Collusion Essay (ecn337).docx - Catherine Corrigan Professor Malloy ECN 337 December 4 2017 Collusion Agreement for Recruiting Employees Adobe Apple Inc

Collusion Essay (ecn337).docx - Catherine Corrigan...

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Catherine CorriganProfessor MalloyECN 337December 4, 2017Collusion Agreement for Recruiting EmployeesAdobe, Apple Inc., Google, Intel, Intuit, Pixar, & LucasfilmThe concept of secret agreements is something that has always been around, regardless ofthe industry or time period. These secret agreements when referring to inter-firm communicationare called collusions. A more recent occurrence of a collusion transpired between Silicon Valley high-tech companies including: Adobe, Apple Inc., Google, Intel, Intuit, Pixar, and Lucasfilm. Most larger, multi-billion dollar firms participate in collusion agreements and illegal practices each year and get off with small fines in comparison to their catastrophic profit margins. These firms established a “no cold call” contract that lasted from 2005-2009 which eliminated the competition for employers to seek the highest salary. The idea of cold calling is defined as “one firm directly calling someone at a different firm and recruiting them to work for them by offeringa higher compensation.” This act is illegal under the Sherman Anti-Trust Act which was created in 1890, yet has been broken countless times in essentially every industry. This leads to questionhow effective the laws against unfair business practice really are. Even though legislation withinthe United States continues to create additional laws in hope to prevent this situation from reoccurring, the concept of secret agreements will never truly end. The Silicon Valley scandal would be an explicit collusion because this was an agreement between multiple competitors to completely suppress rivalry by having inter-firm communication. Essentially, this allowed all the given companies to “under pay” their employees, or not properly compensating them for their skills and qualifications. None of the
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Silicon Valley firms had to compete wage-wise to keep their employees from switching firms, ultimately increasing profits for the given firms as their fixed costs, salary-wise, were held at a lower rate. By working and creating changes internally, this allowed all the companies to stay at competitive market prices, while increasing firm profitability.
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