Chapter 5 BLAW

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Clayton Act: This is a federal statute that regulates business practices to prevent monopolies and promote fair competition1.... It specifically prohibits mergers that would lessen competition or create a monopoly2. Additionally, the Clayton Act prohibits price discrimination3.

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Example: A merger between two large telecommunications companies, which would substantially reduce competition in the market, could be challenged under the Clayton Act by the Federal Trade Commission (FTC) and the Department of Justice.

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Divestiture Order: This term does not appear in the sources.

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Market Power: This is defined as the ability of a business to control prices and exclude competitors2. It is a key factor in determining whether a company has engaged in monopolization2.

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Example: If a company controls 90% of the market share for a specific type of software, it likely has market power because it can dictate prices and potentially stifle competition by making it difficult for new businesses to enter the market.

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Price Discrimination: This occurs when a seller charges different prices to different buyers for similar goods, which may result in reduced competition or a tendency to create a monopoly3. The Clayton Act and Robinson-Patman Act prohibit this practice3. However, price discrimination is permitted if justified by certain factors, such as differences in grade, quality, or quantity, the cost of transportation, a good-faith effort to meet competition, differences in marginal cost, or deterioration of goods or a close-out sale4.

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Example: A bakery selling the same loaf of bread to different grocery stores at varying prices, with no legitimate justification based on cost or quantity, would be considered price discrimination. A real-world example of price discrimination cited in the sources is Utah Pie Co. v. Continental Baking Co.3.

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Robinson-Patman Act: This is a federal statute that prohibits price discrimination that lessens competition3. It is often seen as an amendment to the Clayton Act.

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Example: A national chain of stores cannot pressure a distributor into providing a lower cost for a product, if that lower cost is not offered to similar chains of stores.

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Sherman Antitrust Act: This act prohibits activities that restrain trade and competition, such as price-fixing, boycotts, and monopolization2.... Any agreement to charge an agreed-upon price is considered a per se violation of the Sherman Act5. Price discussion among competitors is also considered an attempt to monopolize5. Boycotts among competitors are also considered per se violations of the Sherman Act2.

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Example: If a group of competing gas stations agreed to set a fixed price for gasoline, this would be a violation of the Sherman Act due to its price-fixing provision.

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Treble Damages: This refers to a remedy where an injured party can recover three times the amount of their actual damages. This term is in the context of civil penalties for anti-competitive behavior. An individual can recover treble damages and an Attorney General can bring a class action suit6.

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Example: If a business suffers $100,000 in losses due to a competitor's anti-competitive behavior, a court may order the competitor to pay $300,000 in treble damages.

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Tying: This occurs when a seller forces a buyer to purchase an unwanted product as a condition of buying a desired product7.

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Example: A software company requiring customers who want their main software package to also purchase an additional software package as part of the deal is an example of tying.