B Y: N E R I S S A E . M A G L A L A N G

SOCIAL RESPONSIBILITY TOWARDS THE COMPETITORS

Agenda

Overview of CSR

Unfair Competition

-Definition

-Antitrust laws

Cartels

Intellectual Property Rights

CSR Overview

CSR policy function as built-in, self-regulating mechanism whereby business monitors and ensures its actives compliance with the spirit of the laws, ethical standards, and international norms.

Unfair Trade Practice

Resorting to unethical business behavior to gain a competitive edge

(Advertising fraud, patent/ trademark infringement, socially irresponsible gimmicks, etc.)

REASONS why companies resort to Unfair Trade Practices

Globalization of Competition

Better Informed & more discerning customers

Increasing number of competitors

Rapid advance in both soft &hard technology

Advance in scientific fields

In short, competition is getting stiffer & stiffer, any kind of edge will count, which is why some companies resort to unethical practice.

When does competition become UNFAIR?

When profit maximization becomes the sole driving force of the business that it pursues it with any means necessary. Resorting to:

.Fraud

.Violation of Human Dignity

.Patent/ Trademark Infringement

.Socially Irresponsible gimmicks

ANTI TRUST LAWS

TRUST: or Corporate Monopoly was Created for the Purpose of eliminating competition in an area of business & of controlling the market for a product.

Coverage of Anti trust Laws

Price fixing between competitors

Abuses of market power by a monopolist or dominant firm

Agreement between competitors to restrict output

Price Fixing between Competitors

Price: often the principal way by which firms compete

Agreements on price initiatives, price ranges, price targets, collusion between competitors on the floor prices are generally illegal under antitrust laws.

Are similarity of prices, simultaneous price changes, or high price, indications of price fixing?

NO, Not always…

Supply and demand can cause these. Price fixing must be PROVEN. (systematic exchange of pricing information between competitors)

How do we determine the JUST PRICE

Pricing Process: require business to effectively calculate resources/needs, supply and demand.

Just Price: one in which both buyer & seller are given what is due the ( price a

manufacturer chargers its customers for G&S is total cost investment plus normal profit)

“Buying & Selling were instituted for the common good of both parties since each needs the product of the other.. Therefore, the contract between them should rest upon equality of the thing to things. The measure of the value of a thing which is exchanged should be given by its money price. Hence to sell a thing dearer or buy it cheaper than it is worth is unjust.”

-St. Thomas Aquinas

Abusing Market Dominance

Dominance: refers to a position of considerable economic power in a market held over a period of time.

Why is the abuse market dominance unethical, socially irresponsible and

anticompetitive?

New rivals are barred to compete

Prices controlled are above the equilibrium level

The product becomes the sovereign of the market

Oligopoly: Agreements between Competitors

Oligopoly: agreements between competitors wherein prices can be set at highly profitable levels & restricts competition

Why is oligopoly wrong?

1. It is basically a MONOPOLY

2. NO competition= no benefits to the consumer

- no improved product quality

- no better price

- no choice

CARTELS

A Cartel is a formal (explicit) agreement among competing firms. It is a formal organization of producers and manufactures that agree to fix and production.

Strategies of Cartels

Market division & Market Sharing

Agreements between competitors to restrict output

Collective boycotts

Resale price maintenance agreements

-conformity among competitors to divide sales territories or allocate customers (agreement no to complete)

Market division & Market Sharing

Agreements between competitors to restrict output

-collusion between competitors to restrict production facilities in order to drive up the price

Collective boycotts

-conformity between competitor not to deal with another person or business

(illegal because it twist/deforms the competitive process by foreclosing competitive opportunities for suppliers or by denying customer choice)

Resale price maintenance agreements

-agreement between a supplier & dealer that fixes the minimum resale price of the a product

GREY AREAS

An agreement between competitors to adopt standards that require fire-resistant materials for certain products.

Con: the agreement to adopt is restrictive. The manufacturers have limited their own ability to use other materials & have limited supplier choice

Pro: will benefit consumers in terms of safety

INTELLECTUAL PROPERY RIGHTS

-constitutes those original creative works that have economic value & are protected by law.

REASONS

They reward the creators of original works by preventing others from copying, performing of distributing those works without permission

They provide incentives for people to produce scientific & creative works that benefit society at large

PATENT LAW

-protect inventions that demonstrate technological progress

COPYRIGHT LAW

-Protect a variety of literary & artistic works, including paintings sculpture, prose, poetry, plays musical competitions, dances photographs, motion picture, radio, TV, computer programs

TRADEMARK LAW

-Protects words & symbols that serve to identify different brands of G&S in the market place

COUNTERFEITING

-A criminal offense of making an imitation of an article with intent to defraud others into accepting it as a genuine item