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Legal and Ethical Issues in Business Essay

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Updated: Jun 21st, 2019

Ethical Issues in Business: Antitrust Laws and Mergers

Bristol Myers Squibb faces similar problems represented in the first example because of its attempt to avert generic competition to represent their new anti-depressant and anti-cancer drugs to the market. Along with its major blockbuster, drug Plavix, the company has experienced $ 7 billion revenues (Mody, 2012). In order to prevent decline in sales, the company has introduced the strategy of generic competition through a number of acquisitions.

Thus, it has announced the merge of Inhibitex at the beginning of this year and of Amylin Pharmaceuticals (Mody, 2012). These two major acquisitions have introduced benefits for the company and have increased their revenues. The strategies met opposition on the part of the Federal Trade Commission. In particular, the Commission accused Bristol-Myers of a series of anticompetitive activities leading to a decline in generic competition and to a promotion of Bristol’s new drug products.

According to the complaints, Bristol’s illegal activities forced consumers to overpay for great amounts of important medications, including drugs that are life saving for cancer patients. From legal viewpoint, the company has violated a number of federal regulations to stymie competition and receive unwarranted patent protection from the U.S. Patent and Trademark Office (PTO).

The second example presents the case of merge of American Telephone and Telegraph Company and Baby Bell SBC Communications. The latter purchased AT&T for $ 16 billion. The merger has provided new competitive perspectives for providing telecommunications with AT&T and SBC’s local exchange. Moreover, AT&T has turned into a long-distance phone company (Reardon, 2005).

The new synergy of giant companies has provided new circumstances for competition in telephone and Internet industries, as well as the adoption of Internet Protocol and emergence of cell phones. On the one hand, the merger promised to introduce a wider range of innovative products and service to customers, as well as expand the existing market. On the other hand, a revolutionary approach to innovation and technological advancement does not guarantee success of the venture.

In addition, the merger of the companies has also created a number of benefits for consumers who strive to receive decent quality at a moderate price. The announcement of merger, therefore, did not influence greatly the client base of both companies. Nevertheless, the separate markets of both companies have provided concerns for the merged industries because of the different goals pursued.

A Comparative Analysis

A comparative analysis of the businesses’ policies and activities can be carried out in terms of their impact on consumer demand, small business competition, industry development, and for wholesale consumers.

To begin with, both companies – Bristol-Myers and SBC communications have experienced dramatic changes in their policies. In particular, both companies resorted to significant acquisitions for expanding their customer base and enhance innovation and product distribution. In addition, both companies sought to introduce new products to take a competitive advantage at the market.

However, unlike SBC communications, Bristol-Myers was more concerned with introducing a new product and settling a stronger position on the market. In contrast, SBC’s purchase of AT&T was aimed at enhancing cooperation and advancing innovation (InfoWorld, 1997). Despite different methods of carrying out business, it seems that both companies resorted to increase consumer demand and conquer the largest segment of the market.

While considering the acquisitions in terms of their impact on small businesses, specific attention should be given to the possibility to reduce competition. In particular, the merger of the companies can lead to clearance policies in both cases of acquisitions. Bristol-Myers is concerned with introducing new market by acquiring shares and positions in the market.

Thus by expanding its influence on market segmentation, the company leaves no chances for the development and introduction of new products by smaller businesses. Similar to Bristol-Myers, SBC communications, along with AT&T can also contribute negatively to the healthy competition at the market. This is of particular concern to introduction of new technologies and innovations.

The point is that the pace of introducing innovation and enhancing technologies takes advantage of other introductions by small business. Overall, both companies stick to the tendencies of developing monopolies leading to reduction of product and service diversity and depriving consumers of wide options.

While considering industry development, both acquisitions can contribute to the development of the industry, but to a different extent. Thus, SBC’s acquisition of AT&T has opened a new opportunity for spreading and development new technologies, including telephone communication and wireless Internet. Mutual efforts directed at developing new services are beneficial for both companies in terms of consumer demand and strengthening the market position.

As per Bristol-Myers, acquisition of new medications leading to increase in generic competition can increase popularity of their product, but decrease the market competition. In addition, the company introduced investment into the development of new medications that could capture the market and increase consumer demand (Brody, 2008). As a result, the product price will be significantly increased, as well as potential market share.

Political, Legal, and Ethical Differences and Impact on Management Decision Making

From legal and political viewpoints, AT&-SBC merge lead to decrease in service competition because of impossibility of regional business to take a competitive advantage. The point is the merger disarms the biggest companies providing telecommunication services and, as a result, depriving the market of the two potential competitions is an important factor in considering merger as the one having a negative effect on the market.

As a result, the Federal Communications Commission expresses its concerns with the price augmentation and lack of potential competition (InfoWorld, 1997). Despite the legal concerns, the U.S. Department of Justice approved the merge provided the companies liquidate certain overlapping assets. The fact of SBC and AT&T competitors in the telecommunication spheres explains the threat of competition reduction and price increase (Hewitt, 2007).

As per the Bristol-Myers, no grounds for the acquisition of other pharmaceutical companies can be found, but the one that meet personal purpose of the company. The case also have significant ethical undercurrent in terms of brand policies. Thus, it has been recognized that SBC communications sought to acquire AT&T to take use of its famous brand and expand markets at the international level. The second benefit of this merger was eliminating SBC’s long-distance services rival, which is ethically unjustified.

Apart from legal and political considerations, both cases introduce ethical concerns as well. This is of particular concern to the first case of Bristol-Myers’ acquisitions, as well as the consequences it had for consumer demands. The anticompetitive acts of the company have lead to significant augmentation of prices for anti-cancer drugs for terminally ill patients (Hewitt, 2007).

As a result of such actions, the company has touched upon legal and ethical concerns of the Federal Commission that disapproved their company’s policies (Hewitt, 2007). By taking advantage of the competition, Bristol-Myers failed to adhere to the norms of ethics and morale. What is more threatening is that the policy put under the threat the unwarranted patient protection introduced by U.S. Patient Trademark Office.

Conclusion and Recommendations

On the one hand, the acquisitions presented in the cases have provided a significant benefit for the development of powerful technology and innovation. By uniting efforts at developing product and services, the quality becomes the major priority.

On the other hand, the lack of competition prevents the large businesses from establishing competitive prices and, as a result, the quality of the products could be under the threat as well. In this respect, both companies under analysis should strike the balance between their business goals and consumer demands. In order to increase competition, the companies should develop higher range of products and services that would make the other businesses confront competition and create beneficial alternatives.

In such a manner, consumers can have a wide variety of options at their disposal. Further, companies should focus more on customer needs and concerns, rather than on actual profit increase and innovation advancement. People-centered approach could have much more benefits as compared to the technology-oriented one. Finally, the company should be able to make predictions in the future and define the pitfalls of the acquisitions.


Brody, H. (2008). Hooked: Ethics, the Medical Profession, and the Pharmaceutical Industry. US: Rowman & Littlfield.

Hewitt, P. B. (2007). Annual Review of Antitrust Law Developments. US: American Bar Association.

InfoWorld. (1997). Telecom Union Unlikely. InfoWorld. 19(22), 15.

Mody, S. (2012). Bristol-Myers’ Strategy to Ward off Generic Competition.

Reardon, M. (2005). SBS Closes AT&T Acquisition. CNET. Retrieved from

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