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William Andrews

Research Legal Case Analysis

Determining the Proper Legal Decision

The federal government is taking a closer look at big tech and whether some of

the nation's leading technology companies are stifling competition. The House Judiciary

Committee is investigating an antitrust violation on Google, Apple, Amazon and

Facebook. These four companies have seemingly gained power without being unfair. In

particular, Facebook's acquisition of Instagram a few years back. As a result, this gave

consumers a limited number of options between social network companies. Experts say

it would be reasonable for the government to reconsider the merge consider making

Facebook a spin off of Instagram. Big tech companies are in violation of the Sherman

Antitrust Act seeing as many of their services are free for their customers.

Senator Elizabeth Warren argues that Amazon should not be able to run their

marketplace with the amount of traffic the marketplace gets daily. If that were the

standard, it would have a great impact on Amazon. However, it would also be a

significant departure from the way antitrust has worked in America for a long time now.

(Goldstein). Google, Amazon and Facebook are following the same playbook. The tech

giants have "platform privilege"—the incentive and ability to prioritize their own goods

and services over those of competitors that depend on their platforms. By doing so, they

contend they are improving their products and benefiting customers. An entrepreneur

can create a superior product or service and still lose business because Big Tech is
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controlling the game and playing it, too. This distorted playing field strikes at the heart of

the American Dream. And it deprives consumers of the choice, innovation and quality

that comes from competition on the merits. (Hubbard).

In the Jackson vs. Capital Company case, the Capital company was somewhat

giving their services to their customers; the same as Big Tech. The Capital Company

gave their customers “purchaser discounts”. The Capital Company was also gaining

power unfairly and tried to sabotage Jackson Inc. so they had no way to make money,

and debilitated their ability to retaliate. The Capital Company company offered many of

Jackson’s major customers substantial rebates to induce them to eliminate or reduce

their purchases of tape from Jackson, by offering them higher rebates.

The Capital Company acted against the Section 2 of the Sherman Antitrust Act.

The act prohibits monopolies, attempts to form monopolies, and combinations and

conspiracies to do so. In this case, the Capital Company did create monopolies. In the

facts listed, the Capital Company offered higher rebates conditioned on customers

purchasing products from Capital Company, the company offered many of Jackson’s

major customers substantial rebates to induce them to eliminate or reduce their

purchases of tape from Jackson. They had customer-specific target growth rates in

each product line. The size of the rebate was linked to the number of product lines in

which the target was met, and the number of targets met by the buyer was determined

by the rebate it would receive from all of its purchases. These decisions played a part in

the attempt to form illegal monopolies. The Capital Company tried to sabotage and

make sure that Jackson Inc. was unsuccessful as a business.

The Capital Company only made one legal decision throughout this whole case.

Instead of competing offered volume discounts—as opposed to competing by offering

volume discounts, Capital Company’s rebate program offered discounts to certain

customers conditioned on purchases spanning six of the Capital’s diverse product lines.

This is legal, and targeting Jackson’s main purchasers is a way to make sure that

Jackson’s Inc. doesn't make any money.

Yes, Capital Company did violate Section 2 of the Sherman Antitrust Act. The

defendant willfully did not acquire or maintain the power that they had through

“Anticompetitive conduct” as opposed to gaining that power as a consequence of a

superior product or business acumen. Capital Company gained the power that they had

by “stealing” purchasers and manipulating the system with rebates and targeting certain

customers to get them to side with them instead of Jackson Inc.

Investigating the Administrative Agency

The Federal Trade Commission is a private independent agency of the United

States government established through the Federal Trade Commission Act. The

purpose of the Federal Trade Commission is to protect all consumers and people who

are in competition with others in similar markets from wrong doers. The FTC helps

educate consumers and businesses on laws and regulations within ecommerce, as well

as help make the laws and regulations that businesses must abide by in order to remain

free of penalties and lawsuits. The FTC also advocates these rules and policies so that

the general public are aware of what is allowed and what is prohibited in the business.

In the process of assuring that businesses abide by the laws and regulations, the

promotion of competition is allowed by inspiring business owners to learn of the

protections and security available to them. The mission of the Federal Trade

Commission is to provide all consumers and competitors with an equal playing field

when conducting business activity.

The Freedom of Information Act is a law that allows the public the right to request

a federal document that is in the hands of the United States government. The request

does not guarantee that you will be granted access to the document, but the FOIA

allows public users the right to request. As stated on the FTC website, the federal FOIA

does not provide access to records held by state or local government agencies, or by

private businesses or individuals.

The three different bureaus are Bureau of Competition, Bureau of Consumer

Protection, and Bureau of Economics. These three bureaus work together to regulate

the laws and protect against false, and unethical business practices. The Bureau of

Competition responsibility is to assure that businesses in like markets compete on fair

grounds by enforcing antitrust laws. The United States has a free market economy

which means that the economy is based on supply and demand. With a free economy,

there is a need for laws to ensure all competitors act accordingly and ethically.

