The
Federal Trade Commission
The internet has been very helpful
with connecting businesses to their customers. Marketing and advertising over
the internet has become increasingly popular over the last several years. As a
result, the Federal Trade Commission has to enforce tons of laws everyday on
internet marketing and advertising. The Federal Trade Commission Act was passed
to prevent deceptive and unfair practices against consumers. Section 5 of the
Acts defines deceptive practices as anything misleading as well as anything
that would have an effect on the consumers’ decision about the service or
product.
The Federal Trade Commission Act
states that all claims made in advertisements must be substantiated. When it
involves matters that concern safety, health or performance, it is even more
important that the claims are valid. The Federal Trade Commission Act
assures that consumers are told the truth and aren’t misleading in any type of
advertisements that they are sent over the internet. They hold all sellers
responsible for all claims that they make about their products. The act says
that all disclaimers and disclosures must be clear and concise, and that the
consumer can notice, read, hear, and understand them.
The Federal Trade Commission makes
sure that people who are promised refunds if they are dissatisfied receive
them. The Federal Trade Commission Act also hold third party advertising
agency, catalog marketers, and website designers accountable for their actions
as well.
The Federal Trade Commission is
involved in protecting consumers’ privacy online. A few of the other laws that
the Federal Trade Commission has implemented are The Fair Credit Billing Act,
The Equal Credit Opportunity Act, The Electronic Fund Transfer Act, and The
Consumer Leasing Act. Some of the other areas that The Federal Trade Commission
oversees are environmental claims, telemarketing, 900 numbers,
testimonials and endorsements, warranties, guarantees, negative option offers
and offers for free products.
The long term affect that all of
the rules and guidelines that the Federal Trade Commission implements assure
the fair treatment of consumers. They help to keep consumers from being mislead
or ripped off. They have continued to protect consumers receiving online
advertisements and reassure them that they are safe.
Generic Competition
Generic
prescription medications are “copies of brand-name drugs that have exactly the
same dosage, intended use, effects, side effects,
route of administration, risks, safety, and strength as the original drug” (Stoppler
M.D., 2009).
Generic prescriptions can be offered at a significantly lower price because
they do not have to pay the overhead incurred from researching developing, and
marketing the drug. Once the patent that
gives the original company exclusive rights the sell the medication expires,
generic companies can begin to replicate the drug and lower prices. This takes a
substantial amount of business away from the drugs original developer. A drug
maker would want to stymie generic competition because they take their business
away. If the original drug maker did not have to compete with generic drug
makers, they would see a substantial increase in earning. The United States has
the Food and Drug Administration (FDA) is responsible for ensuring that all of
the foods and drugs that are sold in the U.S. are safe and won’t cause any harm
to the people purchasing them. “The United States is one of the few countries in
the world in which the government doesn’t control or negotiate the price of
prescription drugs” (O'Connor, 2011).
“The high barriers to entry in the
international pharmaceutical industry caused by liability issues have effectively
prompted industry-monitoring mechanisms and have created voluntary corporate
standards, developing the idea of ‘corporate social responsibility’ ” (Castner, 2007).
The most common barrier into the global industry include economies of scale
(manufacturing, marketing, and sales), distribution product differentiation (in
products, brands, and relationships), financial requirements, access of
distribution channels, regulatory policy, and switching costs (technical
assistance, new equipment, and employee retraining).
Telecommunications
Companies and Merger Concerns
One major concern that arises when
plans to merger are announced is whether or not a monopoly is going to be
created. An example of a merger like this would be the recent situation
occurring with AT&T and T-Mobile. It is undesirable for a company to “capture
such a great share of the market that they have the ability to determine prices
for consumer products” (Lewis, n.d.).
Another concern of one company dominating the telecommunications market is
technological stagnation. Technological stagnation occurs when there is no
longer an incentive to develop new technologies because there is less competition
and therefore less of a need to compete. Labor markets would also be negatively
impacted by the mergers because of the consolidation of the industry and a
continued push to be more efficient.
It is unethical to allow
one company to dominate the market because you eliminate fair competition. It also would not allow for the lowest price
to be available for the consumer because there would no longer be competition
throughout the industry. Ethics can be
greatly compromised in the mergers and acquisitions area of business. “Professor Joseph Badaracco,
an authority on business ethics, cites two central concerns in this area: the
first is whether the merger will create economic value for shareholders; the
second involves a company's implicit contracts with its stakeholders” (Emmons & Perry, 1997).
References
Castner, M. (2007, April 19). The Global
Pharmaceutical Industry. Retrieved December 5, 2011, from International
Trade and Contemporary Trends: http://www.duke.edu/web/soc142/team2/social.html
Emmons, G., & Perry, N. O. (1997,
June). HBS Bulletin. Retrieved December 5, 2011, from Blockbuster Deals:
http://www.alumni.hbs.edu/bulletin/1997/june/deals.html
Lewis, J. (n.d.). Small Business.
Retrieved December 5, 2011, from Telecommunications Companies and Merger
Concerns:
http://smallbusiness.chron.com/telecommunications-companies-merger-concerns-25885.html
O'Connor, A. M. (2011, January 10). Health.
Retrieved December 5, 2011, from Is Buying Discount Drugs in Foreign Countries
a Good Idea?: http://www.health.com/health/article/0,,20456461_2,00.html
Stoppler M.D., M. (2009, September 28). MedicineNet.
Retrieved December 5, 2011, from Generic Drugs, Are They as Good as Brand
Names?: http://www.medicinenet.com/script/main/art.asp?articlekey=46204
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