Latest battle in book price wars (By Hanne Snoeck)

There is a price-war going on between the online retailers; Amazon.com, Wal-Mart, Target and the American Booksellers Association (ASA) who defends the independent bookstores. The 3 retailers are selling bestsellers like Stephan King’s “Under the Dome” for really low prices. The ASA will do everything to protect the independent bookstores against this ‘predatory behaviour’. They have already called for an investigation for these anti-competition acts. According to the ASA, the real reason why these online retailers offering books for low prices is because they want to attract new customers so that they will buy additional sales. The ASA say that Amazon.com, Wal-Mart and Target have a secret plot to eliminate competition. They want to have the control of the market for bestsellers. Those acts are devaluing the concept of the book and the book industry will become a danger of collateral damage in this war. That is often be said when more efficient or productive competitors challenge them in the marktplace. But like in all other industries, innovation and technology change the way of selling and buying books en there always will be winners but also losers.

The online retailers brought a chance in the industry but also increased the appetite for books. Even in the middle of the financial crisis more books have been bought. ASA counters it.

The ASA say that the can not compete because of the price advantage Amazon.com and co have but they can offer other advantages like attentive and knowledgeable service, a reader- and- author- friendly atmosphere,…
Instead of painting them as helpless victims they would better release that. Prices are important but also other things like these other advantages can be important for some people.

In the article they said that the independent book stores can offer other advantages than the price advantage that online retailers can bring. In the text you can read: ‘Prices are important but they aren’t all-important. I think that the price advantage will be the most important advantage and the only advantage for many people that they will take into account especially people who do not read much. Only a small group of book lovers will not buy their book online because of the other advantages and perhaps also on principle.
The online retailers even loose money by offering books for these low prices and it is not right that behind the strategy of it the only goal they have is that new customers would buy more. They are creating a monopoly and that is not good for the competition.

JACOBY, J.( October 28, 2009 ), Latest battle in book price wars. Retrieved from http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/10/28/latest_battle_in_book_price_wars/

Recruitment firms fined for boycotting rival (By Bieke Demeester)

The Office of Fair Trading (OFT) in the United Kingdom, announced at the end of September, that six companies breached the competition law.

The Office said that these six companies, which are recruitment companies, formed a cartel and refused to deal with the new rival ‘Parc UK’. They got a fine of £39 million in total for this serious breach of competition law. The new firm ‘Park UK’ wanted to act as an intermediary between recruitment companies and constrution firms. The six recruitment companies didn’t compete fairly: they formed a cartel, named the ‘Construction Recruitment Forum’. The OFT confirmed that between 2004 and 2006, this forum agreed to boycott ‘Park’. Therefor, they agreed upon fixed fee rates, which the intermediary firms (such as Park) would have to pay. This distorted competition and drived up staff costs, a director of the OFT said.

The company which got the greatest fine, was considering an appeal, although they admitted the charge. They said there was only one guilty employee and they already fired him. On the day of the judgment, the shares of this particular company fell be 3,5%.

Remarkable is that the Office of Fair Trading gives high fines. The construction industry in the UK had to pay in September a fine of £130 million for illegal price-fixing.

I think the OFT is necessary to investigate breaches of competition law, because consumers are always the dupe. Some companies are sentenced, but I think a lot of companies aren’t discovered yet. Although is it verbidden to breach competition law, this article shows that some companies don’t care about it and just want to raise their benefits. In Belgium, there is a similar council which has to investigate breaches on competition regulations.

Sources:
WEARDEN, G. (September 30, 2009). Recruitment firms fined boycotting rival. Retrieved from http://www.guardian.co.uk/business/2009/sep/30/oft-fines-recruitment-firms

Microsoft: An ageing giant (by Ben Van Laere)

Ten years ago, Microsoft was the undisputed leader on the technology market. It only suffered from a ruling of a court. The judge ruled that Microsoft was enjoying a monopoly. This decision was made because the court accused Microsoft of crushing its competitors. Even Apple was not capable of competing with Microsoft.

Now, ten years later, Microsoft has many threats. First of all the old enemies, such as Apple, grew and became very successful. Apple is now making record profits with the iphone. Secondly, two students have blocked Microsoft in their successes. Larry Page and Sergey Brin created Google which is now the most popular and successful organisation on the technology market.

Windows 7, the successor of Windows Vista must recover the damage Microsoft has taken. The problem is that Microsoft was unable to expand its dominance in technology to the internet, games or gadgets. They focussed on operating systems, software and hardware dough they missed the internet and gadget popularity.



Nowadays, the technology develops in a way nobody can follow. A gadget which is now very popular becomes old school within two years. It is very difficult for companies to always be up to date. They need to innovate and hope their new products will be successful. Microsoft was maybe too afraid to change a lot. Focussing on new products is always taking risks.

I think Microsoft still has a lot of clients. They lost their monopoly but they still remain a giant. And after all, competition is not bad, it keeps organisations focussed.

Source:
http://www.guardian.co.uk/commentisfree/2009/oct/24/microsoft-ageing-giant-windows-7

Pub sector ‘ties’ cleared by OFT (by Greet Heyse)

The Office of Fair Trading declared to haven’t found any evidence that the link between pub companies and landlords is damaging the competition in the pub sector. The investigation came after a complaint from the Campaign for Real Ale, who claimed that landlords had to buy beer from their own pub owners.

