CPP Legal and Ethical Constraints 3

Question 1

Two companies meet at a trade association conference and agree not to bid below a certain price on government contracts. This is an example of:

Accepted Answer

Bid rigging, a per se antitrust violation

Answer

Bid rigging—agreeing with competitors on bids submitted to buyers—is a per se violation of the Sherman Act and is aggressively prosecuted by the DOJ.

Question 2

Which of the following is NOT a recognized legal defense under the Robinson-Patman Act for charging different prices to competing buyers?

Accepted Answer

Increasing market share in a new geographic region

Answer

Market share growth is not a statutory defense under Robinson-Patman; recognized defenses are cost justification, meeting competition in good faith, and functional discounts.

Question 3

A dominant firm charges different prices to different customer segments based on their willingness to pay. Under which condition does this become legally problematic?

Accepted Answer

When the price differences injure competition among buyers at the secondary line

Answer

Secondary-line price discrimination under Robinson-Patman is unlawful when it materially harms competition among buyers who compete with each other.

Question 4

An industry leader publicly announces planned price increases well in advance. Competitors then follow with identical increases. This 'price signaling' may raise antitrust concerns because it:

Accepted Answer

Can facilitate tacit coordination without a formal agreement

Answer

Public price signaling can facilitate tacit collusion, which antitrust authorities scrutinize even absent a formal agreement, particularly in concentrated industries.

Question 5

Under the CPP ethical framework, a pricing professional faces pressure to set an unusually high price on a life-saving drug to maximize short-term revenue. The most ethical course of action is to:

Accepted Answer

Raise the ethical concern with management and propose a value-based pricing alternative

Answer

Pricing professionals are expected to raise ethical concerns internally and propose alternatives that balance value capture with stakeholder fairness before taking external action.

(CPP) Certified Pricing Professional Practice Test

(CPP) Certified Pricing Professional Practice Test

CPP Legal and Ethical Constraints 3