209 - Ethical Procurement Strategies

Question 1

Adequate Competition

Answer 1

The level of competition that an unrestrained market produces

Question 2

Antitrust Laws

Answer 2

Protect the integrity of the competition process for the benefit of consumers by ensuring incentive to keep businesses operating efficiently, keeping prices low and quality high

-Ex: Sherman Act, Clayton Act, etc.

Question 3

Bid Rigging

Answer 3

When competitors agree in advance which firm will win the bid

Question 4

Clayton Act

Answer 4

Builds on the Sherman act, covering specific practices that the Sherman Act does not clearly prohibit

-It gives the USAG the right to bring a civil suit in federal court to enjoin antitrusts violations, to break up unlawful monopolies, and to recover damages for the government

-gives state attorneys general the right to sue on behalf of citizens harmed by anticompetitive activities

-Can prohibit mergers and acquisitions

Question 5

Collusion

Answer 5

Occurs when two persons or representatives of an entity or organization make an agreement to deceives or mislead another

-can invoice price or wage fixing, kickbacks, or misrepresenting the independence between the colluding parties

Question 6

Favoritism

Answer 6

Occurs when the procurement process is structured so a favored vendor is unfairly awarded the contract

Question 7

Federal Trade Commission (FTC) Act

Answer 7

Created a federal agency charged with protecting consumers and the principles of competition

-only agency that can enforce provisions in the Act itself which is typically means of cease and desist orders and court injunctions

-Created by Woodrow Wilson in 1914

Question 8

Market Allocation

Answer 8

An agreement among competitors not to compete for specific territories, customers, products, or volume

Question 9

Price Fixing

Answer 9

An agreement among competitors:

• To raise, lower, or maintain prices
• To NOT negotiate prices
• To limit discounts, rebates, or promotions
• On price formulas, price sheets, or guidelines

Question 10

Sherman Act

Answer 10

Prohibits any agreement among competitors to fix prices, rig bids, or engage in other anticompetitive activity and was enacted by Congress in 1890

-enforced by the Antitrust Division of the DOJ and carries penalties of up to $100 million for corp and $1 million for individuals

Question 11

Steering

Answer 11

The process that ensures the favored vendor is awarded the contract

-Authoritative person “steers” the process in a certain direction

Question 12

Undue Influence

Answer 12

Influence by which a person is induced to act otherwise than by their own free will or without adequate attention to the consequences