CHAPTER 41
CHAPTER SUMMARY
SHERMAN ANTITRUST
ACT
Restraint of Trade Section 1 prohibits contracts,
combinations, and conspiracies that restrain trade
 Rule of Reason standard that balances the
anticompetitive effects against the procompetitive
effects of the restraint
 Per se Violations conclusively presumed
unreasonable and therefore illegal
 Quick Look Standard a modified or abbreviated rule
of reason standard
 Horizontal Restraints agreements among
competitors
 Vertical Restraints agreements among parties at
different levels in the chain of distribution
Application of Section 1
 Price Fixing an agreement with the purpose or effect
of inhibiting price competition; horizontal
agreements are per se illegal, while vertical price
fixing is judged by the rule of reason
 Market Allocation division of markets by customer
type, geography, or products; horizontal agreements
are per se illegal, while vertical agreements are
judged by the rule of reason standard
 Boycott agreement among competitors not to deal
with a supplier or customer; per se illegal
 Tying Arrangement conditioning a sale of a desired
product (tying product) on the buyer's purchasing a
second product (tied product) ;per se illegal if the
seller has considerable power in the tying product or
affects a not-insubstantial amount of interstate
commerce in the tied product
Monopolies Section 2 prohibits monopolization,
attempts to monopolize, and conspiracies to monopolize
 Monopolization requires market power (ability to
control price or exclude others from the marketplace)
plus either the unfair attainment of the power or the
abuse of such power
 Attempt to Monopolize specific intent to
monopolize, plus a dangerous probability of success
 Conspiracies to Monopolize
Sanctions
 Treble Damages three times actual loss
 Criminal Penalties
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CLAYTON ACT
Tying Arrangement prohibited if it tends to create a
monopoly or may substantially lessen competition
Exclusive Dealing arrangement by which a party has
sole right to a market; prohibited if it tends to create a
monopoly or may substantially lessen competition
Merger prohibited if it tends to create a monopoly or
may substantially lessen competition
 Horizontal Merger one company's acquisition of a
competing company
 Vertical Merger a company's acquisition of one of
its suppliers or customers
 Conglomerate Merger the acquisition of a company
that is not a competitor, customer, or supplier
Sanctions treble damages
ROBINSON-PATMAN
ACT
Price Discrimination the Act prohibits buyers from
inducing or sellers from giving different prices to buyers
of commodities of similar grade and quality
Injury plaintiff may prove injury to competitors of the
seller (primary-line injury), to competitors of other
buyers (secondary-line injury), or to purchasers from
other secondary-line sellers (tertiary-line injury)
Defenses (1) cost justification, (2) meeting competition,
and (3) functional discounts
Sanctions civil (treble damages); criminal in limited
situations
FEDERAL TRADE
COMMISSION ACT
Purpose to prevent unfair methods of competition and
unfair or deceptive practices
Sanctions actions may be brought by the Federal Trade
Commission, not by private individuals
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.