Power Definition Hearing before an admin. law judge who is an employee of the agency Process: File complaint, violator notified of complaint, agency investigates, response, negotiation, dismiss complaint or take action, hearing before ALJ (usually no absolute right to an attorney, no jury, rules of evidence are relaxed), written opinion, appeal Term Craft v. McConoughy Definition Four grain merchants in Illinois entered agreement (contract) to fix prices   One of the merchants died, son refused to abide by the agreement   Other three sued him to make him follow contract   Illinois Supreme Court said: price fixing was illegal restraint of trade. They refused to enforce the agreement.  Term Interstate Commerce Commission Definition Created by the Interstate Commerce Act to regulate railroads Term Interstate Commerce Act Definition Created the ICC Term Sherman Antitrust Act of 1890 Definition Section 1: "Every contract, combination in the for of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal."  Term Per Se Violation of Section 1 Definition Automatic Violation   You are guilty/responsible with no defense available.  Term Rule of Reason Violoation of Section 1 Definition Can propose a wide variety of justifications for your actions Term Section 2 of Sherman Act Definition "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony." Term Legal Monopoly Definition Where through legal and fair means a company becomes the sole provider of a given good through superior products and doesn't subvert the benefits of market competition  and   The monoppoly refrains from maintaining its status through anti-competitive means and allows competitors to readily enter the market  Term Clayton antitrust act of 1914 Definition Passed to supplement Sherman and fill in some gaps. Specific and preventative   only have to prove significant probability of reducing competition under clayton.   Clayton is civil (lower burden of proof)  Term Price discrimination Definition Charging different prices to different buyers without justification   (Robinson-Patman Act of 1936)  Term Exclusionary practices (Exclusive dealing)  Definition where one firm is given the exclusive right, to the exclusion of others, to buy, sell or trade another's product   this is legal up to a point  Term Tying Arrangements Definition Seller requires a buyer to purchase a "tied" product as a condition of purchasing the desired tying product Term Mergers Definition joining of two or more companies into one   Can substantially lessen competition or tend to create a monopoly, but not all mergers are monopolistic.  Term Federal Trade Commission Act 1914 Definition Establishes the Federal Trade Commission (FTC) as an agency empowered to investigate and enforce antitrust law   Section 5: unfair methods of competition and Deceptive Acts or Practices in Commerce = any busn activity that may tend to create a monopoly by unfairly eliminating or excluding competitors from the marketplace  Term Enforcement of Sherman Definition Private parties (individs. or bsn) have right to sue alleged violators of antitrust law   Dept of Justice, antitrust division may bring criminal suit  Term Enforcement of Clayton Definition Private parties have right to sue alleged violators of antitrust law   FTC can bring civil suit  Term Civil and criminal penalties under Sherman Definition Criminal: felony Individs up to 3 years in prison and/or $350k fine   Civil: injunction; private-action (individuals can receive 3x their damages, attorney's fees, and court costs)  Term Civil penalties under Clayton Definition Dept. of Justice and private individs can bring suit, but it's usually the FTC who does   FTC can issue cease and desist orders to discontinue or modify business acts Criminal sanctions follow if cease and desist is violated  Term Remedies available for antitrust law Definition restrain company or individs from certain conduct force company to divest a subsidiary use company assets to create competing companies force to let other companies use patents, licenses cancel or modify existing busn contracts   remedies only available if harm was the type that antitrust law is meant to prevent  Term Brunswick v. Pueblo Bowl-O-Mat (1977) Definition Brunswick bought out bowling alleys that were on the verge of bankruptcy and continued to operate them, pueblo bowlomat sued claiming that if brunswick would have stayed out of the picture, they would have gotten increased busn, court said this is NOT the type of case covered by antitrust laws   injuries must be caused by anticompetitive behaviors  Term Standard Oil Co. of NJ v. US (1911) Definition Std. Oil controlled 90% of production, shipping, refining, and selling of petroleum products   Lower court ruled to break up Std Oil into several competing companies.   Supreme Court bowed to Rockefeller and tried to give him a way out by establishing Rule of Reason  Term Horizontal Price Fixing Definition US v Trenton Potteries (1927)   Power to fix prices is power to eliminate competition.   Appalachian Coal Company v US   US v. Socony-Vacuum Oil Co  Term Vertical Price Fixing Definition When manufacturer tells buyer they can't sell the product below/above a certain price. Term Horizontal Exchange of Info Definition Illegal to share info secretly Illegal to construct common price list only legal to share info in an open manner as long as it is to enhance competition, create better products, and/or reduce waste  Term Horizontal Market Division Definition Division of market among competitors based on geographic or other terms   per se illegal  Term Vertical Market Restraints Definition Territorial restraints: manufacture tells retailer where they can sell product   Customer restraint: restrictions on who can sell to     Term Horizontal Group boycotts Definition two competitors agree not to deal with other competitors on the same level of competition; purpose is to eliminate or discipline a competitor   per se illegal  Term Robinson-Patman Act 1936 Definition Amends Clayton, section 2a to read:   "it shall be unlawful for any person engaged in commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them." Term Predatory Pricing Definition Sell low to drive out competition, then raise prices   Difficult to win these. Predatory or just competion?  