Aaron McKinney is a cost accountant for Majik Systems Inc. Martin Dodd, Vice Pre
ID: 2455957 • Letter: A
Question
Aaron McKinney is a cost accountant for Majik Systems Inc. Martin Dodd, Vice President of Marketing, has asked Aaron to meet with representatives of Majik Systems' major competitor to discuss product cost data. Martin indicates that the sharing of this data will enable Majik Systems to determine a fair and equitable price for its products.
Would it be ethical for Aaron to attend the meeting and share the relevant cost data? Is Marin in a position to ask this of Aaron? What should Aaron do?
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Explanation / Answer
1. It won’t be ethical for Aaron to attend the meeting and share the cost data with the competitor’s representatives.
2. Information exchanges among competitors increase transparency in the market, which can lead to efficiency enhancing benefits but may also present competition risks.
3. However increased transparency results in non-coordinated anticompetitive effects.
4. Martin is not in the position to ask this to Aaron.
5. Companies must be very careful when making information available as sharing too much information could breach competition law and create exposure to the risk of a large fine or even criminal sanctions for individuals.
6. The main concern arises when the nature of the information exchanged between current or potential competitors makes it easier for them to predict each others' behavior and adjust their own accordingly. In this case it’s about the cost data which is one of the most confidential data.
7. Companies in the unrelated industries can share the data for the purpose of deciding the base rates.
8. Exchange between competitors of information which is not in the public domain and concerns the parameters of competition, such as resale price, production capacity or costs is more likely to be caught by competition rules than exchange of information that is commercially less sensitive.
9. Aaron should assertively say no to Martin for the data to be shared by her, she can mention martin about the criminal sanctions for individuals if the most confidential data about the cost is shared which can act against competition laws.
10. Aaron can mention the ill consequences if the data is shared and redirect Martin to the concerned authorities for approval with regards to sharing the data regarded as confidential data.