Certain rules and regulations related to the commercial domain - Essay Example

?Business Law The notion of business law started to evolve with the beginning of human society. Law has been viewed as the precondition for the existence of society. The notion of law has been in its primitive form has been the use of brute power. In this form one individual controls all other individuals with his power and strengths (Emerson, 2009, p.3). In modern society law has been described as ‘the rule that the society will enforce’. The notion of law has been used by several aspects like economic activities, such as production and consumption, social activities, such as social integration and relationship, but the most important aspect is related to the business or the commercial activities. In this context the notion of business law has been used. Business law or commercial law is the organisation of law that administers business and commercial transactions (Moye, 2004, p.1). This paper is aimed at discussing different business laws and laws and to relate these laws and regulations with the global business or commercial contexts. Case 1: 1. What is the role of the Commission? The role of the competition commission where the person is working can be described by the Competition Act that has been introduced in 1998 under the UK law act. The competition commission is a member body of the ‘competition and regulatory responsibilities under UK law’. The competition commission is part of the competition law of the UK. The competition commission is public body that is characterised as a non-departmental organisation. The commission was started as an independent body by the act of 1998 by replacing the ‘Monopolies and Mergers Commission’ on 1999. The commission is aimed at conducting in-detail investigations into: Mergers (which are either anticipated or completed), Markets (which is related to the scale monopolies and monopoly practices) Regulations (including price regulations and industry regulations etc.). These are the major roles of the commission where the person works as a trainee. The role of the commission is to investigate those above mentioned practices and activities and to refer these investigations to the Office of Fair Trade (OFT). The commission cannot initiate any investigation unless it receives reference by another authority. The commission is responsible for taking decisions regarding the mergers and market and for providing remedial measures to industries. These remedial measures are related to the adverse effects which are or can be obtained by mergers and consumers or producers in the market. After completing its investigation the commission produces a report regarding the investigation and its associated results and submits this to the concerned authority and hence, provides remedial measures or decisions (Competition Commission: General Advice and Information, 2006, p.7). The commission conducted a study on “Public Enterprises, Government Policy and Impact on Competition: Indian Petroleum Industry” on reference by Indicus Analytics Pvt. Ltd. The objective of the study was to examine the nature of competition in Petroleum Refining. The study showed that there is monopoly in the domestic market and suggested that to introduce competition in the market, it is necessary to lift restrictions on imports (Public Enterprises, Government Policy and Impact on Competition: Indian Petroleum Industry, 2009) Under the Competition Act 1998, 50 public schools were fined for fee fixing by OFT. These schools include Eton and Harrow. Each school was ordered to pay a fine of ? 10000. Around 40000 students who attended between 2001 and 2004 were supposed to beneficiaries (Smithers, 2006). 2. What are monopolies, mergers and cartels? Monopolies, mergers and cartels are the form of economic organisations where one or very few producers produce homogeneous products. A monopoly is defined as the market structure where only one producer or firm produces and supplies a particular product to all the customers of that product. In the UK market for postal service, the Royal Mail had a 350 year old monopoly. In 2006, the market was liberalized to allow the entry of other operators. (Nicholson and Snyder, 2008, p.491). The process of joining of two separate firms into one firm or business organisation is known as merger. In September 2009, Deutsche Telecom’s T-Mobile and France telecom’s Orange merged to create a new telecommunications firm in UK’s telecom market. (Office of Fair Trading Monopolies, Mergers and Restrictive Practices, n.d., p.2). Finally cartel represents a form of restrictive business practices where very few (two or three) competing firms or business organisations forms an agreement regarding the price, marketing and production decisions and restricts competition from other firms which produce identical products. Organization of Petroleum Exporting Countries (OPEC) is an international example of these restrictive trade and business practices (Huschelrath, 2008, p.53). The main feature of monopolies, mergers and cartels is that these practices reduce the level of competition by restricting the sources which supply homogeneous products which they supply and also raises market prices of those products and reduce choices of consumers on these products (Office of Fair Trading Monopolies, Mergers and Restrictive Practices, n.d., p.2; Djolov, 2006, p.20). 