Abstract

The setting up of antitrust laws is vital to consumers. The presence of antitrust agencies in a market setting ensures that consumers are protected. The paper presents a case of a pharmaceutical company that is against generic competition and the dynamics that it offers to the overall industry. Legal barriers and the ethical dilemmas surrounding generic completion are also looked into. The second case gives an overview of amalgamation and takeovers and the implications it could have on the consumers. Covered in the case is also the concerns of the consumer agencies and the ethical issues that arise as a result of mergers.

Introduction

Consumers should have the choice of buying products from options that they find viable. Competitiveness in any market structure not only allows quality but it creates a room for consumers to acquire products in the most viable way. The setting up of antitrust laws in any market setting is essential as it hinders businesses from abusing their power and getting in the way of competition. In the case of mergers and monopolies, it is imperative to ensure that their influence is not used to choke the small enterprises and finally the whole market. Free markets where competition and price setting is allowed enables such consumers to take charge of the market while at the same time encouraging growth for the enterprises. Setting up of elaborate antitrust laws is vital for the wellbeing of the consumer as it ensures checks and balances on the companies.

Case One

Reasons Against Generic Competition

The drug maker’s reasons for stifling generic competition are all economic, and market or industry related. Since pharmaceutical companies tend to operate in a market that has barriers to entry. Most of these barriers are as a result of the initial investment required to set up the research facilities, the plants, and the distribution networks. Encouraging generic competition for pharmaceutical companies means reduced profit margins, and a reduced market share and the power to dominate (Parker-Lue, 2015). Generics tend to have a broader market and a high acceptance level by consumers as long as they serve their purpose. Generic competition reduces the popularity and preference of most brands, and this is not pleasant to the drug making companies. Companies dealing with generic drugs enjoy economies of scale as a result of mass production, and this is a situation that weakens the well-established brands, and this becomes a reason for them to fight generic competition Bouet, 2015).   Manufacturing drugs require an in-depth commitment of financial resources in research and development and human capital and this is usually not the case with manufacturers of the generic brands as this is already worked out by the established pharmaceutical companies (Branstetter et al., 2016). Competition authorities tend to decide in favor of the competing companies as it is for the wellbeing of the consumers. However, the very best approach that can be used to deal with generic competition is by cutting the production costs to manageable levels or at the same time legally get the companies producing the generic products to get production and distribution rights.

Legal Barriers to Market Entry

Minimal legal barriers to any market tend to exist. In rare cases, the provisions set by the government might in one way serve as barriers to market entry. The first obstacle that might hinder free entry in to the pharmaceutical market is in the case where the existing businesses have product technology licensed under the law (Bouet, 2015).  In this case, it might require the new entrants to use the set legal requirements to get such technology or keep off the market entirely. In some rare cases, the government might be providing such services or products to the consumers through a partnership and allowing other players into the market might either compromise the quality of the products or entirely fail to make any sense. Government policy might entail the cost of entering the market, the initial investment for new entrants, as well as other legal requirements like the expertise required for such companies. Barriers to entry are however not in many cases set by the government but are indirectly dictated by the industry and the type of market in question (Branstetter et al., 2016).

Ethical Dilemmas in the Case

The case by the drug making company could present several ethical issues each depending on the viewpoint. However, in this case, it is crucial for the Federal Trade Commission to try and find out what could have led to increased sales for the company. Growing sales in an uncompetitive manner are not ethical as it discourages competition and works against the welfare of the final consumers. The other moral issue that might arise in this situation is to knowingly delay or influence the entry of new competitors in the market (Parker-Lue, 2015).  Business activities should not lead to unfair practice in any way. In this case, delaying the introduction of lower-priced generic drugs is not only unjust but also shows greed to the manufacturers. Strategies like these that aim to protect one or a few players in the industry are unethical and should be minimized at all costs. Lastly, the continuous selling of drugs at unaffordable prices is not ethical as it puts profits and capitalism before the health of individuals. In this case, the most prudent action would be in keeping smaller profit margins while at the same time availing the products to consumers at a fair price(Parker-Lue, 2015).

Case Two

Concerns Against Mergers

Business mergers and acquisitions are good as they bring more synergies, allow diversification while at the same time sharpening the focus of the businesses.Ensuring high growth is also an important factor that drives enterprises to merge or combine their powers. However, merging has its share of challenges, and these are the reasons as to why the consumer advocates are against the fusion of the telcos. In one way mergers and amalgamations are only interested in having reasonable customer numbers or an extensive market.

