Public policy of Antitrust Legislation
The public policy behind antitrust legislation has three elements. It prevents practices and agreements that do not allow free competition and trading between businesses. This helps to discourage business cartels. Secondly, it prevents abusive behavior normally indicated by firms that dominate markets. It does this through discouraging practices which are anti-competitive. Such practices include bad pricing, boycott and price gouging among others. Thirdly, it supervises acquisitions, mergers and joint ventures between companies. This results into prohibiting of threatening transactions to the competitive process.
Protection of consumer interests and a level playing field for entrepreneurs are the core objectives of the public policy of antitrust legislation. Antitrust law is viewed as a way to provide better public services.
Group boycott aimed at achieving better pay and other better terms by businesses violates the antitrust law. This is so even when the targeted buyer is huge for instance a state. Public policy protects little businesses from exploitation monopolistic giants’ joints. Boycott receives special attention since it can spoil the competitive process and force the targeted audience to agree to demand terms by conspiring businesses. Buyers are usually protected against boycotts just as competitors and sellers and competitors.
The Robinson-Patman Act (RPA) came into being in 1936. It prohibits various types of price discrimination done by sellers. The Act stopped being consumer oriented because of its political conscious choice of policy that equated individual firms’ well being to interests of consumers. It is a common agreement between antitrust experts and economists that enforcing RPA harmed consumers often because it paid insufficient attention to its effects on competition, consumer welfare and market efficiency. Enforcement agencies have abandoned the statute and it now only exists in books. (http://blogs.law.harvard.edu/ethicalesq/2003/09/18)
The RPA essentially prohibits commodity sellers from selling goods of the same level at different prices to different buyers. It seeks to limit their ability to misuse their buying power. It is not used by private parties often even if it is an important statute. This is because it has complicated language. They prefer to use the Sherman Act which is simpler to refer to. It is also very easy for sellers to create defense against the RPA. For instance if a seller is accused of offering discriminatory price he/she may defeat the claim by Robinson-Patman Act through providing evidence showing justification of price differences as coming from different costs incurred in the production line. (http://blogs.law.harvard.edu/ethicalesq/2003/09/18)
Antitrust in Government contracting
Antitrust is an important issue in government contracting. Antitrust is dealt with through four aspects by the government. These are competition, effects, efficiency, and enforcement. Competition implies that the antitrust law does not protect competitors but instead protects competition. This is debatable though if the strength of competitive process is considered. Aggressive competition mounts pressure on competitors causing some businesses to go out of business or exit a market. Efficiency deals with measurement of the amount of wealth created in proportion to the inputs used. Inputs used could be capital investments, raw materials, labor and undesirable effects. The government always conducts its investigation inquiries in terms of efficiency. In terms of effects the government does use forms to act as screening tools. The effects-based approach allows. The government is allowed to incorporate the best developments in economic thinking by the effects based approach. The government uses the enforcement approach of antitrust as opposed to the regulatory model. The regulatory approach is only used in sensitive areas. For example the government runs systems of air traffic control. A pilot can be fired if he/she disobeys the air traffic controller. (http://www.usdoj.gov/atr/public/speeches/222236.htm)
The government only establishes general principles. It then leaves business people and consumers to make their own decisions. Ordinarily, businesses do not need any justification for their decisions and practices. Whenever they are challenged, the complaining party is the one with the burden. This is because the government does tell businesses what or what not to do. As such they do not have to justify their actions to be perfectly competitive. Some people criticize the government antitrust principles saying it only favors competition which is not stiff leaving out aggressive businesses. Issues of social importance associated with consolidation and concentration are not fully addressed by existing antitrust laws as much as these laws target businesses. Social and economic effects that result from mergers are not addressed by the enforcement aspect. Such effects come from other forces apart from mergers. These include deregulation, technological change and international competition. (http://www.usdoj.gov/atr/public/speeches/222236.htm)
Code of Ethics
A Code of Ethics generally outlining broad ethical principles. The NAEB and NAPM code of ethics highlights a few important things;
a) It requires purchasing businessmen and women to give the policies and objectives of their institutions first priority. This is required to avoid interest conflicts. This results from the understanding that as purchasing professionals, they owe their employer primary allegiance. Business men are also required to decline personal gifts or gratuities. This is stated in the pre-text that commercial bribery is illegal. Moreover, businessmen are required to give all their competitors a level playing field. This is so far as the institutional policy or federal statutes allow. Purchasing is the primary guardian of an institution’s reputation for honesty and fairness in its dealings. On the same point business men are required to conduct business with current and potential and suppliers in good faith. There should be no intentional misrepresentation. There should also be honesty in representation of sales. It does not matter whether it is done verbally, through sampling of products or through written means. Confirmed consent of the originator of an idea should be sought before they are used for purchasing purposes. There should be cooperation among trade, professional and industrial associations. This is important for development and promotion of good business plans. Propriety and confidential information should be handled with care. This is because of the legal and ethical consequences and regulations of government. http://www.usdoj.gov/atr/public/speeches/222236.htm
Both codes of Ethics are useful in guiding behavior. Refraining from soliciting or accepting money/loans, credits or prejudicial discounts is the hardest to uphold. It is difficult to know where to draw the line. Probably the easiest standard set is to accept nothing. Even nothing may require some defining. Not all gifts and gratuities that could affect decision making have obvious monetary value.