3. What do we mean by agreements/ collusions? What do we mean by undertakings? An agreement is set of terms and conditions that administer the relationship between the parties involved into the agreement – either both producers and consumers or two or more producers. An agreement is completely different from an order in the sense that an order signifies only a short-term relationship between the parties involved, whereas an agreement signifies a long-run relationship between parties (Silverston, 2011, p.145). In business law collusion is defined as an agreement between the firms or business organisations in order to reduce the degree of competition from other firms or business organisations and to be engaged in fraud and deceive activities (Folsom and Boulware, 2004, p.72). Although any type of formal or informal collusion is illegal in UK, in recent past several collusions have been found in the country. One important case study among them was the “vitamin cartel” which was formed in 2000 among 13 British companies to distort the market1. The Court of Justice fined these companies more than € 855 million for making this collusive agreement. The companies involved charged high prices for various vitamin products. This caused damage to the consumers while the companies gained huge profits (Jones, 2004, p.191). Undertakings are mainly binding agreements which are created by the mergers or regulators ‘according to which the parties to the merger agree to take certain actions in consideration to the inaction by the regulators’ (Rossini, 1998, p.1). One example of solicitor’s undertaking is Manu Chhotubhai Bhanabhai & Douglas Mark Andrew Burgess v The Commissioner of Inland Revenue2 (2006). The defendants Bhanabhai and Burgess were barristers and solicitors two companies, Nautilus Developments Limited and Golden Gate Holdings Limited. Both these were construction companies and were involved in the construction of residential apartments in Houbson Street, Auckland. The companies were liable to pay GST. There was an error of understanding that the tax was payable after settlement of sales. According to the decision made by the High Court it was declared that there was breach of undertaking agreement by Bhanabhai and his company was to pay an amount as compensation. (Manu Chhotubhai Bhanabhai & Douglas Mark Andrew Burgess v The Commissioner of Inland Revenue, 2006) 4. What do we mean by decision of association of undertakings? The Decision of Association of Undertaking can be defined as the decision which has been initiated by an appendage of an organisation or association that has the legal personality or even that has defected personality. The Decision of Association of Undertakings is perceived to be binding by members of that organization or association. In the event of the merger between T-Mobile and Orange in the UK Telecommunications3 market, both the companies promised to undertake certain obligatory actions under its new identity (Vogelaar, 2000, p.25). 5. What do we mean by concerted practices - see wood pulp case as well as ICI case to compare and contrast? Concerted practices are those business practices where the firms or business organisations raise or reduce prices of goods and services which they produce without having any proper physical agreement to do so. These practices create adverse effects on the purchasing power of the consumers (Bullesbach, 2010, p.611). Forty-one non-EC producers of wood pulp, one US and one Finnish non-EC trade associations have been fined by the European Court of Justice for engaging in concerted practices of fixing the price of the wood pulp4. The fines were imposed because the producers and the trade associations violated the terms and conditions of Article 85(1) of the EEC treaty. (Vollmar and Sandage, 1989, p.721). But after the decision of increasing price of dyestuff by the ICI, the European Court of Justice ordered further investigation, although ICI has claimed that the price hike was an outcome of oligopolistic market where all the other firms have raised their prices of this product. ICI has increased its price to earn more profits from the price hike. The European Court of Justice took ten years to take an action against ICI5 (Topcuoglu, 2006, p.30). 