Camra said it is important that OFT’s decision should be overturned. They can’t accept that the consumer benefits from the competition and choices within the sector.

Action is very necessary right now according to Camra. The government should prevent the flow of the pub closures and ensure that the consumers get a fair share according to the agreements as demanded by the competition law.

OFT reacted by saying that companies who are owned by a pub are not protected from competition by simple agreements with their lessees.
The organization will therefore take no further actions

The biggest operator does not complain hopes that the industry will still move forward. Enterprise, who is also a big operator, also has no complaints because thanks to the ‘beer’ ties that there was a chance for entrepreneurs who are unable to afford to buy a pub on their own.

Personally, I do not know precisely how far people can go in competition. But I do know that they can’t deceive people or restrain other parties from competing. It seems that both parties have some severe arguments. I think, as long as there are no clear negative consequences, the ties can remain and everything should stay as it is now. Also very important is that the consumer is very favored in the whole situation and I think that this was crucial to the decision of the government.


Source: http://news.bbc.co.uk/2/hi/business/8319771.stm

Lehman sells off trinkets on eBay (By Hanne Snoeck)

One of the former Wall Street’s most powerful investment bank Lehman Brothers has found an innovative way of founding money to pay off the gigantic debt they have to their creditors. Every bit will help to repay the creditors and they have organised therefore during the bankruptcy a massive garage sale of the trinkets that were produced in happier times. Those gadgets were in fact produced for their employees and clients. The trinkets are very varied: you have binoculars, umbrellas, bags, teddy bears and even a silver-plated baby rattle, all with the Lehman logo. They sell it under the slogan “Own a piece of history”. The idea came actually from former employees. They posted their memorabilia on eBay and there was apparently a lot of public demand for it. Therefore the liquidators did the same thing and they are even planning a retail store.

When I read the article the first thing that I thought was: Who will buy a trinket of a company that went bankrupt? I can’t imagine that somebody would buy a trinket of a Belgian company that had a compulsory winding-up. Of course this bankruptcy was the biggest ever in the US and we’re not talking about a company in our little country Belgium. But by further thinking, I actually agree that liquidators will search for all the possibilities they can find to pay off the debt that the company had made, even when it seemed a bit weird at first.

Sources:
Foley, S. (July 21, 2009). Lehman sells off trinkets on eBay. Retrieved from http://www.independent.co.uk/news/business/news/lehman-sells-off-trinkets-on-ebay-1754581.html

'Kent attracts new type of tourist: Europeans seeking easy bankruptcy' by Greet Heyse

Normally, tourists vist Kent for its castles, where widowed queens lived who lived out their days and kings who fought for England. And they also came for Canterbury Cathedral, who is known for the site of the murder of Thomas à Becket. There is also a retreat where Winston Churchill brooded and the House where Joseph Conrad wrote, etc.

But now, tourist are visiting Kent for a whole other reason, namely, Kent is considered one of the finest places in Europe to declare oneself bankrupt! The number of foreign debtors seeking bankruptcy in Britain has risen by 20 per cent, that because the English insolvency laws are very comfortable.

People call it the "bankruptcy tourism". They come to Kent because the tax laws are
better than the ones in their country.
Now, this phenomenon is still a legitimate thing but it is nog quite ethical.
In 2002, new European insolvency legislation came into force that made cross-border bankruptcies between member states easier to complete. It is possible for a person to shop around and find the most lenient bankruptcy.

I think this is a really akward situation. People are moving to Kent just for the bankruptcy. I guess that the city musn't be that cosy or nice to live in. All those 'depressed' people are coming to you town because they have enormous debts. It is a really bizar phenomenon. I think, people are not staying put with the real citizens who live in Kent. Has anyone asked for their opinion yet? perhaps their must be a law that equalizes all the bankruptcy procedures in the European Union. But I think and hope that this will happen in the future.

Source:
The Times, 23th of September 2009, http://www.timesonline.co.uk/tol/news/uk/article6845136.ece

Reader’s Digest Headed for bankruptcy (By Bieke Demeester)

At the end of August this year, newspapers reported about the bankruptcy of Reader’s Digest. The magazines with inspirational family stories of the Reader's Digest Association Inc, are famous all over the world. This company was bought in 2007 by an investor group, led by Rippelwood Holdings LLC and from that moment, the managers tried to cut costs. This didn’t work out very well, so in Augusts 2009, they planned to file for bankruptcy for its U.S. businesses, in order to diminish the debts by 75 %. The current debt of 2.2 billion dollars, would be reduced to 550 million dollars. On that very moment, there was already a prearranged plan with all the creditors for a restructuring plan. This plan didn’t provide a lot of redundancies. The operations in other countries (f.e. Canada, Australië, Europe, Africa, Asia,…) were not affected.

This is a very good example of a restructuring of a international company. They made fundamental choices to survive. I think the economic recession has everything to do with his restructuring: people who want to read something, will now more search on the Internet, because that’s for free. The fact that the company will develop a more digitally focus, is a very good example of that.

Sources:

CHELSEA, E. (August 17, 2009). Reader's Digest plans prearranged bankruptcy. Retrieved from http://www.reuters.com/article/wtUSInvestingNews/idUSTRE57G37B20090817?pageNumber=2&virtualBrandChannel=10522
OSTROW, A. (Augusts 17, 2009). Reader’s Digest headed for bankruptcy. Retrieved from http://mashable.com/2009/08/17/readers-digest-bankruptcy/