Page 225 - (DK) The Business Book
P. 225
WORKING WITH A VISION 223
THERE IS NO SUCH
THING AS A MINOR
LAPSE IN INTEGRITY
COLLUSION
n a market economy,
IN CONTEXT companies are in commercial
I competition with one another.
FOCUS
It is illegal for them to “collude”
Ethics of competition
to fix prices or make secret trade
KEY DATES agreements. However, collusion and We have always known that
11th century Legislation in collaboration are close relatives, and heedless self-interest was bad
England outlaws monopolies sometimes companies argue that morals; we now know that
and restrictive practices. the way in which they “work it is bad economics.
together” does not constitute Franklin D. Roosevelt
13th century King
collusion. Rival companies have US former President (1882–45)
Wenceslaus II of Bohemia been known to “collaborate” in
passes a law to prohibit order to gain advantage over other
iron-ore traders from working competitors, or to increase profit.
together to increase prices. They might do this by sharing
restricted information, limiting
1790s After the French
the supply of goods to influence the
Revolution, agreements by
price, or fixing prices. Two airlines businesses in the US, Korea, and
members of the same trade
hit the media in 2007 when they Japan secretly colluded to raise
to fix prices are declared
were accused of price-fixing. Staff the price of lysine (an ingredient in
void, unconstitutional, and
at British Airways had tipped off animal feed) above its average price
“hostile to liberty.”
staff at competitor Virgin Atlantic in the international market. Within
1890s The Sherman Act in over fuel surcharges. British nine months the illegal cartel had
the US makes it illegal for large Airways admitted to collusion, and raised prices by 70 percent. Gains
companies to cooperate with was fined $195.5 (£121.5) million. for the companies and individuals
rivals to fix their outputs, would have been significant if they
prices, or market shares. Accountability had not been caught. Several
Individuals in large organizations executives went to prison and US
2000s The Treaty of Lisbon
sometimes consider themselves company, Archer Daniels paid the
prohibits anticompetitive infallible. In the mid-1990s, five largest antitrust fine in US history. ■
agreements, including price-
fixing, in the European Union.
See also: Play by the rules 120–23 ■ Profit before perks 124–25 ■ Morality in
business 222 ■ Creating an ethical culture 224–27