6. What do we mean by ‘which may affect trade between member states’? Trade between states may be affected by economic as well as social and political factors concerning these states. The economic factors responsible for affecting trade are related to the growth of the economies, types of goods and services produced by these states, prices of these goods and services, economic policies taken by the economic policymakers of these states etc. The social factors are choices of consumers of these states who are the participants of trade practices. The political factors include nature of political relationship between these states. These aspects are also true for the member states of the European Union. In case of trading exchanges between UK and France, the political, economic as well as social factors of both the nations would influence the trade between the States (Moens, 2002, p.172). 7. What do we mean by ‘object or effect of the prevention, restriction or distortion of competition? There are several effects of prevention, restriction or distortion of competition. The words prevention, restriction and destruction are interchangeably used. The terms of the agreement between the parties, the legal and economic contexts of use of those agreements and the conducted behaviour of these parties are the objects which need to be restricted. These objects or effects are expected to affect the trade relations between the parties at large and also are expected to affect the prices of goods and services which are to be traded. These objects, if not prevented, can destroy competition and adversely affect economic agents by reducing their choice and purposing power. Till 2006, UK’s market for postal service was protected from the entry of other firms. The Royal Mail held a monopoly over the marker over three centuries. These restrictive regulations distorted the presence of competition in the postal service market (Jones and Moens, 2009, p.87). 8. What do we mean by dominant position case examples? Dominant position is described as the business practice where one or few business undertakings or associations hold the exclusive right of a product regarding its sales and delivery decisions. In the case of abuse of dominant undertaking the firm or business undertaking refuses to supply the product to the market. One example includes Commercial Solvents6, a medical company that refused to supply aminobutanol, ‘an essential drug for treatment of tuberculosis to an Italian medical company Zoja’ (Abuse of dominant position, 2011, p.1). Case 2: 1. What do we mean by intellectual property? Give at least 2 examples of different types of Intellectual property in a business environment? Intellectual property is a creation of mind which involves ‘inventions, literacy and artistic works, different names, symbols and images’ that are used in commerce. The notion of intellectual property is divided into two categories: industrial property and copyright. ‘Patents for inventions, trademarks, industrial designs and geographical indications’ are part of the industrial property (What is Intellectual Property, n.d., p.2). Patent is an exclusive right given to the inventor who invents a product or process that gives a new method of doing any task or that provides ‘a new technical solution to a problem’. In UK patents are provided by the national patent offices, like the European Patent Office (EPO) or by regional offices, like the African Intellectual Property Organization (OAPI) (What is Intellectual Property, n.d., p.5). An UK based company called NewVoiceMedia holds patent for executing caller data and search queries with the use of ‘Internet data repositories and external resources like Google’ (Schelmetic, 2012, p.1). Copyrights include works by a person or a group of person regarding literary works (like poems, novels etc.), artistic works (like drawings, photographs etc.), music, films and architectural designs (What is Intellectual Property, n.d., p.2). Example of industrial property includes property right of the Microsoft Company to produce computer application softwares like MS Office (What is Intellectual Property, n.d., p.5). Example of another industrial property right includes the property right of the American Publishing company Pearson to publish the book named as Microeconomics: The bibliography of Africa: proceedings and papers, written by James Douglas Pearson and Ruth Jones, published in 1970 by Pearson Publications, USA (What is Intellectual Property, n.d., p.6). One example of copyright infringement case in the music industry is the Michael Bolton vs the Isley Brothers (1991)7. A song called “Love is a wonderful