Term Volume discount   (defense to price discrimination) Definition Example: buying 1 TV from a manufacture vs. buying 7,000. Is the consumer helped or hurt by the volume discounts? Term cost justification   (defense to price discrimination) Definition difference in transportation costs   difficult to prove: it is virtually an acct and economic impossibility to assign specific costs of production to individual products  Term changing conditions   (defense to price discrimination) Definition deterioration of perishable goods obsolescence of seasonal goods court ordered sale/judicial sale  Term meeting competition   (defense to price discrimination) Definition must be in good faith   seller can only meet, not beat, the competitor's price  Term functional discounts   (defense to price discrimination) Definition legal if the functional discount constitutes a reasonable reimbursement for the actual marketing functions and there is no injury to competition   Texaco v. Hasbrouck 1990  Term Tying arrangements (tie-in sale) Definition sale of one product conditioned upon required purchase of another product Term Exclusive-dealing contracts Definition contracts under which a seller stops a buyer from purchasing the seller's competitors' products   Prohibited under Section 3 of Clayton if the effect of the contract is to substantially lessen competition or tend to create a monopoly  Term Boycott Definition when a group (consumers, union members, retailers, suppliers, etc) conspires to prevent the carrying on of business or to harm a business   Often associated with price fixing schemes or other restraint of trade situations.   Usually per se illegal if group possesses market power and the boycott is intended to restrict or exclude a competitor.   Eastern States Retail Lumber Dealers Assn v. US  Term Horizontal merger Definition firms were competitors prior to merger Term vertical merger Definition combines two firms up and down the business chain Term market extension manager Definition merger between two firms in similar fields but not in the same exact field Term geographic market extension merger Definition company merges with another company that sells same product but in a totally different geographic region of the country on which they had no contact prior to merger Term product market extension merger Definition one company merges with another company that make similar product to the first company Term congolmerate merger (diversification merger) Definition merger of firms outside of the first three types which is normally the merger of two totally unrelated businesses Term When Mergers are allowed Definition Failing Firm Defense (created by courts): firm being acquired is unlikely to survive   Merger will enhance efficiency in market: will help consumers   Power-buyer defense: allowed because buyers still have upper business hand since remaining power buyers still have enough power to keep merged firm from having any control   lack of power industry: coal is consistently losing market share, so it won't make a difference  Term Natural Monopolies Definition Utility companies and state governments regulated by governmental commissions that set the prices for the consumer   public transport is regulated by several other agencies (ICC, DOT, FAA, FMC)  Term Individual Exceptions to Major Antitrust Law Definition -Labor Unions -Agricultural Cooperatives or Associations: not for profit orgs that work to assist farmers, fisheries, fisheries cooperative marketing act of 1976 -State action: action by states that lead to and/or regulate monopolies -Foreign trade: antitrust laws generall don't apply to US firms selling primarily to foreign consumers -Baseball: US Supreme Court -Political Action Committees (PACs) and Lobbying activities under Noerr-Pennington Doctrine  Term Norris-La Guardia Act of 1932 Definition Outlawed "yellow dog" contracts Mad it much more difficult for employers to obtain an injunction forcing their striking workers back to work, unless the strike is violent    Didn't directly sanction union nor their activities  Term Wagner Act of 1935 (National Labor Relations Act - NLRA) Definition Pro-Labor   Specifically legalizes unions, specifically gives unions concerted activities, encouraged collective bargaining and employer collective action. "Magna Carta" of the American Labor Movement.    Excludes all government employees, railroads and airlines (under Railway Labor Act), domestic servants, individuals employed by parents or spouse, supervisors (they're basically management), independent contractors  Term Definition Term National Labor Relations Board (NLRB) Definition Created by NLRA   federal admin agency to administer labor laws   Appointed by president, confirmed by senate. Broad admin. powers.  Term Taft-Hartley Act 1947 Definition Passed to get unions under control. Vetoed by Truman, overridden by congress.  Term Right to Work Law Definition Undermines unions.   Sothern and western states have them.   Means a worker does not have to join a union, but still gets the benefits of unionization.  Term Free Speech under Taft-Hartley and Wagner Definition Wagner: almost any speech/action by employer against unionization was considered an unfair labor practice   Taft-Hartley: restores free speech rights to employers to speak out against unions. Cannot threaten any reprisal for unionization nor make promises if employees don't unionize.  Term Landrum-Griffin Act of 1959 Definition Regulates the internal affairs of american labor unions.   Financial affairs Election of union oficers (intimidation and violence was used to keep people from running against officers)    Unions are among the most highly regulated private organizations in the country.