Legal and Ethical Constraints Flashcards
7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Legal and Ethical Constraints flashcards as text
Under the Robinson-Patman Act, a supplier charges different prices to two competing retailers for the same product. Which defense would most likely justify this price difference?
Answer: The cost difference is justified by different order volumes reducing shipping costs
The Robinson-Patman Act allows price differences that can be justified by actual cost differences, such as lower per-unit shipping costs for larger orders.
Which of the following best describes 'resale price maintenance' (RPM) under current U.S. antitrust law?
Answer: Evaluated under the rule of reason to determine net competitive effects
After Leegin Creative Leather Products v. PSKS (2007), vertical RPM agreements are evaluated under the rule of reason rather than treated as per se illegal.
A pricing manager discovers a competitor's confidential price list was accidentally emailed to her company. What is the most ethically appropriate action?
Answer: Notify the competitor, delete the information, and avoid using it
Ethical standards and misappropriation laws require returning or destroying inadvertently received confidential competitive information without using it.
Which antitrust concept describes an agreement among competitors to divide customers, territories, or markets among themselves?
Answer: Market allocation
Market allocation agreements, where competitors divide markets, customers, or territories, are treated as per se illegal horizontal restraints of trade under the Sherman Act.
A company prices a product below average variable cost in a market it dominates. The intent is to eliminate a smaller rival. This practice is best classified as:
Answer: Predatory pricing
Predatory pricing involves pricing below cost with the intent to eliminate competition, which may violate Section 2 of the Sherman Act.
Under the Federal Trade Commission Act, which of the following pricing practices most clearly constitutes an 'unfair or deceptive act'?
Answer: Advertising a 'sale' price on an item never previously sold at the reference price
Fictitious reference pricing—advertising a 'sale' against a price that was never actually charged—is a deceptive practice prohibited by the FTC Act.
A U.S. company bribes a foreign government official to secure a favorable pricing contract. Which law is most directly violated?
Answer: Foreign Corrupt Practices Act (FCPA)
The FCPA prohibits U.S. companies and individuals from bribing foreign government officials to obtain or retain business.