I am not a lawyer, and I do not pretend to be one on TV, but I am an international business executive that has managed businesses in many different countries. What I can explain is that anti-trust means different things in different countries so I will discuss it from a business point of view and its consequences, not from a legal point of view.
When I was younger going to university I was taught that anti-trust was “price fixing” which is illegal. But what I have since learned is anti-trust is anything that can be considered unfair business practices. Now that is a vague statement because what is the definition of “unfair”. Well, what I have experienced is it depends on whatever the regulators in a country believe is unfair. So as a foreign company operating in a foreign country you have to be very careful because anything can be considered unfair. I’ll give a couple of examples.
Working for a logistics company in a foreign country I had some pricing discussions with our sales management and we decided to implement a marketing campaign to gain additional business for a certain segment of our business. I sent an email to a sales manager informing of the new prices for this campaign. What did the manager do? He forwarded that email to the sales team with the comment “let’s crush the competition” to motivate the sales team to achieve their sales goals.
Well, a sales professional on the team sent that email (with the email trail attached) to one of his customers advising that he could offer new pricing to win the customer’s business. What did the customer do? He forwarded that email (with the entire email trail attached) to the national airline asking if they could beat the rates that our company was offering. People at that airline were shocked when they read the comment about “crushing the competition” and sent that email to their friends in the government.
The next thing that happened was the government was accusing us of unfair business practices in violation of anti-trust laws and threatened to shut us down if we did not cease our actions. We had to spend the next month proving to the authorities that this was just a normal marketing campaign targeting a specific segment of customers with reasonable pricing. We also had to back that up by providing an enormous amount of company data (by customer segment) to prove our case. We then had to explain that the sales manager who made that comment was just trying to motivate the team and did not represent the company’s strategy.
That issue eventually went away but a year later a similar thing happened in another country when one of our branch managers informed the media that we were reducing our published prices. The authorities quickly cracked down claiming “predatory pricing” and told us to reverse our pricing actions immediately or face serious consequences. So we did, and it took us over 6 months to explain to the authorities in that country that our actions were to merely match the prices of the competitors in the market and was not predatory pricing. We had to provide a lot of evidence to support our position along with lengthy discussions, and eventually we were allowed to proceed, with a strong caution that “we will be watching you.”
I can give many more examples from around the world but there are several takeaways from these experiences:
- You must be careful and be on your best behavior in a foreign country. You need to coach all of your staff to be careful about what they say, whether in email or verbal, and do not make dramatic or inflammatory statements either internally or externally.
- Being a foreign company in another country raises nationalistic concerns among authorities. They do not want you there, but the host country had to agree in order to allow their country to gain access to other markets as part of WTO or other bi-lateral trade agreements.
- Regulators do not understand your business or market dynamics. Educating them is a major issue when they start demanding answers, and oftentimes they do not want to listen and just want to exercise their authority. They are not knowledgeable of many of the marketing or pricing tactics that I have talked about in previous articles, namely Segment Pricing and Segment Cost Types, so it can be an uphill effort to educate them.
- Providing lots of your confidential company data to the authorities to prove how your marketing campaigns are positioned relative to your other customer segments, or to the local competition’s campaigns, is often necessary. However, depending on the country there is no guarantee that your company data won’t be “leaked” to the local competition.
- If discussions don’t go well you can contact your country’s Embassy in that country, namely the Commercial department, and ask the diplomats to arrange a high-level meeting with the country officials to explain your case. The embassy staff are there to help your case, as long as you are not guilty of the accusations. So be sure you are in the right.
- Finally, and the most important advice of all, do not let this happen in the first place! It is far easier to educate your staff on the potential consequences of their actions and comments than to spend months (and legal fees) educating regulators and risking your confidential company data. Innocent statements or actions can be taken out of context by others when they are looking for an excuse for your company not to be there in the first place.
There are other areas of anti-trust such as controlling supply of goods and services in favor of one company or another. It is not just limited to pricing issues so always consult legal advice and/or take an online course in anti-trust to familiarize yourself further. It is well worth the investment.
Three Tree Solutions 