The antitrust laws are the foundation of our free market economy, and allows

those who participate in the market to understand the do’s and don'ts while conducting

business. The antitrust laws allow consumers to have many options to choose from and

not be forced to buy from one producer. The antitrust laws also allow consumers to

shop low prices and still receive good quality. The Bureau of Consumer Protection is

responsible for protecting consumers against fraudulent practices. This is done through

follow up investigation on companies that have broken the laws.

The Bureau of Consumer Protection also keeps track of companies that have

been sued and any other activity that goes against the laws set for the marketplace to

thrive on fair terms. Businesses in the market have rules and responsibilities that they

must follow in order to stay away from being sued. Also, consumers are educated on

the rules and responsibilities that businesses have to follow so that if they are ever

broken, they would know immediately. The Bureau of Economics responsibility is to

help the FTC keep track of the impact made on the economy. The Bureau of Economics

also provide the courts with analysis to help rule in decisions.

The FTC brings first case against developers of stalking apps. These

applications were designed to gather consumer information through agreement upon

installation. Many consumers had no idea of what they were agreeing to when they

installed these stalker apps and it has led to the FTC demanding the developers of the

apps to take all of their apps down. The developers can no longer sell, promote, or

distribute any apps that require the user to breach their mobile devices security settings.

The FTC also demanded that the developers of the stalker apps delete all information

retained through the apps use. In the final decision the developers were forced to stop

selling these types of apps in 2018 and they are no longer in use. I agree with the

Federal Trade Commission's decision to cease the development of such apps because

there were violating people's privacy without them knowing.

Using Ethical Methods to Resolve the Ethical Dilemmas

The Front of the Newspaper Test

Laura Nash: Religion Offers Value(s) for Business

This model for ethical evaluation is usually used because it can encourage public

officials to consider how their actions may or may not look to the outside world. It is a

method that makes you ask yourself if you would want your current actions on the front

page of a newspaper, or even mentioned in a blog. This test is essentially hoping to

measure your integrity and why it is discussed and evaluated when discussing business

ethics. When handling a business, it is important to keep the reputation in good

standing, and the newspaper test allows for this.

Laura Nash Model

Billionaire Warren Buffett has a ‘simple’ test making tough decisions–here’s how it

works

The Laura Nash Model developed questions to help people working in business

—specifically management positions, reach the assumed correct decision in an ethical

dilemma. The questions Laura Nash asks are: “Have you defined the problem

accurately? How would you define the problem if you stood on the other side of the

fence? How did this situation occur in the first place? What is your intention in making

this decision? How does the intention compare with the probable results? Whom could

your decision or action injure? Can you discuss your decision with the affected parties?

Are you confident that your position will be as valid over a long period of time as it

seems now? Could you discuss your decision with your supervisor, coworkers, officers,

board, friends, and family?” Asking these questions with the Laura Nash Model makes
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room for examining an ongoing ethical dilemma from all perspectives; and in doing so,

defines the problem and its origin to ensure a similar issue won't happen again.

Applying the Ethical Models

After careful review of the fact pattern and ethical models “the Front-Page of the

Newspaper Test” and “the Laura Nash model”, the Capital Company’s actions have

been perceived as unethical and they should not continue giving Jackson’s customers

these rebates. Capital company ended their sale of transparent tape in the early 1990s

and began selling office supplies, the same as Jackson Inc. and several other

companies in the early 1990s. It is not ethical for Capital Company to broaden their

market to all office supplies the same as Jackson’s because Capital Company engages

in unethical competitive acts such as aiming to restrict the availability of lower-priced

transparent tape and preventing other companies like Jackson Inc. from gaining and

maintaining large sale volumes.

“The Front-Page of the Newspaper Test,” ethical model gives more leverage as

to how Capital Company acts unethical in the competitive market by asking the

company to question themselves. How would Capital Company feel if their company

was on the front page of the newspaper, their practices being brought into question?

Not only is that a bad look for the company, it also challenges the company’s

consumers to ask themselves if they want to support a company that acts in such

manner towards competition. The fact pattern uses Jackson Inc. and other related

companies like Walmart, Kmart, Sam’s Club, and Target to emphasize the question

asked by Laura Nash “can you confidently discuss your decision with the affected

party?”. Capital Company Inc. uses competitive antics that harm its neighboring
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organizations in an unethical matter. Laura Nash’s model challenges the company

acting in a harmful way to put themselves in the shoes of the company they are

harming. Capital Company Inc. should ask themselves “if this were happening to me

how would I feel?”. The Capital company uses rebate programs that set customer-

specific targets to lure consumers away from other leading companies that are similar in

practice.

These antics make for a successful company, but in a scheming manner and

reduces a level, competitive playing field. Capital Company Inc. wouldn’t behave this

way if they knew their tactics gave them an advantage, by being misleading and harmful

to companies of a similar nature. The simple fact that Capital Company has several

leading facts and sources that prove their antics to be unethical along with the two

provided ethical models, makes it easier to conclude that their actions are in fact

unethical. There should be a way for Capital company to innovate several ideas that will

better their business for their targeted consumers and leave room for fair competition in

the same field.

References
Goldstein, Jacob. "Big Tech Antitrust" NPR (Jan 9, 2019).
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Hubbard, Sally. "The case for Why Big Tech is violating the Antitrust Laws." CNN (Jan 2, 2019).