Question

9. Antitrust laws 

Cooperation among oligopolies runs counter to the public interest because it leads to underproduction and high prices. In an effort to bring resource allocation closer to the social optimum, public officials attempt to force oligopolies to compete instead of cooperating. 

Consider the following scenario: 

Suppose that the leaders of several oil corporations hold a secret meeting in the Cayman Islands where they agree to restrict fuel output in order to boost prices. As a result of the higher fuel prices, an airline company loses billions of dollars 

This airline company could recover three times the damages it has sustained by suing the appropriate oil corporations under which of the following Toni? 

• The Robinson-Patman Act of 1936 

• The Clayton Act of 1914 

• The Sherman Antitrust Act of 1890 

• The Celler-Kefauver Act of 1950
  

Answer 1

Robinson Patman act prohibits the practices by the producers such as price discrimination. Sherman Antitrust act, on the other hand, prohibits the monopolies or the combinations of companies to restrict their output. Celler-Kefauver act was made to prevent the formation of mergers and acquisition which may lead to a monopoly in a market and thus may reduce the competition. Clayton act does not clearly mention the restrictions of mergers and acquisitions, however, works against price discrimination and unfair practices by the producers. The Clayton act though authorise the private party to sue for the three time damages in case they are harmed by the violation of either Sherman or Clayton act. Thus, Airline company can file under the Clayton Act for the triple damages. B (Clayton Act of 1914).