MODULE 22 FEDERAL SECURITIES ACTS AND ANTITRUST LAW 107

EXAMPLE: A manufacturer of a very popular line of jeans requires its retailers to also stock the
manufacturer's line of shirts in order to obtain the jeans.
(2) Only applies to sales and leases, not consignments
(3) Recently courts' use Ride of Reason for tying agreements rather than per se violations
d. Exclusive dealing arrangements
(1) Occur where seller requires buyer to buy only seller's products (i.e., may not deal in the com-
modities of a competitor)

EXAMPLE: A sporting goods manufacturer requires its retailers not to sell its competitor's goods.
(2) A violation if a substantial dollar amount or substantial percentage of the market is involved
(a) Then presumed to be anticompetitive (i.e., a per se violation)
3. Judicial standards for Clayton Act violations
a. If competition is not lessened, it is not illegal
b. Quantitative considerations
(1) Sales volume of product, in dollars
(2) Control of the market (e.g., percentage share)
c. Qualitative
considerations
(1) Strength of competitors

(2) Ease of entry into industry by newcomers

4. Sanctions
a. Injunctions, forced divisions, forced divestitures (by individuals; corporations, or government)
b. Treble damages (by individuals, corporations)
J. Federal Trade Commission Act of 1914
1. Created the Federal Trade Commission (FfC)
a. FfC has authority to enforce most of the antitrust laws
b. FfC has exclusive authority to enforce this Act's prohibitions (i.e., individuals may not enforce)
c. FfC has authority to determine what practices are unfair or undesirable
2. Prohibits unfair methods of competition and deceptive practices involving advertising,
telemarketing,
electronic advertising

-a. FfC has exclusive authority under this Act and can determine what is unfair
b. FfC may stop unfair and deceptive practices in their incipiency (i.e., before an actual violation oc-
curs) as well as after a violation occurs
EXAMPLE: An oil company agreed with a tire company that the oil company would promote the sale of the tire
company's accessories to the oil company's independent dealers. There was no tying or overt coercion in these
promotions to the independent dealers, but the dominant position of the oil company over its dealers created strong
potential for stifling competition. The agreement was therefore an unfair method of competition.

c. Unfairness standards
(1) Cause of substantial injury to competitors or consumers
(2) Offends public policy

(3) Oppressive or unscrupulous practices

3. Sanctions
a. Cease and desist orders
(1) Civil penalty for each violation
 (2) Each day of continued violation is separate offense
(3) FfC may also use cease and desist orders for the Sherman Act and Clayton Act
K. Robinson-Patman Act of 1936
1. Amended the Clayton Act to expand control in the area of price
discrimination
a. Also J?akes buyers (in addition to sellers) liable for price discrimination

2.Prohibits

a. Discrimination as to price between purchasers of goods of like quality and grade

(1) If the effect is to substantially lessen competition or tend to create a.monopoly
(2) Or if the effect is to injure or prevent competition by competitors or customer's competitors
(3) Includes price discrimination between different geographical areas unless based on cost
b. Special discounts, rebates, or commissions (e.g., brokerage fees, to customers)
(1) Services (e.g., advertising) not allowed either unless on a proportionate basis to all customers
(2) To prevent favoritism to purchasers of quantity

(3) Illegal per se

c. Buyers also are prohibited from knowingly inducing or receiving a discrimination in price or ser-
vice

3.Price (differential) discrimination is allowed if

a.It can be directly related to lower costs caused by production and sales in quantity (i.e., functional)
(1) This cost differential must be proven; reliance on the general assumption that larger quantities
are cheaper is not accepted

a. Price discrimination is to meet lawful competition

(1) If a competitor has a low price, this may be met
(2) Only to keep old customers, not to gain new ones

(3) Competitor's price must be lawful (i.e., price discrimination cannot be met with price dis-
crimination)
c. There is no substantial lessening of competition nor injury of competition
4. Sanctions
a. Injunctions (by individual, corporations, government)
a. Criminal penalties
b. Treble damages (by individuals, corporations)