Antitrust

OBE 118, Fall 2004

Professor McKinsey

In the course of doing business, companies, businesses and individuals can easily run afoul of the Antitrust laws of the United States:

• If a business is real big or dominant in a market, it needs to be careful how it competes! (Monopolies)

• If two or more competing businesses want to do something together or closely communicate, they need to be very careful! (Restraints of Trade)

Final Exam is Thursday, December 16 from 8:00 to 10:00

Agreements in Restraint of Trade

(Sherman Act, Section 1)

1) Separate entities conspiring, contracting, or otherwise acting in cooperation

2) Unreasonable restraint of trade

Per se versus Rule of Reason(Revisited)

• Some actions are considered per se violations: there is no need to show market effect

• Everything else is evaluated using a rule of reason that allows for a balanced evaluation as to whether the action is good or bad for competition. (Fact specific)

Horizontal versus Vertical

Vendor

Coke

Regional Distributor

Pepsi

An agreement between Coke and Pepsi would be a horizontal agreement. Example: market division, price fixing. Such agreements are often bad for competition

Horizontal Restraints

• Any price fixing, rigging, maintaining or even terms of sales- per se violation

• Market division – per se violation

• Group Boycotts – per se violation

Pepsi Coke

Vertical Restraints

• Price fixing- – Minimum (floor) – Per se– Maximum (ceiling) – Rule of reason– Other price based – Rule of reason

• Non-Price Agreements– Rule of reason– Tying products can be per se

Pepsi

Regional Distributor

Vendor

Monopoly Violation(Sherman Act Section 2)

1) Market Power in Relevant Market

2) Anticompetitive Acts to get or keep Market Power (Monopolistic Intent)

Both elements must be present, it is not illegal to be have monopoly power.

Exam III

40 Multiple Choice Questions Thursday, December 16, 8:00 AM

Exam covers only the topics since the last exam and is weighted approximately to the relative time we spent on a topic

You will require a scantron 882

Exam Review- Topic Outline

Property

Business Organizations

Agency

Employment

Antitrust

Types of Property, How you can acquire or create them, rights that come along with them, how to transfer, loan or sell them

Focus on Corporations and LLCs; some questions about the basic nature of the other types of entities; one question strictly on partnership law

What is an agency relationship, how is it created, what duties are there, what happens in liability situations

Basic obligations that employers have re employees and rights employees have; wrongful discharge and employment discrimination

Two categories, what generally constitutes a violation, horizontal versus vertical agreements