TOPIC 1: Ch 16 Regulating Competition-Antitrust Laws
NUMBER YOUR ANSWERS AND COPY THE QUESTIONS HIGHLIGHTED IN RED IN YOUR ANSWERS.
FAILURE TO FOLLOW THIS INSTRUCTION WILL INCUR A 3-POINT POINT REDUCTION FOR THIS TOPIC DISCUSSION.
THIS TOPIC HAS 4 SHORT CASES:
CASE 1: Horizontal Price Fixing
The members of a real estate brokers’ multiple listing service voted to raise their commission rate from 6%to 7%. The bylaws of the association provided for expulsion of any member charging less than the agreed-upon commission.
If broker Hillary continues to charge 6 percent, can she be expelled legally? Why or why not?
CASE 2: Restraint of Trade
All of the orthodontists in your community at their annual holiday party agreed to charge the parents of each child patient a nonrefundable fee of $200 prior to beginning any treatment. They also agreed that the charge for an orthodontia procedure would not be less than $2,000.
Are these agreements in violation of the Sherman Act? Explain.
CASE 3: Monopoly
The Justice Department filed a civil suit claiming Grinnell Corporation had a monopoly in the operation of central station hazard-detecting devices. These security devices are used to prevent burglary and to detect fires.
They involve electronic notification of the police and fire departments at a central location. Grinnell, through three separate subsidiaries, controlled 87% of that business. It argues that it faces competition from other modes of protection from burglary, and therefore it does not have monopoly power.
What argument does the Justice Department have to make to prove its claim that Grinnell is operating an illegal monopoly?
CASE 4: Price Discrimination
You are the sales representative for a manufacturer of insulation. A customer that accounts for approximately one-third of your sales suddenly asks for a discount because of the volume of its purchases. You are politely told that a refusal will cause the customer to take its business to another manufacturer. Your income is solely from commissions on sales, which are calculated on gross profit margins.
If you agree to a discount, have you broken any law?
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