There are two different cases which the paper will critically major on. All the cases are concerned with the issues of antitrust legislation and the power it has over matters that affect business. The antitrust regulation ensures that there exists fair competition in the market. They ensure that business with large economic scales doesn't monopolize the markets. This is what is entirely majored on in the two case presented in the paper. In the first instance, market barriers are discussed. Also discussed in the first scenario are the ethical dilemmas in generic completion and reason as per why large companies may want to stymie generic competition. The second case in the paper majors on the current mergers which many businesses have resort. With regards to this, reasons, why consumers’ advocates are so much interested in these issues, are discussed. Also discussed within the second case is the ethical dilemma in the case presented and some of the challenges which the consumers may get when their favorite brand company majors or decide to merge with another. The two cases are comprehensively discussed and analyzed in a manner that is required.
Case 1
Why would the drug maker want to stymie generic competition? Explain.
The first glaring reason for this move is that the company risk losing a lot of cash or profits since as the details indicate, it seems the general cost of the product cost fourth of the original prescription cost. This means that there have been billions of shillings coming as profit in this deal and the company would like to salvage it to the single coin. For instance, the company needs this prescription delayed even for some few months since this would make them make billions of profits from the drug. Another possible reason for the delay would be regarding the drug introduction cost into the market. It is often costly to have a certain type of drug introduced into the market (Healey, 2008). For this reason, the company may have cashed a lot of money on this project, and they need it to succeed and recoup the money spent during its introduction. This may be the reason why it may be delaying the project to buy more time for them to get back the intuition introduction capital. Looking at this issue from the general completion point of view makes it even attractive. They have limited upfront in this case. The competitor will be free to isolate formula and have the drug re-created without the cost that the company needs to pay out. In case they stymie this right, the product will take long for the manufacture to turn, and importantly, the original investment may be recovered from the current drug users. Other reasons would be regarding the entire fall in the profits for the company in case they suddenly stop the primary source of boom revenue.
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What types of legal barriers to market entry exist?
Pharmaceutical industry often has three legal obstacles. The first one is the brand loyalty. This is the degree to which the patients love the product. Brand loyalty is not a factor which can be ruled out overnight. In this industry, it is often challenging to have a company secure the much-needed customer loyalty. Another legal barrier to the market entry in this industry is to have the right for a particular ingredient or drug granted to the company. For instance, the company can legally stymie generic completion by having a major retailer's contracts bought to make sure that such products hold revenue from other businesses. The last barrier is the patent antidepressant drug for almost seven to ten years. This makes sure that no other company other than the patent company can get revenue from the said drug.
What are the possible ethical dilemmas that are present in this example?
The first ethical dilemma in my perception is that those people who can only afford low-cost drugs are not considered in this case. In this case, the generic competition in the markets is being cut off by such like companies; this ensures that the only drug available in the market is costly and can only afford by those who are financially stable. This forces those who have financial issues to go without buying such kind of medication. The ethical dilemma in this case, therefore, is on the side of the consumers who are using this drug. Another possible difficulty is on the edge of the company which uses its power to diminish the fair competition in the market. This act is not good to other businesses that also compete on the same business sphere.
Case 2
Why do you think consumer advocates have expressed concern over such merger possibilities?
One reason or issue which is crystal Clare and faces the customers as result of this merging is the reduced number of options when they are buying the products or service. A variety of the companies producing similar services in the market is very critical to the consumers. They provide an option for them regarding the services or products quality, quantity and even pricing. However, when such companies come together as one, the operations are harmonized into one; there are no options for the consumers to choose. This might be one reason why the consumers are concerned in this case. Another possibility for the concern is the cost hijacking. When two companies which have a strong brand in the market come together, there is the possibility of them resulting in one huge investment which may dominate the entire industry (Lane, 2011). This also means that other is a glaring possibility of this industry to have the market cost under control and they can manipulate it as much as it suits them. This may stem from many factors, for instance, the two companies due to their large economies of scale can decide to buy or have a contract with some sources of the raw material or important recipe or ingredient in the industry, and this may automatically cut off the small business in the same industry. This gives them opportunities to control the entire market and use it to their benefits which may hurt consumers economically.
Other than pricing, what are some pitfalls that consumers might have to deal with when two major companies merge?
It is undebatable fact that the major worry of the consumers when two brands come together in an industry is pricing. However, there are other obstacles which may affect the customers in case there is merging between two influential companies. The first pitfall is the inadequacy of the options in the market. The population of the companies or their demography within the industry is crucial for the consumers. It provides them with varieties which they choose from. However, in case two or three of these companies come together, the whole demography of the enterprises in the industry is reduced. This creates shortages and inadequacy of options to the consumers (Huffman, 2014).Another fact is that the consumers may get less quality or quantity or unreliable services in case a scenario could the industry monster are created by the merging companies. The merging companies often create a powerful force which dominates the entire market. This makes them trounce over small or other industries in the market and bring about monopoly. Trust companies often discriminate consumers regarding quality, quantity and reliability.
What are the possible ethical dilemmas that are present in this example?
The first moral dilemma which is crystal clear in this case is that there could be the possibility of displeasure from the contract signed. For instance, the merge forces the consumers to have limited options in the telecommunication market. Ethically, the users need to have options to choose from; mostly from the company they think offers affordable and quality services. Merging is done by the two companies to control the market so that they have the upper hand regarding economies of scale in the industry. It means that the consumer side is not given attention as the contract is signed. This is unethical (Peralta, 2011). Alternatively, the merging of the two companies has the possibility of adverse effects on the telecommunication products pricing in the market. This is intentionally done for specific businesses to have the upper hand and diminish others. This makes this contract unethical to the competitors and the consumers.
Conclusions
This paper has presented two cases which have majorly made the benefits of the antitrust laws glaring. This law is out to make sure that there is fair competition in the market. For instance, it ensures that there is no monopoly in pharmaceutical market to ensure that drug price is affordable by all. Alternatively, it provides that merging is done fairly to control the companies which merge with the intention of monopolizing the market.
References
Healey, M. (2008). Drug makers try to stall generics. Retrieved from http://articles.latimes.com/
Huffman, M. (2014).AT&T and T-Mobile Acquisition. T-Mobile's consumer-friendly strategy ignites sales. Retrieved from http://www.consumeraffairs.com/att-and-t-mobile-acquisition
Lane, S. (2011). US government files an antitrust suit to block AT&T purchase of T-Mobile. antitrust_suit_to_block_att_purchase_of_t_mobile
Peralta, E. (2011). Would AT&T Merger With T-Mobile Hurt Consumers? Retrieved from http://www.npr.org/blogs/thetwo-way/2011/08/31/140089442/would-an-at-t-t-mobile-merger-hurt-consumers Retrieved from http://appleinsider.com/articles/11/08/31/us_government_files_1997/oct/22/news/mn-45455
