International Business Law Case Studies

Partnership, another form of business organization, emerged as an improvement over sole-proprietorship. But, still it could not cope up with the growth in economic activities. Moreover, partnership, too, has its limitations. The financial resources are limited to the extent of capital provided by its partners and their borrowing capacity. The managerial skills of partners are also limited. Again in sole-proprietorship and partnership, the liability of owner/owners is unlimited. Thus to have monopoly and zero competition against their business rivals firms are secretly agreeing upon cartel agreements which by law is illegal.
Cartel agreement is considered as the most damaging form of anticompetitive behavior. According to this agreement competitors decide not to compete with each other and try every possible thing to conceal their agreement thus distorting markets and the main losers are the customers.
US Sherman Antitrust Act is made to protect the companies who are not part of cartel agreements. According to this act "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal" (Wikipedia, 2006).
It also provides that any individual who monopolizes or make any attempt ot monopolize, or taking the help or conspire with one or more persons, try to monopolize the market or trade or commerce among the several states or with the other nations is acting against the law and shall be guilty of felony.
Goliath and its subsidiary company Junior Ltd. Entered into a cartel agreement to maximize the profits. The agreements clearly indicates the violation of US Sherman Antitrust Act which says that entering into cartel agreement even with the foreign nations is illegal and are subjected to be found guilty of felony.
Though Goliath argument that US market will not be affected may be true but they are acting against the law there a case would be filed against them. As far as Junior Ltd. is concerned it is not subjected to this act since it is working outside US.
Lets look at the scenario clearly. MBI is a multi national corporation that has been manufacturing and delivering military tanks from its branches around the world to different countries. Thus it clearly shows that the company has to go on with the rules of those countries where its branches lie.
Further MBI sells the manufactured military tanks to those countries where it has no branches. Thus it can be said that virtually MBI is ready to sell manufactured military tanks to any country that shows interest in buying them.
MBI has a branch in country C and sells the manufactured military tanks to country C army and as well as country D army. MBI does not have a branch in country D. MBI delivered hundreds of these tanks to the army of country D. After receiving the delivery of tanks country D refused to pay saying that the tanks delivered were of defective nature. Anyhow the army of country D has deployed those tanks in its artillery and has been using them as frontline battle tanks.
A classical example of this type of case is the Bofors scandal that rocked India for several decades. Bofors was a Sweden based manufacturing company that has supplied howitzer to the Indian army. To get the deal they bribed many bigwigs of Indian

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