In most cases, the mergers do not work to serve the interests of these customers or their needs at all (Pike, 2016). Strategists putting together the paperwork for such mergers and acquisations overlook the needs and problems of the customers as they are at that particular moment interested in how they are going to get their returns back. Mergers and acquisitions usually bring with them cultural clashes especially when two or more organizations with different organizational settings come together. In this scenario, they might see the customer base as an opportunity to switch the existing solution or product with an entirely new one (Christofi et al., 2017). Most mergers and acquisitions do not present an opportunity to change the terms of endearment, and this is not good and fair to the customers. Since consumers do not have a say in what happens or which company takes over the other one it is not easy for such customers to influence the success or failure of the new entity. In case the new entity fails or collapse, the customers are left with no option but to suffer. It is however vital for the technical organizers to lay out a strategy that aims at reducing the issues that come with mergers and acquisitions to protect the welfare of the consumers.

Pitfalls of Mergers to Consumers

Mergers and acquisitions have the potential to decrease or increase the choices available to consumers. In the case of reduced options for the consumers, the company might be able to save costs with the aim of competing. Services to consumers might be affected by mergers. Mergers between two companies might lead to termination of services that reach consumers like relationship managers (Duvall-Dickson, 2016).  In this scenario, the merging of the two telecommunication companies might lead to billing errors and inefficiencies in the first few months or days. Mergers might seek to improve the quality of products and services offered to the consumers. In the first few instances before the systems are streamlined the consumers might be affected by poor quality, but this can change within days (Christofi et al., 2017). The sole aim of merging two enterprises is believed to either be for the common good of the stakeholders, however, there is a possibility of inefficiencies in service delivery or the quality of products offered primarily during the transition period. In a bid to ensure that this does not affect the standing of the companies in question it is always important to establish a business continuity plan that will take care of such issues.

Ethical Dilemmas in mergers and acquisitions

Mergers and acquisitions are encouraged and undertaken with the firm belief that the different companies will enjoy better growth opportunities than they were as wholly independent companies. In the process of merging ethical dilemmas arise especially on how this is going to affect the consumers. In the case of joining the two telecommunication companies, it is wrong and unfair to have the consumers pay for the costs of merging because they are not the owners of the companies (Christofi et al., 2017).  Disclosing the information of the companies involved is wrong, and it might affect its future standing, and therefore it should be discouraged by all means. Information, in this case, might include that of consumers and the general information. Mergers and acquisitions should be friendly and coordinated, failing to do this in the right way present a wrong impression of the company to the consumers and other stakeholders. Confidentiality issues might arise in case the consumers should be made aware of an impending takeover or merger. Failing to do this in the right way might affect the decisions of the consumers ( pike, 2017).

Conclusion

Antitrust laws are fundamental in ensuring that the interest of consumers is taken care of. In most cases, business owners might be tempted to go for options that favor them at the expense of the consumers or customers. In the first case, it is prudent and ethical to encourage generic competition as it allows consumers to get pharmaceutical products at affordable prices and thus improve their well-being. In the case of merging of the two telecommunication companies, enough emphasis should be put to ensure that the consumers do not pay for the cost and that their interests are not abandoned for the sake of shareholder wealth maximization.

References

Christofi, M., Leonidou, E., & Vrontis, D. (2017). Marketing research on mergers and acquisitions: a systematic review and future directions. International Marketing Review, 34(5), 629-651.

Pike, B. (2017). Mergers: What ethical leaders can do to help ensure success — the Siegel Institute Journal of Applied Ethics, 4(1), 1.

Duvall-Dickson, S. (2016). Blending tribes: leadership challenges in mergers and acquisitions. SAM Advanced Management Journal, 81(4), 16.

Parker-Lue, S., Santoro, M., & Koski, G. (2015). The ethics and economics of pharmaceutical pricing. Annual review of pharmacology and toxicology, 55, 191-206.

Bouet, D. (2015). A study of intellectual property protection policies and innovation in the Indian pharmaceutical industry and beyond. Technovation, 38, 31-41.

Branstetter, L., Chatterjee, C., & Higgins, M. J. (2016). Regulation and welfare: evidence from paragraph IV generic entry in the pharmaceutical industry. The RAND Journal of Economics, 47(4), 857-890.

Case Analysis Outline

Thesis Statement: Setting up of elaborate antitrust laws is vital for the wellbeing of the consumer as it ensures checks and balances on the companies.

1. Abstract
2. Introduction
3. Case One
4. Reasons Against Generic Competition
5. Legal Barriers to Market Entry

• Ethical Dilemmas

4. Case Two
5. Concerns Against Mergers
6. Pitfalls of Mergers to Consumers

• Ethical Dilemmas.

5. Conclusion

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