1. Do you think either of the NCAA’s amateurism policies noted above violates antitrust laws? Explain your answer. The Sherman Act prohibits managers of different companies from colluding to fix the prices of a good or service.

Violators are subject to fines and other sanctions. But suppose that the managers themselves do not directly fix the prices; suppose that instead they use other means to limit price competition and collude indirectly. Do such alternative mechanisms stand up to Supreme Court scrutiny?

Can profit-maximizing managers create alternative, thirdparty groups that allow them to fix prices? An actual case will help answer these questions. It is followed by another case for you to consider.

Limiting Price Competition Using a Third Party Government agencies decide when a city or state needs a bridge. When a government agency makes this determination, it needs to hire civil engineers to help prepare design plans and construct the bridge. The agency usually determines which engineering firms are qualified to provide the requisite services. Then, in an effort to minimize the cost of bridge construction, the agency generally solicits competitive bids from these rival engineering firms. But at one point in time, the National Society of Professional Engineers (NSPE) thwarted the attempt to obtain competitive bids. At that time, the NSPE Code of Ethics required each engineering firm to market its services on the basis of quality and past performance, but an ethical canon prohibited engineering firms from competitive bidding. In particular, the Code of Ethics said, “The Engineer will not compete unfairly with another engineer by attempting to obtain employment or . . . professional engagements by competitive bidding.” In addition, the Code of Ethics required the government agency to select the engineering firm it would hire before the firm’s managers could even discuss the fees it would charge. So when agencies attempted to solicit bids, each engineering firm dutifully informed them that the NSPE Code of Ethics prevented them from participating. As you might expect, the absence of competitive bidding and the inability of government officials to discuss fees with the firms until after the agency had selected the firm resulted in higher fees