Back to Book

Financial Crime and Corruption by Samuel Vaknin

4. A competitive price will be comprised of a

488 words  |  Chapter 43

minimal cost plus an equilibrium profit which does not encourage either an exit of firms (because it is too low), nor their entry (because it is too high). Left to their own devices, firms tend to liquidate competitors (predation), buy them out or collude with them to raise prices. The 1890 Sherman Antitrust Act in the USA forbade the latter (section 1) and prohibited monopolization or dumping as a method to eliminate competitors. Later acts (Clayton, 1914 and the Federal Trade Commission Act of the same year) added forbidden activities: tying arrangements, boycotts, territorial divisions, non-competitive mergers, price discrimination, exclusive dealing, unfair acts, practices and methods. Both consumers and producers who felt offended were given access to the Justice Department and to the FTC or the right to sue in a federal court and be eligible to receive treble damages. It is only fair to mention the "intellectual competition", which opposes the above premises. Many important economists thought (and still do) that competition laws represent an unwarranted and harmful intervention of the State in the markets. Some believed that the State should own important industries (J.K. Galbraith), others - that industries should be encouraged to grow because only size guarantees survival, lower prices and innovation (Ellis Hawley). Yet others supported the cause of laissez faire (Marc Eisner). These three antithetical approaches are, by no means, new. One led to socialism and communism, the other to corporatism and monopolies and the third to jungle- ization of the market (what the Europeans derisively call: the Anglo-Saxon model). B. HISTORICAL AND LEGAL CONSIDERATIONS Why does the State involve itself in the machinations of the free market? Because often markets fail or are unable or unwilling to provide goods, services, or competition. The purpose of competition laws is to secure a competitive marketplace and thus protect the consumer from unfair, anti-competitive practices. The latter tend to increase prices and reduce the availability and quality of goods and services offered to the consumer. Such state intervention is usually done by establishing a governmental Authority with full powers to regulate the markets and ensure their fairness and accessibility to new entrants. Lately, international collaboration between such authorities yielded a measure of harmonization and coordinated action (especially in cases of trusts which are the results of mergers and acquisitions). Yet, competition law embodies an inherent conflict: while protecting local consumers from monopolies, cartels and oligopolies - it ignores the very same practices when directed at foreign consumers. Cartels related to the country's foreign trade are allowed even under GATT/WTO rules (in cases of dumping or excessive export subsidies). Put simply: governments regard acts which are criminal as legal if they are directed at foreign consumers or are part of the process of foreign trade. A country such as Macedonia - poor and in need of establishing its export sector - should include in its competition law at least two protective measures against these discriminatory practices:
Previous Chapter Chapter List Next Chapter

Chapters

1. Chapter 1 2. 1997. The US Department of Justice brought another 30 3. 1989. Both events have forever altered the patterns of the 4. 1. Egregiously corrupt, high-profile, public figures, 5. 2. All international aid, credits, and investments must 6. 3. Corruption cannot be reduced only by punitive 7. 4. Opportunities to be corrupt should be minimized 8. 5. Corruption is a symptom of systemic institutional 9. 6. Corruption is a symptom of an all-pervasive sense 10. 1999. Its report remains classified but Stroev confirmed 11. 1995. PwC did make a mild comment in the 1997 audit. 12. introduction of best independent directors' practices". 13. 1989. Six years later, their number shrank to 1,612 and it 14. 2600. By 2002, it has increased elevenfold since 1995. 15. 2001. Nine of every 10 hijacked ships are ultimately 16. 4. NEVER expect ANY help from the Nigerian 17. 5. NEVER rely on YOUR Government to bail you 18. 1996. Iraqis are also being trained in Belarus to operate 19. 1. Job security is a thing of the past. Itinerancy in various 20. 2. Outsourcing and offshoring of back office (and, more 21. 3. The populace in developed countries are addicted to 22. 4. The other side of this dismal coin is workaholism - the 23. 5. The depersonalization of manufacturing - the 24. 6. Many former employees of mega-corporations abandon 25. 7. Despite decades of advanced notice, globalization 26. 8. The decline of the professional guilds on the one hand 27. 9. The quality of one's work, and of services and products 28. 10. Moral relativism is the mirror image of rampant 29. 11. The disintegration of the educational systems of the 30. 12. Irrational beliefs, pseudo-sciences, and the occult 31. 1. That the fair "value" of a share is closely 32. 2. That price movements are mostly random, though 33. 3. That the fair value responds to new information 34. introduction of a reciprocal visa regime between the two 35. 1. Legal activities that are not reported to the tax 36. 2. Illegal activities which, needless to say, are also 37. 1. How to make sure that the expenditures match and 38. 2. How to prevent the criminally corrupt activities 39. introduction of free marketry are unemployment and 40. 1. There should be no barriers to the entry of new 41. 2. A larger scale of operation does introduce 42. 3. Efficient competition does not exist when a market 43. 4. A competitive price will be comprised of a 44. 1. Blocking Statutes - which prohibit its legal entities 45. 2. Clawback Provisions - which will enable the local 46. 1. National laws should be applied to solve 47. 2. Parties, regardless of origin, should be treated as 48. 3. A minimum standard for national antitrust rules 49. 4. The establishment of an international authority to 50. 1. Agreements to fix prices (including export and 51. 3. Market or customer allocation (division) 52. 5. Collective action to enforce arrangements, e.g., by 53. 6. Concerted refusal to sell to potential importers; 54. 7. Collective denial of access to an arrangement, or 55. introduction of new management techniques (example: 56. 1. They attack the perceived source of frustration in 57. 2. They seek to subsume the object of envy by 58. 3. They resort to self-deprecation. They idealize the 59. 4. They experience cognitive dissonance. These 60. 5. They avoid the envied person and thus the 61. 2. It is impossible for two players to improve the 62. 3. Is not influenced by the introduction of irrelevant 63. 4. Is symmetric (reversing the roles of the players 64. 1. Crooks and other illegal operators. These take 65. 2. Illegitimate operators include those treading the 66. 3. The "not serious" operators. These are people too 67. 4. The former kind of operators obviously has a 68. 5. Speculators and middlemen are yet another 69. 6. The last type of market impeders is well known 70. 1995. But the phenomenon recurred in Kosovo. 71. 1. What part of the NGO's budget is spent on salaries and 72. 2. Which part of the budget is spent on furthering the aims 73. 3. What portion of the NGOs resources is allocated to 74. 4. What part of the budget is contributed by governments, 75. 5. What do the alleged beneficiaries of the NGO's 76. 6. How many of the NGO's operatives are in the field, 77. 7. Does the NGO own or run commercial enterprises? If it 78. 1. The process and rules of joining up (i.e., the 79. 2. The application and membership procedures are 80. 3. The system alters its membership requirements in

Reading Tips

Use arrow keys to navigate

Press 'N' for next chapter

Press 'P' for previous chapter