Ge Case Analysis

Collusion is the act of a number of firms within an industry agreeing to set a certain price, output or another parameter and is almost always against the law. This is as they all compete in the given industry, with the setting of prices or outputs done in favour of the

The decisions or strategies one company chooses will likely motivate other competitors to respond. Using the game theory allows a company to assess and understand more about itself and its competitors so that it can adjust and shape the competition to maximize its win probability (Johnson, 2014). Some examples of how A&D companies apply the game theory in their decision making are:

Monopolies and oligopolies often use anti-competitive practices, which can have a negative impact on the economy. This is why company mergers are often examined closely by government regulators to avoid reducing competition in an industry.

There are different types of businesses, for example, some use monopolies, trust and pools, while other eliminate competition for higher prices. As stated in “Progressive reformers regarded regulation as a cure for all sorts of socioeconomic and political problems” , “The Sherman Act of 1890 attempted to outlaw the restriction of competition by large companies that co-operated with rivals to fix outputs, prices, and market shares, initially through pools and later through trusts” , meaning, competition is the

The cause of the tensions has been traced to the objectives of both the laws. In definition, IPR gives the owners an exclusive right to behave in a particular way, when competition law does everything in its power to keep the markets open. So then tension rises at which point does IPR become harmful and competition law should intervene and override IPR?

The antitrust laws are the basis of this national policy. These laws, enforced by both the federal and state governments, require companies to compete in the marketplace. The Sherman Act, the first federal "antitrust law," was enacted in 1890, at a time when there was enormous concern about "trusts" -- combinations of companies that were able to control entire industries. Since then, other laws have been enacted to supplement the Sherman Act, including the Federal Trade Commission Act and the Clayton Act (1914). With some revisions, these laws still are in effect today. They have the same basic objective: making sure there are strong economic incentives for businesses to operate efficiently, keep prices down, and keep quality up.

Unknowingly, Antitrust began a cycle of Rule of Reason, which is the Lax Enforcement, and the Per Se Rule, which is the tight enforcement (Boyes 2013, p 249). Litigation of the Antirust law was not frequent, and that’s because between the years of passage 1890 and 1914, only seven cases were tried by the Supreme Court, in which they broke up monopolized companies like Northern Securities, and Standard Oil Co. of New Jersey; but also allowed the formation of major league baseball. This period of Lax Enforcement ended with the passage of the Clayton Antitrust Act and the Federal Trade Commission Act, and ushered in Per Se Rule. The changes to Antitrust laws gave a more clear definition to the law by guide lining the prohibitions of price discrimination, the creations of barriers to enter a market, outlaws mergers deemed unfair, and imbalanced methods of business; the Federal Trade Commission was also allowed to investigate into these practices. Since 1941, the FTC and it parent division, the Justice Department, had filed over 2,800 cases related to Antitrust, but it is the private sector that had an exponential amount lawsuits filed. Between the passage of these two laws and the Supreme Court Justice William Douglas, who prized the laws, any inkling of proof that a business could be monopolizing or engaging in unfair business practices, almost always lead to a guilty verdict that mostly results in a heavy fine, and in extreme

Oligopolies have been around ever since there is trade. However, it has only recently gained grounds in this age of globalisation. Never before has oligopolistic competition been so fiercely contested across so many industries.

Antitrust investigation is of considerable importance because it is utilized in the establishments of mergers, partnerships, acquisitions and other business takeovers/partnerships which when completed might result to an antitrust violation. These laws serve to prohibit services designed to restrain trade and commercial progress such as a monopoly structured market. Monopoly structured market is when there is a single provided product with no close substitutions. As opposed, to a monopoly, a pure competition market is an aspect in which multiple companies offer identical or close to the same products, which will compete with price and quality, and in some case costumer service. Additionally in contrast, oligopoly is a market structure where there are a few firms producing all or most of the market supply of a particular good or service and whose decisions about the industry's output can affect competitors. Oligopolies firms tend to charge reasonably premium prices but they compete through advertising and other promotional means. Simultaneously, possessing an array of market structures safeguard the consumption of basic products and services as supplied by the business community to the rest of the human populace. “When P = MC, society cannot gain by producing 1 more or 1 less unit of the product. In contrast, a monopolist maximizes profit by producing the lower output level at which marginal revenue (rather than price) equals marginal cost. At this MR = MC point, price exceeds marginal cost, meaning that society would obtain more benefit than it would incur cost by producing extra units” (McConnell, Brue, and Flynn, 2012, p.375). Unlike most companies, Google has cornered its market and does not have to contemplate the high barriers to entry or costs. However, these

The CJEU held that Mr. McFadden, despite the fact that the he offered the WiFi service free of charge , was protected under the E-Commerce Directive and could avail of the “mere conduit” defence as a provider of an “information society service”

Similarly, anti-competition issues have been the primary concern of national competition authorities, and they have been involved in antitrust restrictions on firms (Commission of the European Communities 2004). Traditionally, competition authorities have focused on how to detect anti-competitive activities of firms such as price fixing, bid rigging, and other forms of collusion. Nicklisch (2012) reported that the enforcement of antitrust legislation has been regarded as an important issue in the European Union. Likewise, the US Justice Department accused nine auto parts makers (FBI 2013). Anti-competitive attempts of firms are subject to such criminal prosecution as they can have enormous negative effect in the economy and can last for more

When companies are making decisions, the companies do not worry about how the rivals will react, in part to each company’s actions are unlikely to affect its rivals to a great extent hence they are independent. In addition, there is perfect knowledge in the market hence new companies have the freedom to enter into the industry. The companies are also profit maximizers, producing output where marginal revenue equals marginal cost; the profit maximising condition. Companies in a

United Beverages’ CEO is debating with his department heads on the course of action the company is going to take in the future. Their flagship product, GangBuster, has been highly successful for the past 5 years. However, they have been thinking of entering the market for Energy Drinks for kids. Paul Diaz also comes up with a revolutionary idea of the dual-drink, having two separate flavored drinks in a bottle and being able to mix both flavors. Due to the limited resources of United Beverages, they have two weeks to decide whether to expand their portfolio or not?

In this market, AT&T may be forced to use restrictive trade practices to increase their services prices and restrict their production (Sjögren and Vifell, 2014). The organization may also in many instances collide with other organizations in the same industry in an attempt to stabilize an unstable market.

To mitigate the ‘Rivalry among Existing Competitors’, GE’s focused on bringing new capacity and was still able to produce pressure on prices; mitigating negative price competition. As Porter mentioned: “Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly form an industry to its customers.