The Role of FTC
The role of Federal Trade Commission is to oppose unjust practices, acts and methods of commercial activities. The commission lays down policies that direct members of the commercial industry and the industrial practices. When these policies are not adhered to by the members then they are liable to being fined by the commission and this ensures free and fair competition among businesses. The main areas where the commission imposes its policies are:
- Price fixation whereby producers agree on retail prices with their consumers and when competing producers agree on the amount of goods they are supposed to produced and dispatched for sale (Murray, 2002).
- Prohibition of unjust competition by ensuring that big sized business do not take advantage of their size market authority to achieve lesser prices from their suppliers, and monopolized businesses do not take advantage of monopoly and sell their goods at relatively high prices. Also a producer is not supposed to give discount to a big sized business and fail to offer the same discount to a small sized business. The commission also prohibits a business from merging with another business. The commission establishes strategies and criteria that discourage businesses merged and ensure that control of business within two companies that have merged is unjustified and irrational and therefore it is illegal (Wysocki, 2002).
- Prevention of deceiving practices such as bogus advertisement which contains omission or twisted information which consumers may misinterpret. Therefore an advertisement should give the right information and not information that will deceive the consumers. If there is an offer the advertisement must clearly indicate the terms and conditions of the offer (Marx & Anthony, 1997).
Why the conduct of the IPAMG was deemed as anti-competitive behavior by the Federal Trade Commission
IPAMG (interdiction Planning and Asset Management Group) is a firm that is charged with the role of passing information about financial planning and investment. It is an advisory firm that aims at empowering investors on investment issues. The program adds integrity to the process of investment planning (English, 2003). The firm operates under the policies that it is only compensated by the client so as to do way with any disputes regarding interests (In the Matter of Independent Physician Associates Medical Group, Inc., 2009).
The firm recently made a note of its intentions to occupy the states of Washington and Idaho so as to transact business in those states since it is not subject to registration in those states. This move was considered as an uncompetitive behaviour by the Federal Trade Commission since this would mean taking advantage of the situation. According to the Federal Trade Commission, it is a crime for the big firms which have automatic entry in some states to take it as an advantage over the small firms. This is unfair competition and it lead to a penalty for the IPAMG (Blankenau, 1994).
The cases of unfair competition that involves taking advantage of the situation are expensive since it calls for serious penalties, fines and charges. The crime also affects the main area of the business operation and may call for serious attention of the key management.
The penalty
When a firm is caught in the situation by the Federal Trade Commission, the charges for the offence include fines and other legal charges. The commission also may close the business boundaries of a firm so that they operate in limited area (Federal Trade Commission, 2003). This is because if one large firm dominates a certain market, there is monopoly and this may hinder opportunities for other up coming firms. The penalty that was imposed to the IPAMG was however fair since it would have led to loss of trust in the market by the local people and it is their interests that would have been affected.
References
Blankenau, R., (1994,). The new rules of the road. Hospitals & Health Networks 68 (20).
English, M. (2003). Improving Health Care: A Dose of Competition. Health Care and Competition Law and Policy.
Federal Trade Commission (2003). FTC Headlines.
In the Matter of Independent Physician Associates Medical Group, Inc., (2009). Doing business as AllCare IPA, a California corporation. Federal Trade Commission.
Marx Jr. D. & Anthony, M. F. (1997). Overcoming antitrust obstacles to integrated delivery. Healthcare Executive 12 (3), 18.
Murray, A. (2002). FTC Cracks Down On Antitrust Issue In Health-Care Area. Wall Street Journal. (Eastern edition), A.4.
Wysocki Jr., B. (2002). FTC Chief Pledges Antitrust Vigilance In Health Sector. Wall Street Journal. (Eastern edition), D.3.