Alternative situation 1: I would do the ethically right thing and take the gift to the owner
Alternate situation 2: Taking it to the owner.
Alternate situation 3: Take it to the owner
Alternate situation 4: Share the news with the department. We can then decide together what to do with the $100 bill
Alternate situation 5: I would call back and decline explaining that it is a form of bribery and goes against code of ethics
Alternate situation 6: Explain to the boss the implication of going for the party.
Alternate situation 7: Decline and explain soft and firmly why I can’t go.
Alternate situation 8: Wait for the appropriate time and confront him about it. Alternatively I could talk to a friend of his to do it on my behalf.
The article covers false claims issues in subcontracting under the false claims Federal Civil Act (FCA). It is interesting that the article covers subcontracting because it is a very serious matter in our society presently. With regards to liability under false claims laws, prime contractors may be liable where they intentionally or recklessly submit requests for payment that misrepresent facts relating to their subcontractors or subcontractors. Subcontractors that intentionally or recklessly cause a prime contractor to submit a false claim will be subject to false claims liability. They both may be liable for conspiring to submit false claim. Special damages and penalties issues arise. Each of the parties may blow the whistle on the other under the Acts ‘provision. Questions have resulted concerning the ability of each party to bring a counterclaim or even completely unrelated claims. (http://www.rjop.com/PDF/FalseClaimsIssuesinSubcontracting.pdf.)
The Federal Civil Act may apply to projects for the Federal Government or to other public or private projects that involve federal funds. Federal Civil Act lists actions that give rise to liability under the act for damages and or penalties. Relevant to subcontracting issues any person that does the following is liable under the Act-
a) Knowing presents or causes to be presented to the government a false claim.
b) Knowingly makes uses or causes a false record or statement to have a false claim to be paid or approved by the government.
c) Conspiring to defraud the government using a false claim allowed or paid.
d) Knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid or decrease an obligation to pay the government.
An issue that arises in the context of subcontractors is whose claims should the tried and whether to calculate penalties submitted by the subcontractor or primary contractor. The 15 percent to 25 percent award to the contractor from any recovery from defendant by government encourages whistle blowing. The Federal Civil Act as a good deterrent to bogus sub-contractors and primary contractors. (http://www.rjop.com/PDF/FalseClaimsIssuesinSubcontracting.pdf.)
David Giacalone. (2003) Even Struggling Lawyers for the Poor Don’t Get Antitrust Immunity. Retrieved on 12th February fromhttp://blogs.law.harvard.edu/ethicalesq/2003/09/18
Hill, B. Wellford. Antitrust Issues in Standard Setting. Retrieved on 12th February 2008 fromhttp://www.usdoj.gov/atr/public/speeches/222236.htm
http://my.naeb.org/Purchasing_Link/Commentaries/Sep2003_NDM_Commentary.htm. Retrieved on 12th February 2008
http://www.rjop.com/PDF/FalseClaimsIssuesinSubcontracting.pdf. Retrieved on 12th February 2008