thing” was released by the Isley Brothers in 1966. Another song with similar name was released by Bolton in 1991. The Isley brothers sued a case against Bolton for plagiarizing parts of their song. The case was won by the Isley brothers and they ended up with a reward of 5.4 million dollars. (Michael Bolton vs the Isley Brothers, 1991) Another example of copyright infringement case is the Feist Publications vs Rural Tele Services Co.8 (1996). Feist Publications used a particular format for publishing phone numbers of people in their dictionary. Rural Tele Services used the same format in their directory. Feist Publications sued a case against Rural Tele Services for copyright infringement. However, Rural Tele Services won the case because the court did not grant it as copyright infringement because the phone numbers were arranged in a simple format. (Feist Publications vs Rural Tele Services Co., 1996) 2. Which bodies enforce protective legislation in this area? OFT or the Office of Fair Trade is mostly responsible for enforcing protective legislation in the area of intellectual property rights. The OFT sets ups links and coordination between all the parties who are included under the enforcing authority of intellectual property rights. The OFT is responsible to set formal memorandum to create the coordination or arrange the enforcement between it and all enforcers of UK (Enforcement of consumer protection legislation: Guidance on Part 8 of the Enterprise Act, 2003, p.6). Among other enforceable authorities the important ones are ‘the Trading Standards Service in Great Britain and the Department of Enterprise, Trade and Investment in Northern Ireland (DETI)’. When the South Staffordshire Plc acquired the Cambridge Water Plc. the OFT referred the case to the Competition Commission for further investigation. (Enforcement of consumer protection legislation: Guidance on Part 8 of the Enterprise Act, 2003, p.5). Case 3: 1. Discuss which area of law this collage could be protected under? The collage can be protected under the laws of Intellectual property Rights of the United Kingdom. The Art Historian had collected rare pieces of art and cultural objects for a forthcoming exhibition scheduled to be held during Easter. Harpers had acquired the exclusive right of photography of the exhibition. He had arranged his art collection in an exquisite manner to be photographed by Harpers, which would serve as the advertisement posters for the Easter exhibition. This was considered to be a collage of his live artwork. The Historian had showed this collage to a few of his selected invitees in a party. Unfortunately, the freelancing photographer had captured some pictures of the collage without seeking the prior permission of the Historian. In this case, the Art Historian can ask the photographer to surrender these photographs to him, on account of the existing legislation (Intellectual Property Rights – Overview, 2007, pp.3-5). The Intellectual Property Right Law of UK entitles the property owners to the exclusive right of their properties. Under this law, only the Art Historian was entitled to the exclusive rights of the Collage since he himself had accumulated the rare art items. The law further provided him with the right of using the art collection for any purpose which he desired. This law restricts the unauthorized use of the collage. Under such a situation, it was illegal on the part of the photographer to capture the pictures of the artwork collage without the permission of the Historian. The Historian can always claim an exclusive right to the collage on account of the Intellectual Property Rights. Further, the Historian could also own a ‘property license’ regarding his art collage. This license is a formal document enumerating his exclusive rights on his ‘work’. In such a case, the photographer can never claim a legal right to the photographs of this artwork. Following UK’s Intellectual Property Rights, the Historian can always establish his exclusive authority over the collage and its photographs. (What is Intellectual Property, n.d., p.18). 