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Antitrust Laws Make Which of the following Illegal Group of Answer Choices

Horizontal mergers: As companies with dominant market shares prepare for a merger, the FTC must decide whether the new entity will be able to exert monopolistic and anti-competitive pressure on the remaining companies. For example, the company that produces Malibu rum and held a market share of 8% of total rum sales offered to buy the company that makes Captain Morgan rums, which held 33% of total sales, in order to create a new company with a market share of 41%. According to this abridged version of the analysis of the rule of reason, the court is not required to carry out the strict analysis of the market and the anti-competitive effects required by the rule of reason. Instead, the claimant only has to present some form of harm to the market. A court could apply the rapid analysis if the defendant`s conduct is of a type that, while not illegal in itself, appears to be so likely to have anti-competitive effects that it is not necessary for a court to conduct the full analysis. The U.S. Supreme Court in National Collegiate Athletic Ass`n v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984), commented that this quick look can sometimes be applied in the “blink of an eye.” Which of the following are considered illegal under the Clayton Act? To analyze whether a particular restriction is inappropriate under federal cartel laws, a court will use one of three approaches: The Federal Trade Commission Act (FTC Act), also passed in 1914, focuses on unfair competition methods and deceptive acts or practices that affect trade (West, nd). All actions that violate the Sherman Act also violate the Federal Trade Commission (FTC).

The FTC Act aims to fill gaps in unfair practices by condemning all anti-competitive behavior that is not otherwise covered by other federal antitrust laws. Commercial practices considered illegal per se under antitrust law include: (a) horizontal price-fixing agreements, (b) horizontal market-sharing agreements, (c) supply-side manipulation between competitors; (d) certain boycotts of horizontal groups of competitors; and (e) sometimes tied selling agreements. Bid manipulation can be divided into several forms: bid suppression, additional bidding, and bid rotation. Sherman Act § 1 prohibits “the contract itself, combination in the form of trust or otherwise, or conspiracy to restrict trade or commerce”. [17] These are two or more different companies that cooperate in a way that harms third parties. It does not cover decisions of a single undertaking or economic unit, although the form of a unit may consist of two or more separate legal persons or companies. Copperweld Corp. v. Independence Tube Corp.[18] was an agreement between a parent company and a wholly-owned subsidiary that could not be subject to antitrust law because the decision was made within a single economic entity. [19] This reflects the view that no harm is suffered if the enterprise (as an economic unit) has not acquired a monopoly position or does not have significant market power. The same logic has been extended to joint ventures, where shareholders of companies make a decision through a new company they form. In Texaco Inc.c.

Dagher,[20] the Supreme Court ruled unanimously that a price set by a joint venture between Texaco and Shell Oil was not considered an illegal agreement. Thus, the law makes a “fundamental distinction between concerted action and independent action”. [21] The behaviour of several undertakings tends to be considered more likely than the behaviour of certain undertakings in order to have clearly negative effects and “is assessed more rigorously”. [22] In general, the law identifies four broad categories of agreements. First, some agreements, such as price fixing or market sharing, are automatically illegal or in themselves illegal. Second, because the law does not seek to prohibit any type of agreement that interferes with freedom of contract, it has developed a “rule of reason” where a practice can restrict trade in a way that is considered positive or beneficial to consumers or society. Third, there are significant problems in proving and identifying faults when companies do not establish open contact or simply exchange information, but seem to act together. Tacit agreements, particularly in concentrated markets with a small number of competitors or oligopolies, have given rise to significant controversy over whether or not antitrust authorities should intervene. Fourth, vertical agreements between an entity and an “upstream or downstream” supplier or buyer raise concerns about the exercise of market power, but are generally subject to a more flexible standard under the “rule of reason”. The Sherman Act also criminalizes monopolizing any part of interstate commerce. An illegal monopoly exists when an undertaking controls the market for a product or service and has acquired that market power, not because its product or service is superior to others, but by suppressing competition through anti-competitive behaviour. No introduction to antitrust law would be complete without addressing mergers and acquisitions.

We can divide them into horizontal, vertical and potentially competitive mergers. If an antitrust action does not fall into an inherently illegal category, the plaintiff must prove that conduct in the “trade restriction” under Sherman§ 1 according to “the facts inherent in the company to which the restriction is applied” causes harm. [24] This essentially means that it is more difficult to demonstrate an anti-competitive effect unless an applicant can refer to a clear precedent to which the situation is analogous. The reason for this is that the courts have tried to draw a line between practices that restrict trade in the “right” and “wrong” way. In the first case, United States v Trans-Missouri Freight Association,[25] the Supreme Court found that the railroads had acted unlawfully by creating an organization to set transportation prices. The railways had protested that their intention was to keep prices low and not high. The court concluded that this was not true, but concluded that not all “trade restrictions” could be illegal in the literal sense. As in common law, the restriction on trade must be “inappropriate.” In Chicago Board of Trade v. In the United States, the Supreme Court found that there was a “good” restriction on trade. [26] The Chicago Board of Trade had a rule that commodity traders could not privately agree to sell or buy after the market closed (and then close trades when it was open the next day). The reason for the introduction of this rule by the Chamber of Commerce was to ensure that all traders had an equal opportunity to trade at a transparent market price. It has clearly restricted trade, but the Chicago Board of Trade has argued that it is beneficial.

Justice Brandeis, who ruled unanimously before the Supreme Court, found that the rule was pro-competitive and consistent with the rule of reason. He did not violate the Sherman Act §1. Secondly, professional sports leagues benefit from a number of exceptions. Mergers and joint agreements of professional football, hockey, baseball and basketball leagues are excluded. [35] Major League Baseball was considered largely exempt from antitrust law in Federal Baseball Club v. National League. [36] Holmes J. was of the view that the organization of the baseball league meant that there was no exchange between states, even if teams crossed state borders to host games. . . .