1. Chapter 7 Legal Aspects of Business

2. Regulations Maintaining Competition
Competition - rivalry among companies for customers
Monopoly - exists when competition is lacking for a product or service or when products are in a position to control the supply and price of goods and services.
Very few monopolies exist because of the effectiveness of competition
Usually public services (FPL) are regulated by the government. The government regulates the prices that can be charged to consumers & other policies.
The trend is to weaken or eliminate monopolies in order to encourage competition

3. Fair Competition Laws
Sherman Act - major law promoting competition. Discourages monopolies by outlawing business agreements among competitors.
Clayton Act - forbids corporations from owning rights in other corporations if the purpose is to create a monopoly and forbids contracts that specify goods that a buyer must purchase in order to get other goods. (Ex. Pepsi owning parts of Coke)
Robinson-Patman - prevents price discrimination.
Wheeler -Lea Act - prevents false advertising

4. Federal Trade Commission
Federal Trade Commission (FTC) - was created as the result of many businesses demanding protection from unfair methods of competition.
Bankruptcy - is a legal process that allows selling assets to pay off debts.
Disadvantages - credit reputation of the business is blemished. All unpaid debts stay on file for 10 years and can’t file again for 6 years. Obtaining credit becomes very difficult.
Advantages – some businesses can survive (Kmart)

5. Federal Agencies which Regulate Business
Federal Aviation Administration (FAA)
Federal Communications Commission (FCC)
Food & Drug Administration (FDA)
Securities & Exchange Commission (SEC)
Environmental Protection Agency (EPA)

6. Regulations Protecting Business & The Public
Patent - the federal government gives an inventor the sole right for 20 years to make and sell an invention.
Copyright - the federal Gov.. gives an author the sole right to reproduce, publish & sell literary or artistic works for the life of the author +70 years.
Trademark - is a distinguishing name, symbol or special mark placed on a good or service that is legally reserved for the sole use of the owner.

7. Protecting the Public
Food & Drugs - (FDA) - prohibits the sale of impure, improperly labeled, falsely guaranteed & unhealthful foods, drugs& cosmetics.
Non-food Products - a health warning message must appear on cigarette packages etc..
Consumer Product Safety Act - set standards on many items (recall)
Information - when information is handled carelessly = information liability.

8. Business Taxes
Government uses taxes mainly to raise money to fund new & ongoing programs, pay for the police, roads, military etc....
Income Taxes - tax against the profits of business firms and against earnings of individuals. The largest source of revenue for the federal government.
Sales Tax - tax against the retail price of goods and services. The main source of revenue for most states & local government

9. Property Taxes
Property Tax - main source of income for local government
real property tax - land and buildings
personal property - furniture, machinery & equipment