2. Discuss how and when a person can be sued for breach. Check case law? In the above case, the Art Historian can sue the freelance photographer for capturing the pictures of his artwork collage without securing his permission. Under UK’s Case Law, the creator of owner of a property has the exclusive right on ownership over that property and can use it for any purpose that he/she wishes. The Law further states that it is only the property owner who can transfer the different rights to any individual or organization of his choice. The Art Historian had appointed Harpers as the exclusive photographers of his upcoming Easter exhibition. Therefore, only Harpers had the authority to photograph the Historian’s artwork and publish them in the media. If the magazine decided to publish the freelance photographer’s pictures of the Historian’s artwork collage, it could be sued by the Art Historian. The historian could lodge a case against the Manager of the magazine as well as the freelance photographer in the UK Courts of Justice for violating a number of laws such as the Intellectual Property Rights, the Law of Confidentiality and so on. Under the Intellectual Property Rights Law, the Art Historian had the sole and exclusive right over his artwork collage. He had designated Harpers as the exclusive photographer for his exhibition. In such a case, he can always sue the Magazine editor and the photographer for the infringement of his authority and the rights of the Harpers. Under the Law of Confidentiality, the Art Historian can claim to have a confidential right to all information regarding the artwork collage, which could not be made public without his notification. He can bring a case against the Manager and the freelance photographer for leaking the photographs of his collage without seeking his prior permission (Bailey, 2005, p.505). Self Evaluation The above assignment comprised of undertaking a research in Business Law. It provided an opportunity of getting familiar with certain rules and regulations related to the commercial domain. It is always ideal for business organizations to operate in a perfectly competitive environment. This is considered to be the perfect business scenario where the producers and the consumers have no influence on the market price. However, in reality firms have been found to function under different market formations such as monopoly, oligopoly, monopolistic competition etc which are actually deviations from the perfectly competitive setting. The Competition Commission in United Kingdom supervises the operations of the business firms under these different market settings. During the course of this assignment, one had the chance of knowing in detail about the responsibilities of the Commission and the actual implementation of those duties. The Competition Commission undertakes the vital function of regulating the market activities in UK’s business sphere. The assignment also provided an opportunity to gain knowledge about some modern business formations such monopolies, mergers, cartels, collusions and so on. In the modern world, business corporations are engaged in fierce competition against each other in expanding their respective business to the maximum possible limits. In many cases, firms are found to form collaborations among themselves to operate as a single unit and drive out all other competition in the market. However, there are certain laws governing the formation of these collaborations. This work was an ideal opportunity to study the circumstances leading to the creation of different collusions among firms and the legislation in this area. It also provided the opportunity of evaluating the historical cases of such mergers and cartels in UK’s economy. In the second part, the assignment dealt with the study of intellectual property rights in the UK. This proved to be an interesting area of research. Usually one is familiar with the various tangible assets that we come across in our daily lives and the different laws governing the ownership of these assets. However, there are also some intangible assets like the products of the creative mind such as inventions, literacy and artistic works, different names, symbols and images used in business and so on. These are also considered to be form of asset and are known as the intellectual property of their respective creators. This assignment provided an opportunity of studying the legislation protecting the ownership and copyright of these intellectual assets. The third part of the assignment proved to be the most engaging of all. The paper quoted a case study and asked the researchers to apply the principle of the necessary business laws to the situations of the case. This adequately tested the knowledge of the Business laws and their subsequent application in real life circumstances. The incident narrated a case of violation of the intellectual property rights. It was quite challenging to identify the correct laws applicable to the case and then evaluate their implications under the present circumstances. The Case Study proved to be a real eye-opener in the overall theoretical assignment. This underlined that fact that in the real world, theory has to always be accompanied by practical examples to arrive at the best results. References: 1. Abuse of dominant position, (2011), Finnish Competition Authority, available at: http://www.kilpailuvirasto.fi/cgi-bin/english.cgi?luku=antitrust%2Fabuse-of-dominant-position&sivu=abuse-of-dominant-position (accessed on January 13, 2012) 2. Bailey, L. (2005), Cases, materials and commentary on administrative law, UK: Sweet & Maxwell 3. Bullesbach, A. (2010), Concise European IT law, Netherlands: Kluwer Law International 4. Competition Commission: General Advice and Information, (2006), Competition Commission UK, available at: http://www.competition-commission.org.uk/rep_pub/rules_and_guide/pdf/cc4.pdf (accessed on January 13, 2012) 5. Djolov, G. (2006), The economics of competition: the race to monopoly, London: Routledge 6. Emerson, R. W. (2009), Business Law, New York: Barron’s Educational Series 7. Enforcement of consumer protection legislation: Guidance on Part 8 of the Enterprise Act, (2003), Office of Fair Trading, available at: http://www.oft.gov.uk/shared_oft/business_leaflets/enterprise_act/oft512.pdf (accessed on January 13, 2012) 8. Folsom, W. D. and Boulware, R. (2004), Encyclopedia of American business, New York: Infobase publishing 9. Huschelrath, K. (2008), Competition Policy Analysis: An Integrated Approach, Heidelberg: Springer 10. Intellectual Property Rights – Overview, (2007), JISC Legal Information, available at: http://www.jisclegal.ac.uk/Portals/12/Documents/PDFs/IPROverview.pdf (accessed on January 13, 2012) 11. Jones, T. (2004), Business economics and managerial decision making, UK: Wiley Publishers 12. Jones, R. and Moens G. (2009), International Trade and Business Law Review, UK: Taylor & Francis 13. Moens, G. (2002), International Trade and Business Law Annual, London: Routledge 14. Moye, J. E. (2004), The law of business organizations, USA: Cengage Learning 15. Nicholson, W. and Snyder, C. (2008), Microeconomic theory: basic principles and extensions, USA: Cengage Learning 16. Office of Fair Trading Monopolies, Mergers and Restrictive Practices, (n.d.), Office of Fair Trading, UK, available at: http://www.thetimes100.co.uk/case_study.php?cID=32&csID=125 (accessed on January 13, 2012) 17. Rossini, C. (1998), English as a legal language, UK: Martinus Nijhoff Publishers 18. Schelmetic, T. (2012), UK Company Granted Patent for Technology That Pulls Social Media Data into Contact Center, Contact Center Solutions Featured Article, available at: http://callcenterinfo.tmcnet.com/Analysis/articles/251953-uk-company-granted-patent-technology-that-pulls-social.htm (accessed on January 18, 2012) 19. Silverston, L. (2011), The Data Model Resource Book: A Library of Universal Data Models for All Enterprises, USA: John Wiley & Sons 20. Smithers, R. (2006), Slap on wrist for Public Schools in fees cartel, The Guardian, available at: http://www.guardian.co.uk/uk/2006/feb/27/schools.publicschools (accessed on March 6, 2012) 21. Topcuoglu, M. (2006), The Concept of Concerted Practice and Its Scope from the Perspective of Turkish and European Competition Law, Review of International Law and Politics, Vol. 2, No. 5, pp.30-49, available at: http://www.turkishweekly.net/article/166/the-concept-of-concerted-practice-and-its-scope-from-the-perspective-of-turkish-and-european-competition-law.html (accessed on January 13, 2012) 22. Vogelaar, F. O. W. (2000), Competition law in the EU, its member states and Switzerland, Netherlands: Kluwer 23. Vollmar, A. N. and Sandage, J. B. (1989), The Wood Pulp Case, Heinonline, available at: http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/intlyr23&div=53&id=&page= (accessed on January 13, 2012) 24. What is Intellectual Property, (n.d.), World intellectual property organisation, available at: http://www.wipo.int/freepublications/en/intproperty/450/wipo_pub_450.pdf (accessed on January 13, 2012) Case Studies :- 1. Public Enterprises, Government Policy and Impact on Competition: Indian Petroleum Industry, January, 2009, CCI, http://www.cci.gov.in/index.php?option=com_content&task=view&id=140 2. Michael Bolton vs the Isley Brothers (1991), fairwagelawyers, http://www.fairwagelawyers.com/most-famous-music-copyright-infringment.html 3. Feist Publications vs Rural Tele Services Co. (1996), brighthub, http://www.brighthub.com/office/entrepreneurs/articles/74022.aspx 4. Manu Chhotubhai Bhanabhai & Douglas Mark Andrew Burgess v The Commissioner of Inland Revenue (2006), IRD, http://www.ird.govt.nz/technical-tax/case-notes/2006/cn-20061220-solicitors-undertaking.html Cases: Manu Chhotubhai Bhanabhai & Douglas Mark Andrew Burgess v The Commissioner of Inland Revenue (GST Act 1985) Michael Bolton vs the Isley Brothers (1991) F.3d 477 (9th Cir.2000) Vitamin Cartel v. EC (2000) T-Mobile & O2 v Ofcom [2008] EWCA Civ 1373: jurisdiction of CAT Re Wood Pulp Cartel: A. Ahlstrom Oy and Others v. E.C. Commission ICI vs. EU (Case T-36/91) Case C-6-7/73 Commercial Solvents v Commission [1974] Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991) Read More