From: Thorelli, Hans B. [mailto:thorelli@indiana.edu]
Dear Reader,
This is the second part of "Recommendations for Simulations (Ethics)". We hope that the story is self-explanatory.
-----Original Message-----
From: Alenka .
Sent: Friday, February 09, 2007 3:12 AM
To: Thorelli, Hans B.
Subject: Intopia RISEBA 2007 - Riga Latvia
Dear Sir,
We are currently having INTOPIA as our course at University and have
encountered some problems with the game. Please find below an
explanation of what happened and if possible give us some solution or
your opinion on this matter.
In Q4 everyone and even teachers witnessed how one group has taken
signatures for as they called it "Anti-dumping" contract. In that
contract companies were obliged to sell chips and computers at the
given price, this price was the same or a little smaller than the
price of such products in Business to Consumer markets. Unfortunately
Riseba's 4th year students still don't know that dumping is the sale
of a good for a lower price than its cost of production, not the market price.
We are sure that the idea of making such contract was to isolate our
company from producers, which will lead to a fast bankruptcy, because
we were wholesalers in all 3 areas and didn't have any production at
that moment, and all our profit were depending on the prices offered
by producers. As the result it has become cost inefficient to buy
products from another company because the margin with B2C price is
minimal, and this is without taking into consideration advertising
expenses. So wholesalers experienced huge losses. Another aftermath is
that industry will experience a huge decrease in B2B market, which in
real life in average is 4 times bigger than a B2C market.
Another thing that proves that everything was made against our group
is that we were the only company that were not offered to sign this
contract, and whole process of taking signatures were kept in secret
from us.
According to the Executive guide Intopia is about trustful
relationships between the companies and implementation of B2B
transactions is ultimately based on trust between parties. It is also
mentioned that the price in B2B should be profitable for both parties.
As it is written in executive guide, ONLY tax and antitrust
authorities can make such agreements and dictate the minimum and the
maximum prices in the market, however the group who initiated this
contract confused other groups that teachers were responsible for this as well.
Price fixing is prohibited anti-competitive behavior and in all 4 areas:
USA, EU, Brazil and Liechtenstein such behavior falls under antitrust
restrictions. And normally such companies pay compensations.
Now it is evident that this contract was illegal from the point of
view of the rules of the game as well as justice in the mentioned
areas. Our company experienced inventory shortage and in order to
avoid a stock out risks we were obliged to buy computers for the price
of 185USD when the real cost of production of such computers is about 60USD.
As we had experienced decrease in sales and our planned cash flow is
jeopardized, and we don't see any peaceful solution of this problem.
We demand from the teachers to take following measures:
Every company which signed this contract (exception is for company 7)
is obliged to sell (if requested) 10,000 chips and 10,000 computers in
quarters that are in table below. The price of Deluxe models for the
price of 45% and standard model for the price of 40% from the price of
so called "Anti-dumping contract". The price already includes air
transportation in the same area. If it should be transported to EU or
USA price should be increased by 5% if to Brazil by 10%.
As the result, our company has sued company 19 on the matter.
Unfortunately, although the teachers agreed that the company 19 was in
the wrong and the campaign was illegal no measures were taken. The
teachers have closed their eyes on the matter and announced to the
companies that the contract is illegal and no compensation was paid to
our company.
We request you look in the matter and provide your guidance on the
matter. We hope to receive an answer from you as soon as possible.
With respect,
Company 15
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От: "Thorelli, Hans B." thorelli@indiana.edu
Отправлено: 2007-02-09 23:11:35.95
Кому: "Alenka ."
Тема: RE: Intopia RISEBA 2007 - Riga Latvia
Dear Alenka,
Thanks for your excellent presentation of Co. 15 dispute with Co. 19.
I hope you will understand that it is impossible for me to suggest a
solution. After all, I have no data of Co. 10 and your Facilitator on
my hand. And it would be unrealistic for me to try to inject myself as
a "judge" in the conflict.
I am, however, anxious to explain that under U.S. law
anti-dumping does not apply to domestic markets. (If so, we might as
well throw out our antitrust policy!) It involves measures to protect
domestic producers from dramatically low-cost importers (a case might
be imports of Chinese shirts at $5, when just manufacturing
corresponding shirts in the U.S. might be $10. The World Trade
Organization (WTO) is trying to eliminate "anti-dumping tolls" as
interfering with the concept of the open market and free competition).
If the EU, or the Latvian interpretation of EU, were to be freely
applied to "domestic" trade that would indeed take much of the meaning of antitrust policy away.
Thus, if your local interpretation of anti-dumping is correct, I
would understand the apparent conclusion of your Facilitator, that it
is "illegal", but he does not want to do anything.
But I personally have the impression that anti-dumping at the EU
level has the same nature as in the U.S. If that is the case, and if
EU law is strictly applied, you could sue for damages, and cartel
participants could be force to pay fines to the government (in the U.S.
top executives might even be put to jail).
By the way, your English is unbelievably perfect grammatically,
and with a grand vocabulary!
Warm regards,
hans
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Dear Hans,
Thank you for your prompt reply. Intopia has finished today and due to all the matters that have come up, our company has placed third! Not a very satisfying position. Thank you for the explanation, will gladly present it to the committee who was in charge of the game.
Regarding my english, I was in an <st1:placename w:st="on">American</st1:placename> <st1:placetype w:st="on">School</st1:placetype> in <st1:country-region w:st="on">India</st1:country-region> "<st1:place w:st="on"><st1:placename w:st="on">Woodstock</st1:placename> <st1:placetype w:st="on">School</st1:placetype></st1:place>" for 9 years. It is nice to receive a compliment from someone who is a native speaker.
Thank you for your reply once again.
With respect,
Helen