Read each assessment listed below. Your response should address each assessment in order to move the conversation forward. Ensure the mastery of the concept as well as critical thinking. In your opinion, do not simply state that it is a good or bad idea; elaborate on your reasons and argument. Include enough detail to substantiate your thinking as well as your position on the questions or comments for each assessment.
Assessment One
First of all as I read it I do not think Goliath and Junior are fully correct. Goliath and Junior are considered to be one entity. The Sherman Act considers a parent company and its wholly owned subsidiaries to be an individual entity. Further according to the Sherman Antitrust Act the reach of the US antitrust laws is not restricted to behavior dealings that take place inside the borders of the United States. Now according to the case Harford Fire Insurance Co v. California, “the Sherman Act applies to foreign conduct that was meant to produce and did produce some substantial effect in United States”. The jurisdiction of United States courts is valid (Antitrust Manual).
Assessment One
First of all as I read it I do not think Goliath and Junior are fully correct. Goliath and Junior are considered to be one entity. The Sherman Act considers a parent company and its wholly owned subsidiaries to be an individual entity. Further according to the Sherman Antitrust Act the reach of the US antitrust laws is not restricted to behavior dealings that take place inside the borders of the United States. Now according to the case Harford Fire Insurance Co v. California, “the Sherman Act applies to foreign conduct that was meant to produce and did produce some substantial effect in United States”. The jurisdiction of United States courts is valid (Antitrust Manual).
Therefore, Goliath and Junior are incorrect because if the cartel agreement allocates market and sets prices for all sapphires sold outside the US, the supply of sapphires to the US and the prices of sapphires exported to the US are bound to be affected. The Sherman Act and the Foreign Trade Antitrust Improvements Act of 1982 applies to foreign conduct that has a direct, sizeable, significant, intensive, and rational or practical consequence on United States commerce (Areeda, P. & Hovenkamp, H.).
I see Goliath and Junior as having several options. The first option is that Junior should break away from the cartel. This will ensure compliance with the US law. The second option is that Goliath should shift its headquarters away from the US to a country where cartels are allows. Goliath should cease to be a US company. The third option is that Goliath should sell off Junior. If Goliath does not own Junior it will not be responsible for the actions of Junior.
Where there are subsidiary companies in foreign countries. From the perspective of the Sherman Act, the holding company is fully responsible for the actions of the subsidiary company. This is the legal position. From the political perspective, unlawful actions taken by US based subsidiaries have the potential of harming the diplomatic relations with foreign countries. There are several trade agreements with other countries that prohibit activities that restraint competition. The relations with these countries are adversely affected. Where there are anti competitive actions such as price fixing on international scale, negative social attitudes develop towards companies that indulge in price fixing or even the countries to which these companies belong to. The economic implications are that fewer people can afford the products whose prices are increased or whose supply is restricted. Cartels and restrictive trade practices restraint economic growth.
References
Antitrust Division Manual. Retrieved November 17, 2013 from
http://www.justce.gov/atr/public/divisionmanual/chapter2.pdf
Areeda, P. & Hovenkamp, H. Fundamentals of Antitrust Law. Aspen Publishers Online, 2011
Assessment Two
Assessment Two
The Legal Information Institute defines the Sherman Antitrust Act as “A federal anti-monopoly and anti-trust statute, passed in 1890…which prohibits activities that restrict interstate commerce and competition in the marketplace” (Legal Information Institute, n.d.). In my research Goliath and Junior was right about the interpretation of this law. Every country put laws in place with the hope of law acting as a pointer on which decisions are like it to be made based on it. I truly believe that Goliath had every right to hire a subsidiary company to handle their foreign operations. Junior was in charge of all of the decisions and they were in charge of the business in the Cayman Island. The law could have damaged the relationship between the U.S. and the Cayman Island. It’s good that the Sherman Trust Law exist because they can not hold Goliath or Junior accountable for breaking the law. This doesn’t imply that we should disregard the law, but we should be very critical. We have a moral obligation in all countries to uphold the law.
Goliath had the right to hire a subsidiary company to firm to aid its foreign operations since it was bound by the Sherman Anti-Trust policy (Basu, 2013). Goliath and Junior had an honest agreement that should be respected by the law. Most companies know that whenever there is illegal or unethical activity that tarnishes that company’s image. It is known that when a company has problems, the best solution is to get rid of this problem. In this situation I feel that Goliath was making a good decision. They should not be persecuted for any legal business that they have set in place with Junior. I have analyzed the Sherman Anti Trust Act. There is absolutely no bearing on Goliath’s part by affiliating with Junior. These were separate organizations and they should be treated separately. Goliath should not have to suffer for making smart business decisions with Junior. Goliath was put in a tight spot by having to address these types of issues. The law was set up to prosecute all unethical practices whether you are a large company or not.
