Shared Flashcard Set

Details

Bus 404 Test
test #2
39
Business
Undergraduate 2
05/17/2009

Additional Business Flashcards

 


 

Cards

Term

 

Antitrust Statutes

 

Definition

 

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

 

Term

 

Antitrust Statutes

 

Definition

 

Originally designed to protect the viability of a market system composed of small businesses.


 

Term

 

Social Policy & Antitrust Laws

 

Definition

 

As social policy, the antitrust laws express concern about concentrations of economic power and the potential for abuse inherent in that concentration.


The constitution controls political power through checks and balances among the branches of government and through popular elections, antitrust policy has focused on controlling economic power.


 

Term

 

1890 Sherman Act 

 

Definition

 

unreasonable restraint of trade

-monopolizing is a felony

 

Term

 

1914 Clayton Act 

 

Definition

 

substantially lessen competition


-discriminating in the price between different purchasers
-prohibits mergers that may lessen competition or create a monopoly

 

Term

 

1914 Federal Trade Commission Act 

 

Definition

 

unfair methods of competition


 

Term
Language of Satutes
Definition

 

Lack of specificity


General terms


Ambiguity


Left open to interpretation in their application


Current application of the antitrust statutes:

Economic efficiency – the more competition there is the better it is for the consumer.

Competition keeps an industry healthy.

 

 

Term
Economic efficiency
Definition

 

the more competition there is the better it is for the consumer.

Competition keeps an industry healthy

 

Term
Monopoly
Definition

 

to affect the price of goods or services.


 

Term
Monopoly Power
Definition

 

has the ability to control prices or exclude competition.


 

Term

Act of monopoly 

Definition

willful act to acquire or maintain the power

Term

Antitrust Policy Making Institutions

Definition

Congress: legislation, appropriation, exemption

Federal Court System:  interpret ambiguities leaning to economic efficiency

Administrative Agencies:  DOJ & FTC

Executive: appointments – political philosophy

Private Sector: private actions to recover

Term
Department oF Justice
Definition

Cabinet level

More aligned with President

Sherman & Clayton Acts

Criminal enforcement

Complaint driven 

Disclosure statement revealed


Term
Federal Trade Commission
Definition

- Created by the federal trade commission act

Independent Regulatory Agency

5 commissioners no more than 3 of the same political party 7-year term

Sherman, Clayton & FTC Acts

Complaint driven 

Disclosure statement revealed

Term

Private Party Action:

Definition

Injunction

Specific performance

Damages 

The above plus

Costs, attorney’s fees, treble damages


Term

Consent Decree

Definition

An agreement reached by the litigants under the sanction of a court.

Reduces liability, it is not a law violation.

Benefits the market, generally involves restrictions on the actions by defendant.

Term
In restraint of trade
Definition

Only unreasonable restraint of trade is prohibited.

Weigh out the benefits against the harms

Term

Rule of Reason: 
Courts examine

Definition

The pro- and anticompetitive effects of the challenged restraint

The competitive structure of the industry

The firm’s market share and power

The history and duration of the restraint

Did the defendant commit the act in question?

Was the action unreasonable?

Term

Per Se Illegality

Definition

Potential for being so harmful to competition no argument can be made for their benefits.

No justifications of any kind can prevent the per se rule from applying.

The acts are presumed to be unreasonable.

Only defense, the act itself was not done.

Term

Price Fixing

Definition

In any shape or form, is deemed anticompetitive and thus unlawful.


Term

Horizontal Price Fixing 

Definition

An agreement between competitors to charge specified prices.


Term

Horizontal Division of Market Areas 

Definition

An agreement between competitors setting forth which territorial areas each may sell.


Term
Horizontal Restraints
Definition

Horizontal Price Fixing

Horizontal Division of Market Areas


The antitrust laws postulate a competitive marketplace in which rival firms compete with respect to prices, products, and services.  Any behavior contrary to this is highly suspect.

Term

 

Vertical Restraints

 

Definition

Vertical Price Agreements

Vertical Non Price Restraints

 

Stimulates inter-brand competition but reduces intra-brand competition


 

Term

 

Vertical Price Agreements 

 

Definition

 

A seller and a buyer agree with respect to the price at which the buyer will resell.


 

Term

 

Vertical Non-price Restraints 

 

Definition

 

(different levels of the distribution chain)  Supplier of a product or service agrees with a buyer about where or to whom the buyer may resell the product or service.


 

Term
intrabrand competition
Definition

competition between sellers of the same brand

Ex: 2 toyota dealers competing against eachother

Term
interbrand competition
Definition
dealers competing against the sellers of other makes of automobiles
Term
FtC enforcement
Definition

* only the FTC can enforce the FTC Act

-sherman act

clayton act

Term
Monopoly
Definition

A firm has such a predominant share of the market that it has the power to control prices or exclude competition.

Has the firm achieved or maintained its size by engaging in business practices that cannot be justified on efficiency grounds or are otherwise not normal for that industry?


Term

Anticompetitive Conduct

Definition

Unchallenged economic power deadens initiative.


Anticompetitive conduct vs. superior skill, foresight, or industry

Term
Clayton Act Section #7
Definition

Mergers or acquisitions that may have the effect of substantially lessening competition are illegal.

Enforcement of this section is almost exclusively with the administrative agencies.

Hart-Scott-Rodino Act requires notification and a waiting period before mergers can go through.

Horizontal mergers:  mergers of direct competitors.

Ultimate Question:  Whether the effect of the merger may be to substantially lessen competition in the relevant market?

Act is intended to arrest anticompetitive effects of market power in its incipiency.

 

Term
Vertical Merger
Definition

Combinations of firms in buyer-supplier relationship

Term
Injuntion
Definition
stomp them from doing a certain thing
Term
Damages
Definition
what was the economic loss to the competitiors
Term
History
Definition

-changing economic conditions- industrial revolution

-farmers, small business, industrials

-large firms may possess to much political power

Supporting users have an ad free experience!