The Influence of Law in Business Practice
Intro to Business & Technology
March 23, 2014

The Influence of Law in Business Practice

There are several laws in the United States that are meant to set a standard for fair, balanced, and competitive business practices. These are, by design, a way to ensure that trade- international as well as domestic- is done in a reputable and progressive fashion. There are many aspects that come in to scrutiny in considering whether a business is operating in a way that is fair: one view on this subject I found was related to The Eagle and The Condor Theory. “There is no universally recognized definition of Fair Trade, but its principles and practices include fair wages, cooperative workplaces, consumer education, environmental sustainability, direct trade with producers, financial and technical support for producers, community development, respect for cultural identity, and public accountability through transparency.” (Stenzel, 2012). Related to this description of fair trade, there are laws in the U.S. that aim to regulate business. One such law is the Federal Trade Commission Act of 1914.
The Federal Trade Commission Act of 1914 was set up to prevent unfair competition among businesses. It also allowed for a Commission (The FTC, or Federal Trade Commission) to be formed to regulate businesses and enforce the Act, which oversees many different things- from false advertising to false claims related to where a product is made. The Act additionally allows for the Federal Trade Commission to conduct investigations and to report any such indiscretions to Congress. (www.ftc.gov). While I agree that such regulations are needed to keep an open and free marketplace, I can understand both the positive and negative aspects of such interference in the business world.
A big part of the FTC Act is monitoring false claims made by businesses, such as claiming “made in the U.S.A.” when that isn’t true. The Federal Trade Commission sets a standard for what would qualify a product to be marketed under the pretense that it is made in the U.S.A., which would make purchasing the product more likely based on such a claim. The Federal Trade Commission is also responsible for monitoring claims of false advertising. An example would be when a company advertises an item at a sale price, and then upon going to purchase the item, has a different price marked. We do need protection from things like this to prevent a business from taking advantage of consumers. Without regulation from a commission like the Federal Trade Commission, we would be powerless in the marketplace when we come across situations like these. The Federal Trade Commission is also responsible for ensuring competitive and fair marketing, so as not to allow a big business to bully smaller companies. This would be similar to a major retail store purchasing the exclusive right to sell a product. That would give to store free reign over what to charge consumers for the product. With the product not available anywhere else, there is no competition among retailers so consumers are forced to pay whatever price is set by the store. Another way businesses are regulated so they are fair is by not allowing price gouging to push a smaller company out of business. Price gouging would be like a company buying such a large quantity of an item that there isn’t a fair amount left for other companies to purchase, and then lowering the price indefinitely to a below-cost rate, making it impossible for any other company to sell any of the item. Things like this make it important to have a commission in place to provide protection against such things. Without protection, smaller businesses couldn’t enter in to or survive in any type of market. Some businesses are opposed to the supervision and regulations put in place. A lot of companies are faced with problems related to this- just because a company is doing well, this shouldn’t prompt an expensive and intrusive investigation that can result in bad publicity. There is opposition as to what all the Federal Trade Commission should be allowed to make laws to regulate. A current example of opposition to this would be the current debate over how long internet purchase logs should be able to be kept by a company. The Federal Trade Commission says these records are not necessary and keeping them could be a risk for consumers, while businesses maintain that keeping the records is cheaper than destroying them and also helpful for marketing purposes, similar to how a grocer remembers things like lettuce sells well in a certain month. I believe the laws the United States has in place to regulate fair and balanced trade are necessary and a good practice. Acts such as the Federal Trade Commission Act help keep consumer options open, keep prices low, and allow for a free and open trade market. We value these things as American consumers. Back to the Eagle and the Condor Theory- It is important to remember all aspects of free trade. From consumer education to public accountability, if we operate in a way that is fair and keeps our consumers, culture, and the good of all people in mind, we can sustain in any environment.

References:
Stenzel, P.L. (2012) The Pursuit of Equilibrium as the Eagle Meets the Condor: Supporting Sustainable Development Through Fair Trade. American Business Law Journal. Retrieved from http://eds.a.ebscohost.com.proxy.devry.edu/eds/pdfviewer/pdfviewer?sid=5a7e6902-f838-4caa-8415-7f12751748da%40sessionmgr4005&vid=4&hid=4203 on March 23, 2014.

www.ftc.gov