LESSON OBJECTIVES1. Understand the rationale for

government regulation2. Examine the key legislation

that structures the legal environment for business

3. Compare the cost and benefits of regulation

4. Study how business participates in and influences public policy

5. Describe the government’s approach for legal and ethical compliance

What is government regulation?

1. A legal system that regulates the activities in businesses of a certain community, country or the universe at large

2. It has legal identity and provisions from the court system to settle disputes and punish criminals both organizational and individuals

3. Laws that protect managers and stockholders from being personally liable for a company’s debts but also individuals who are responsible in their own moral conduct

The Rationale for Regulation

1. Capitalistic Theory of Adam Smith observed the supply and demand, contractual efficiency, and division of labor of various companies- Modern Economics

2. The Laissez Faire is critical to Capitalism to assume market thru its own inherent mechanisms to keep commerce in equilibrium

3. Control of interest rates, taxation and public projects- John Maynard Keynes in 1930s; increase aggregate demand , increase economic activity, reducing unemployment, and deflation

The Rationale for Regulation

4. Milton Friedman- deregulation from government because the system could reach equilibrium even without government intervention starting from the 2nd half of the 20th century during the presidencies of Ronald Reagan, G.H.W. Bush and G.W. Bush.

Key Legislation that structures legal environment for business

---Sherman Antitrust Act-1890--- prevent businesses from restraining trade and monopolizing markets;

-----trust or conspiracy in restraint of trade makes a violation of the law a felony crime punishable by fine up to $10M for corporate violators and $350,000 and or 3 years in prison by the individual offenders

Key Legislation that structures legal environment for business

---Clayton Act-1914--- prohibits specific practices like price discrimination, exclusive dealer arrangement, and stock acquisitions that lessens competition and tend to create monopoly

---Federal Trade Commission Act—1914—gives the FTC investigatory powers to be used in preventing unfair methods of competition

Key Legislation that structures legal environment for business

---Robinson-PatmanAct-1936– prohibits price discrimination, exclusive dealer arrangement, and stock acquisitions that lessens competition among wholesaler or retailer; prohibits producers for giving disproportionate services of facilities to large buyers

Key Legislation that structures legal environment for business

---Wheeler-Lee Act-1938– prohibits unfair and deceptive acts and practices regardless of whether competition is injured; places advertising of foods and drugs under the jurisdiction of Federal Trade Commission

Key Legislation that structures legal environment for business

---Lanham Act-1945---provides protections and regulations of brand names, brand marks, trade names and trade marks

---Celler-Kefauver Act—1950—prohiibits any corporation engaged in commerce from acquiring the whole or any part of the stock or other share of the capital assets of another corporation that tends to create monopoly

Key Legislation that structures legal environment for business

---Fair Packaging and Labeling Act- 1966---makes illegal the unfair of deceptive packaging or labeling of consumer products

---Consumer Goods Act—1975—prohiibits the use of price maintenance agreement among manufacturers and resellers in interstate commerce

Cost and Benefits of Regulation

---Cost on Administrative and Enforcements-Government expenditures that are considered

overhead expenses---Compliance Cost-Expenditures by organizations (both public and

private) to meet regulatory requirements such as hiring of personnel, training employees, and monitoring compliance

Cost and Benefits of Regulation

---Benefits of Regulation-Greater equality in the workplace, safer workplace,

resources for disadvantaged members of society, safer products, more information and greater choices among products, cleaner air and water, preservation of wildlife habitats to ensure beauty and diversity in the future, more innovative products are developed and produced

How business participates in and influences public policy

ASSIGNMENT

1. Continue reading Chapter 4 2. List the other regulatory Acts and major Federal

legislations in a sheet of paper and pass them next meeting

3. Enumerate the signs of Antitrust Violations4. Explain Lobbying as cited by the author and as

per your own understanding5. Describe Ethical Corporate Culture