Studied by 2 people
Antitrust policy
Laws and government actions designed to prevent monopoly and promote competition
Industrial regulation
Gov’t regulation of firms’ prices within selected industries
Social regulation
Government regulation of the conditions under which goods are produced, the physical characteristics of goods, and the impact of the production and consumption of goods on society
Sherman Act
Cornerstone of antitrust legislation
Clayton Act
Strengthened + made clear the intent of the Sherman Act
Tying contracts
Producer requires that a buyer purchase another (or others) of its products as a condition for obtaining a desired product
Interlocking directorates
Situations where a director of one firm is also a board member of a competing firm—in large corporations where the effect would be reduced competition
Federal Trade Commission Act
Created Federal Trade Commission (FTC)
Individual firms
________ can sue other firms under antitrust laws.
Cease-and-desist orders
Issued in cases with unfair methods of competition
Wheeler Lea Act
________- Amended Federal Trade Commission Act + gave FTC more responsibilities.
Wheeler-Lea Act
Amended Federal Trade Commission Act + gave FTC more responsibilities
Celler-Kefauver Act
Amended Clayton Act; prohibited one firm from obtaining the physical assets of another firm when the effect would be reduced competition
Standard Oil case
Supreme Court found Standard Oil guilty of monopolizing the petroleum industry through a series of abusive and anticompetitive actions
US Steel case
Courts established a rule of reason, saying that not every monopoly is illegal
Alcoa case
Even though a firm’s behavior may be legal, possessing monopoly power violates antitrust laws
DuPont cellophane case
The government contended that DuPont, along with a licensee, controlled 100 percent of the cellophane market. But the Court accepted DuPont’s contention that the relevant market included all “flexible packaging materials”—waxed paper, aluminum foil, and so forth, in addition to cellophane
Microsoft case
Microsoft was found guilty of violating the Sherman Act by taking several unlawful actions designed to maintain its monopoly of operating systems for personal computers. A lower court ordered that Microsoft be split into two competing firms. A court of appeals upheld the lower-court finding of abusive monopoly but rescinded the breakup of Microsoft. Instead of the structural remedy, the eventual outcome was a behavioral remedy in which Microsoft was prohibited from engaging in a set of specific anticompetitive business practices
Horizontal merger
Merger between two competitors that sell similar products in the same geographic market
Vertical merger
Merger between firms at different stages of the production process
Conglomerate merger
Any merger not horizontal or vertical
Per se violations
Collusive activities such as scheming to rig bids on government contracts or dividing up sales in a market
Natural monopoly
When economies of scale are so extensive that a single firm can supply the entire market at a lower unit cost than could a number of competing firms
Public interest theory of regulation
Industrial regulation is necessary to keep a natural monopoly from charging monopoly prices and thus harming consumers and society
Legal cartel theory of regulation
Practical politicians “supplying” regulation to local, regional, and national firms that fear the impact of competition on their profits or even on their long-term survival. These firms desire regulation because it yields a legal monopoly that can virtually guarantee a profit
Note 
Flashcard (44)